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What are Points of Difference?
Points of difference are the unique characteristics that distinguish a product or service from other competitors in the market. These added features might offer you a significant advantage over your rivals. and give customers a reason to choose you over other options. Price, customer service, product selection, or even innovative technology, are just a few factors of points of difference.
For example, if a Cracker Barrel restaurant offers personalized delivery services while its competitors don’t, that could be considered a point of difference. Or if a clothing store ABC specializes in luxury materials, that could be its a way to stand out from other competitors.
Points of Difference (PODs) and Points of Parity (POPs) are two crucial ideas in marketing. PODs are the distinctive traits or characteristics that set a business or product apart from the competition. POPs, on the other hand, are the characteristics that help a product be seen as having a comparable level of quality to its rivals.
Characteristics
Points difference may have certain characteristics, such as
- Pricing – Price can be a powerful differentiator in the market, whether it’s low or high. Low prices can help you gain a broader consumer base, whereas higher prices signify that the product is of premium quality and more prestigious.
- Service – Service is another important differentiator. A business can stand out if it offers better services such as faster delivery or more personalized experiences to its customers.
- Quality – Quality is essential to differentiating a product or service from competitors. A higher quality product or service can signify that it is of superior value and will last longer.
- Innovation – Innovation can help position a business as a market leader. Developing products or services that are new or more advanced than competitors can help a business stand out and draw in customers.
Types of Differentiation
When looking at different products or services, it’s important to compare the key points of difference in order to positively evaluate which one is best suited to our needs.
Although certain items may have the same extent of features, there will always be subtle differences that set them apart in front of the target audience. Hence, on these grounds, there are three types of differentiation from the consumer’s point of view –
1. Vertical
Vertically differentiated products vary in both price and quality, however, consumers generally perceive some options as superior to others. For example, luxury cars are typically priced higher and have better features than standard models.
2. Horizontal
Horizontally differentiated products differ mainly in terms of features or preferences, but not in price or quality. For example, a restaurant could differentiate itself from competitors by offering vegan-friendly menu items.
3. Mixed
This type of differentiation combines both vertical and horizontal elements. For example, a restaurant may offer different types of cuisine that vary in both quality and price as well as features and preferences.
Benefits
- Gain customers: Differentiation can help businesses to stand out from the competition and draw in new customers. It can also help to ensure that existing customers are retained. When a brand stands out, customers are more likely to remember it and become loyal.
- Improve pricing power: Differentiation can help to improve a business’ pricing power. When customers perceive that one product or service has added value, they are often willing to pay a premium for it. This can help the business to increase its profit margins and overall revenue.
- Create competitive advantage: Differentiation can also give a business an edge over its competitors. By offering something unique, it can gain an advantage in the market and position itself as a leader in its industry. This can help to solidify the business’ position and create long-term success.
- Optimize brand loyalty: Differentiation also helps to optimize brand loyalty. When customers have a positive experience with a business, they are more likely to become loyal and recommend the brand to others. This can help to drive repeat business and create a loyal customer base.
How to create Points of differentiation?
Creating points of differentiation will depend on the type of business. However, some common strategies can be used to effectively differentiate a brand from its competitors.
1. Examine your competitors
The first step is to identify what sets your business apart from the competition. Look for areas where you can provide a unique value proposition and use this as a way to differentiate your brand. You can also look at their product life cycle and identify opportunities for innovation or new features that may give your brand an edge.
2. Create unique products/services
Creating products or services that are unique and stand out from the crowd can help to set a business apart. Consider ways to innovate and provide value that your competitors are not offering. Using innovative technology or personalizing product or service as per consumer needs in a specific segment can help you beat other competitors and create a strong brand.
3. Invest in your strengths
Focus on the areas of your business that are particularly strong. Investing in these can help to reinforce your points of differentiation and make it easier for customers to recognize what sets you apart.
4. Market your differences
Make sure that potential customers are aware of the points of differentiation that set your business apart. Use marketing and advertising to communicate these points and highlight what makes your brand unique.
5. Improve customer service
Excellent customer service can also be a powerful point of differentiation. Provide a personalized experience that exceeds customer expectations and helps to build loyalty.
So, these are some of the ways to create points of difference. You must have noticed that small business often relies on points of difference to set them apart from the competition and attract customers.
Consumers find that their experience with small businesses is worth the higher price they pay to larger competitors. These businesses may offer more personalized services and lower prices than their larger competitors, which makes them a great option for savvy consumers.
Hence, by using the aforementioned strategies, a business can create differentiation based on the value and unique services it provides. All in all, when a business offers something different than the competition, customers can be attracted to it and will continue to come back.
Examples of Brands that use Points of differences
- Apple: Apple sets a great example when it comes to distinctiveness & competitiveness. I think their points of differentiation are highly effective and hard to miss. They have positioned themselves as a top-tier brand through their sleek designs, intuitive user interfaces, and advanced technologies. Apple products are designed to be easy to use, reliable, and appealing to customers.
- Tesla: The next example that I think should be mentioned is Tesla. They have been able to stand out from the competition by providing innovative and cutting-edge electric vehicles. Their combination of style, performance, and technological advances is unmatched in the industry.
- Dollar Shave Club: Dollar Shave Club stood out in the grooming market with their subscription-based service that delivers grooming products, including razors, straight to customers’ homes. I believe the razor sales method was unconventional compared to traditional over-the-counter sales. This makes it a great example of points of difference.
- Amazon: The ecommerce company is notable for offering a wide variety of products and dependable delivery, particularly if you have an Amazon Prime membership. Prioritizing customer satisfaction is of utmost importance and we all know that Amazon does that adeptly through its simple return & refund processes. It also stands out from many other ecommerce platforms with its comprehensive customer reviews section, allowing consumers to make informed decisions.
- Netflix: Finally, I believe Netflix has to be mentioned here. They have disrupted the whole streaming industry by offering an extensive library of content, an easy-to-use interface, reasonable pricing, and a personalized recommendation algorithm. All these changes have enabled them to stand out from the competition and gain a strong customer base.
Conclusion
Businesses need to differentiate themselves in order to succeed in the market. This can be achieved by offering a unique selling proposition, understanding the target market and audience, and positively evaluating competing products.
Additionally, businesses must strategically decide if they should enter a price war or maintain higher prices. To make this decision, they must consider how much the lower price will affect their profits in comparison to the potential buyers that could be lost to competitors.
Finally, businesses should ensure that the points of difference they offer are perceived as valuable and successful by their target market to guarantee a successful business strategy.
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