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What’s the Difference? June 16, 2008

Posted by Amanda in A Better Mouse Trap, Business Tails.
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What makes a small business grow into a big business?  Is it how much money you spend on advertising?  Or maybe it’s how hard you work at growing it…  What really makes a small business take off and become “big business” is simple.  Differentiation.  Your business has to be unique (and that means unique in a good way).  You have to be doing something that others aren’t, filling a need that others do not.

Jack Trout wrote about this recently at Forbes.com (read the article here).  He talked about why so many CMO’s “move on” after only a short period on the job.  They are not successful because they fail to focus on differentiation  The same can be applied to small business that is trying to grow.  If you do not seperate yourself in the mind of the consumer, you are disposable.

Now, how CAN you differentiate yourself?

You could be the lowest priced.  Price differentiation is a common strategy and it’s how Walmart and Amazon have grown to be so large. BUT: Can you compete with the Walmart of your industry?  Companies like Walmart use Economies of Scale to push prices low; they can get lower prices on what they buy because they are already so large.  That allows them to pass that savings on to the consumer and still make a healthy profit.  Also, it is very easy to duplicate a price differentiation strategy. 

You could have the best service.  Zappos is known for its service.  They have seperated themselves from other online shoe retailers in the mind of their consumers.  If you are unhappy with your Zappos shoes, they don’t fit, just return them!  You can call and chat with their friendly customer service representatives for an hour if you wish.  BUT: Providing great service often means hiring great people.  Maintaining a top workforce is an expensive proposition, but your customers will reward you with loyalty.  Again, this is a strategy that is reproduceable by others.

You could make a product no one else does.  I’d like to call this the ‘Next Big Thing’ strategy.  This is one of the easiest and fastest ways to stand out in the mind of the consumer, but it can also be the most difficult.  This differentiation strategy relies on your product being significantly different from anything else on the market.  Whether that means your product is more durable, easier to use, has better features or serves a need that no one else does yet.  This is a highly sucessful technique BUT: You have to come up with the idea and the customer has to believe that your product is different.

You could serve a need that no one else does.  This is known as Niche marketing, as I mentioned in my previous post about M&D Innovations.  This is also called Focus Differentiation.  It has so many names because it is such a great strategy.  BUT: You have to listen to your customers. 

What’s the best strategy for you?  Well, that depends on your business but it is normally a combination of these four strategies.

 

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