What is a Differentiation Strategy?

Definition: A differentiation strategy focuses on providing a product or a service with distinctive attributes, in comparison with the competition, to reach a broad market. In other words, it means to set the product or service apart from similar ones.

What Does Differentiation Strategy Mean?

The differentiation strategy is one of the three main marketing strategies, along with the low-cost provider strategy and the focus strategy. This particular strategy focuses on market research data to understand the client and also to identify what the current competitors are doing to fulfill what the market is expecting.

By analyzing these two perspectives the company can develop a differentiated product or service that includes both the customer’s expectations and a competitive advantage that surpasses what its competitors are currently offering. This differentiation aims to fulfill a whole market and not a particular segment. This means that differentiation is normally a high-cost strategy since providing a distinct quality might cause the company to incur in high research and development costs and also the new elements included in the product or service might increase the final cost of production.

On the other hand, there’s also a strategy for differentiated focus, this strategy has the same goal of providing a product or service with distinctive attributes but it focuses on a particular market segment.

Example

Unbreakable Solutions Co. is a company that manufactures screen protectors for smart phones. Since the business started the founders were committed to provide the market with an unbreakable screen protector. Currently, competitors only offer transparent and shade screen protectors.

But customers are always complaining about their smart phones screens being broken when they fall down and Unbreakable Solutions is trying to differentiate itself from its competitors by providing a unique solution to this particular issue. They are aiming at the screen protector’s market but by using a different approach they are setting themselves apart by offering an enhanced solution to the current needs.