Differentiation

Approaches to differentiation are limited only by the human imagination, but they generally take one of these form:
• Appealing design, for example, Braun kitchen products
• Superior performance, for example, the Apple PowerBook, Porsche, and Lexus automobiles
• Technical innovation, for example, hybrid-powered vehicles introduced by Toyota and Honda
• Reliability and durability, for example, Maytag appliances
• Convenience and ease of ordering, for example, Amazon.com
• Owner safety, for example, Volvo and Saab automobiles
A vendor can also differentiate itself through what many refer to as atmospherics: the physical or psychological environment in which business is conducted. This can be a powerful differentiator. Many people look for a satisfying environment in which to make their purchases, and they are willing to pay for it.

Branding
Branding is another approach to differentiation. One could make a case that branding is the culmination of efforts to differentiate product or service. By building a positive and familiar image for your offering, you have a better than even chance of becoming the buyer's first choice among many competitors.
A strong brand either will become the default choice when the customer goes to make a purchase, or--the next best outcome--it will get the product or service onto the short list of possible choices.
Brand-name products have an aura of quality or utility that rival products in the same category do not possess. That aura usually translates into premium prices over nonbranded rivals. Brand power also leads to higher unit sales, because customers don’t have to agonize over whether or not to buy them. As Patrick Barwise and Sean Meehan have written, "Familiar brands reduce risks in a reliable, affordable, convenient way." A recognizable brand acts as an imprimatur of reliability, making the consumer's choice easy. People mostly don’t have time or energy to compare and consider other products when they are shopping. When people find something that works for them, they tend to stay with it. So they reflexively add products to their carts based on brands that they already have in mind.
The power of some categories of consumer packaged-goods brands may be diminishing, however, as customers come to understand that the aura of superiority may be nothing more than a curtain of advertising, and that nonbranded products may deliver the same utility at significantly lower cost. This understanding is gaining ground as supermarkets and drugstores place their lower-cost-generic products side-by-side with more expensive brands.

Differentiation That Matters
Differentiation matters only to the extent that customers value the difference. If the targeted customers truly value the difference that sets your product or service apart, they will either (1) select yours over others (2) be willing to pay a premium for what you offer, or (3) act on some combination of 1 and 2. Experience and market research are the best way to determine whether your difference is valued by customers.
There is growing evidence, however that many physical products fail to differentiate themselves in ways that customers really value. Company marketers and product developers sometimes add bells and whistles to new and enhanced product versions without giving much thought about whether customers care about or are willing to pay for them.
Do consumers want the many capabilities built into their DVD players, VHS machines, digital cameras, and office software suites? Engineers love these things and dedicate enormous effort to making them part of their products. This explains why every new version of Microsoft Word and Excel gets bigger and more complex, even though 90 percent of users probably use only a small fraction of these capabilities.
According to Patrick Barwise and Sean Meehan, being the best at what matters to customers produces a winner, and in many cases being the best is achieved when a product or service performs as it should, is easy to buy and operate, and is backed by excellent service.
They argue that most companies have taken differentiation so far that they have left their customer behind. The emphasis on being different is probably driven by ad people, who desperately need something different to talk about so as to cut through the smog of contemporary media. In advertising today, you must say something very different to be noticed. According to them, many customers don’t want bells and whistles and other differentiators as much as they want quality products, reliable service, on-time-delivery, and fair value for their money.
To be more succeed, then you have to be different.