Product differentiation or how to stand out
The most challenging part of product creation is to understand how you can stand out. It becomes especially important nowadays when we are all flooded with various products being launched almost daily. That’s why being crystal clear on how you are different helps to set focus to the overall product strategy that is nothing else as a balancing act between unlimited opportunities and limited resources. There is no single formula that serves all products and that will provide you with a clear set of product differentiators, however here I collected some insights that can bring you closer to finding your perfect mix.
So you are determined to create the best product that stands out. The main point here is to understand the real value you create, which in its’ turn brings you closer to understanding your differentiation and positioning, and hence will impact not only product development but all your sales, marketing and communication efforts. It defines every step you take, every feature you plan to introduce, every user test you do, every campaign, and pitch you make. Product positioning means to be clear on how you are better at some specific thing that your target market cares about. Strong positioning is focused on what the product does the best, which unique features it delivers, and how they are better than existing alternatives, meaning it depends on product differentiators you introduce as a part of your product strategy.
Work on your differentiators starts with the key element of both product positioning and differentiation which is knowing and understanding your users, who they are and what they need, which problems they have, and how do they plan to address them. The next comes understanding of your customers and industry they are in, be clear on the value chain you address, and try to identify the important factors, which bottlenecks you notice, which trends you observe. You should also dedicate some time to study your target market, your direct and indirect competition, what are they doing good. Check advancements in technology and how you can benefit from it. And the last step is to be honest about your product — what can you do better in a market to address the existing customer problem or maybe there is something you do not do as customers expect and this should be your focus of improvement.
After building the landscape around your product idea, here are also some approaches you can take to work on differentiation for your product.
Feature-based differentiation
This is the easiest differentiation strategy, but the most difficult to sustain in the long run and to develop consistently. If you select this approach you should think not only about a single feature but about a set of features aligned around one theme or vector, meaning you should have some plan to address existing user journey that should not result just in one feature. For example, “improving the process of damage reporting” can be one of the themes I may pick up to develop multiple features for motum by RepairFix. The features grouped around this vector include reporting of paint surface damage, glass damage, interior damage, mechanical damage reporting, support of damage history use case, etc. and at the beginning when you build a base of your product this is rather a good approach, but you should keep in mind that the impact of a product having more and more features diminishes with time and when not selected wisely this differentiation approach is hard to sustain. The solution here can be if you base the feature vector on your unique fundamental capability which is in the core of your system. This may be a better way to support your feature-based differentiation and to protect it later on. And definitely, your feature vector should deliver measurable benefits to your customer, not only be a set of features you strongly believe in, so do not forget validation of your ideas before building it.
Differentiation based on user experience
As there is a growing number of new products delivered to customers it may be not enough if your product competes on a feature differentiation basis only. You can support it with a secondary differentiation strategy that is all about building a recognizable image and a better user experience. While designing your product think about unique interaction elements and small delights that give your product “a face” and make the user experience unique. These design and interaction elements if they are definitely unique and loved by customers can be protected from copying by your competitors later on. A good example of this is Swipe to unlock functionality introduced by Apple.
Differentiation based on non-functional attributes
This type of differentiation involves the following dimensions: speed, capacity, reliability, and continuous availability, security. Depending on the domain you are operating in this can be a primary dimension of differentiation or secondary one. To put it the other way around, for most of the products it will not be the positioning element number one if we provide 99,99% uptime or our MTBF is almost infinite, but it can become a problem if we do not focus on it enough and customers start churning because of these elements. However, this differentiation takes the first place if we are talking about missing critical or financial systems.
Differentiation through a platform approach
This differentiation strategy follows feature-based differentiation and is all about offering not a standalone product, but an ecosystem of connected products that a customer benefits from. One of the aspects I see important here is to put modularity in the core of your product platform and enable easy access to it (talking about integration possibilities) by your customers and partners.
There are many other ways to differentiate your product, like pricing, branding and messaging, networks, and partners, you can definitely be creative here. Every differentiation vector has its benefits and drawbacks and you should take both aspects into account to mitigate differentiation risks. Isolated they are not as strong as in combination. My approach is to select a leading strategy of differentiation and support it by additional ones.
Once you are clear on your differentiation you are clear on USPs you communicate to your customers and that will be the core of the context of your product.
The last but not least topic you should keep in mind while defining your differentiation strategy is how to sustain it and to create barriers to entry. The higher the barriers are, the harder it is for competitors to catch up with your product. If you are not in the field that requires considerable R&D efforts and strong technical competencies and this directly defines your main vector of differentiation you can try patent protection to lock out competition and win some time. However, for this your differentiators should be strong enough. Especially if you are just starting there will be a temptation from already established companies to replicate your solution. So think about the ways to protect your differentiators from the very beginning, at least be aware that this might come.
If you are interested in the topic I can recommend Product strategy for high technology companies by Michael McGrath and Obviously awesome by April Dundorf as two resources that made me think this topic through. Enjoy reading!
