The Tactical Steps to Create a Competitive Advantage Differentiation Strategy

by Daria Kelly Uhlig, studioD

The "genetic strategies" Michael Porter introduced in his book, "Competitive Advantage: Creating and Sustaining Superior Performance," defined ways in which companies may compete with rivals at the business level. Cost leadership is the most obvious, as it entails gaining a competitive edge by selling a product or service for less than competitors sell their comparable products and services. Companies may also compete by implementing a differentiation strategy that creates value through emphasis on the qualities that make their products and services unique. Uniqueness, in this sense, is often perceptual rather than objective.

Enhance Physical Characteristics

Changing a product's physical characteristics may reduce customers' perceptions that one company's product is essentially the same as similar offerings from other companies. Sharpen your company's competitive edge with products the consumer perceives as having better quality or more functionality. Avoid complacency, however. As Mindtools warns, competitors with a differentiation focus on different market segments could prove formidable.

Create a Unique Product Mix

EcoFine cites HP as an example of a company that has differentiated itself with a unique product mix. It notes that HP began offering cables for its computers after it recognized that its customers were purchasing cables from other companies to use with their HP computers. Not only did HP create added value through its mix of products, it did so by saving the customer an extra shopping trip or, at the very least, the trouble off choosing an additional product.

Build Your Reputation

Differentiation isn't just about the product. It's also about the company's identity and its culture. A reputation for social responsibility, for example, works in concert with favorable product and service characteristics to inspire loyalty by encouraging the customer to build a relationship with both the product and the company.

Enhance the Customer Experience

Companies may create a competitive advantage by ensuring that customers' experiences are positive at every touch point. A great product combined with excellent customer service and technical support, if applicable, can differentiate a product from those of its competitors.

About the Author

Daria Kelly Uhlig began writing professionally for websites in 2008. She is a licensed real-estate agent who specializes in resort real estate rentals in Ocean City, Md. Her real estate, business and finance articles have appeared on a number of sites, including Motley Fool, The Nest and more. Uhlig holds an associate degree in communications from Centenary College.

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