Pauline E. Ranger Every company is struggling to differentiate its offerings. They strive to establish an unassailable position in the market for their products, which will allow them to capture a large share of customers’ minds and wallets.
To their frustration, their customers often find that, no matter how expertly or enticingly they portray their solutions, their and their competitors’ solutions look remarkably similar. The Value Gap and the painful dry-run scenarios of no sales are often the result of painstakingly implemented solution differentiation strategies.
Theodore Levitt said twenty years ago: “The pursuit of meaningful distinction is central to the marketing effort.” Marketing is all about creating distinction with customers by differentiating What you do and How you operate. Everything else is derived from that. “Sellers have embraced Levitt in large numbers. The sellers focused first on the most obvious part of LeLevitt’sormula for differentiation and tried to differentiate themselves based on “w” at you do.”They created and marketed even longer and more obscure lists of features. Also, they made more complex bundles combining products and services.
The focus on the solution benefits was valid, but it became ineffective due to two factors.
First, competitors quickly copied the features that customers liked, and the differentiation between solutions vanished.
The second was a race for features, which soon exceeded the requirements and saturation point. Differentiation schemes are rendered meaningless when customers can’t see or recognize the benefits.
In the pursuit of differentiation, many companies have focused their efforts on the “h”w-you-operate” “portion of LeLevitt’s for “c” customer gaining a distinction.”
“the business model that your company was built on is the highest level of “h”w you operate.”Adrian Slywotzky (now a Managing director at Mercer Management Consulting) published a powerful exploration of business model innovations in 1996. In value migration, Slywotzky attributed the explosive growth of Nucor, Microsoft, and EDS to their ability to create and operate new types of business designs that more effectively delivered value to their customers.
Nucor, for example, won a leading position in the hidebound industry of steel by building mini-mills capable of converting scrap steel into bar and rolled metal. The promise and potential for business model innovation became a major driver in the rush toward e-commerce during the late 1990s. Slywotzky described these examples as “a” pattern of increasing Value Migration away” “from outdated business models to others better designed to maximize profit and utility for companies.
I” properly based on customer needs, new business models can provide a wealth of profits. It is more advantageous to be able to establish a distinct position in the mind of the customer using a new business model than a feature-based differentiation. Business design-based differences are subject to the same problems as feature-based differentiation. When competitors adopt the same value-delivery models (which is what they will do if a successful model is found), its differentiation power diminishes.
Your competitor does not have to be able to deliver the new model; they have to verbalize this capability to disrupt your advantage. If your competitors do not want to “me t, “you will create a race for new business designs. We risk being unable to meet our customers ‘ demands or their understanding levels.
It is not the concept of differentiation in its broadest sense that is at fault. We believe that differentiation based on solutions is destined to fail. In an Era 3 world, solution-based differentiation is a strategy that was used in Era 1 and Era 2. Marketing that focuses on “what” what’s on sale” is” a marketing strategy that may engender some curiosity and perhaps a few deals (usually from the small group who are always looking for the latest and greatest). It will not, however, generate the sales required to create a complex and profitable solution.
This is because, in complex markets for products and services, most customers don’t know how “cool” or” you” think your solution is.
Customers in the business-to-business market are interested in their strategies, how they can be implemented, and their problems. Problem-oriented Differentiation, or Diagnostic Marketing, is the best way to bring complex products to market. Diagnostic Marketing aims to create targeted messages to engage customers and help them move along the “pro” recession of change.”
I” is a spectrum that measures physical and objective characteristics to determine a customer’s willingness to act to solve a particular problem. The spectrum ranges from a satisfied state, where there is little or no motivation to change, to a crisis state, when the customer feels compelled to take action (which we describe as having the desire to change). Marketing messages often fail to take into account this progression.
The individual is also progressing through time as they move from the past to the future. Both the physical and mental state must be recognized. The present is their physical reality. This will be judged positively or negatively. They will then mentally travel into the future to explore the possibilities for change. This future is bound to contain their greatest hopes (the positive future) as well as their biggest fears (the negative future).
The fundamental principle that guides behavior change is: “People” won’t want unless they feel more pain by remaining the same than by changing.”
The” “psy” horology” of”change is a model for their behavior and how they progress through the change process. Diagnostic Marketing is effective because it recognizes this tangible progression and creates marketing materials and messages that are in sync with an individual of change.
