Product Differentiation vs Marketing Distinction

In high-tech, the golden mantra is all about product differentiation. Create a better product, be it software SaaS, hardware, or extra-ordinary services; and you will beat the competition. In my early days as an engineer and product marketer, life was simple and this notion ruled. But in today's world, product differentiation isn't enough for your marketing strategy. Whether you sell products or services, it is important to distinguish your product, and to develop a marketing distinction for your holistic company offering.

More than Just the Product

In the early 2000's research about perceived quality (including mine) found that between product quality and service quality, services prevailed. In consumers' minds, when purchasing a product and service combination, the service elements had a greater impact on the perception of quality of the entire offering. Abstract this concept and what it tells us is that to create brand loyalty, businesses need to provide good core offerings (product), and positive experiences (soft services), in unison. It isn't about merely providing a great product offer, and differentiating against like offerings. Building success in the market, like Apple's requires both building an exceptional core offering, then using sales, marketing, and soft services - to create a sense of marketing distinction.

Think about Apple a little deeper. Yes, they have been brilliant at creating new products and services that the world simply had never seen, nor understood that it 'needed' before. But, we don't just look to Apple and think of them as a brilliant group of visionary engineers. We also think of Apple as a brilliantly artistic design center. Steve Jobs made it his mission to create a distinction through the beauty and aesthetics of his offerings. But that's not all! With Apple stores, the amazing friendly service of the in-store experience, and the genius bar; Apple is also known for it's impeccable service offering. And on, and on. Apple has continually looked beyond mere product differentiation, to use multiple elements to create it's own market and marketing distinction. (Photo by Laurenz Heymann)

Product Differentiation

Old product-based thinking by engineers (like me), were that a product stands on its own merits. Key in on your unique selling propositions, set the product price to just below what the market will bear, and highlight teh vertical differentiation, or horizontal differentiation - to win the market over. Potential customers will flock to the best product. Their purchase decisions will be based on a combination of need severity, product quality, and relative strengths compared to competitive markets.

While this may be true of an ideal world (in the mind of a product marketer) - it isn't enough. In the real world, this model simply does not work. For a deeper discussion check out Does 'Marketing' or the 'Better Product' Win?

When Differentiation did NOT Work

Years ago, as a category manager at HP, my division was set on delving deeper into the professional photography printing markets. As for business strategies, this let us expand our pie slice into additional printing markets. It would let us hit higher value and hence higher price point offerings. It would drive an entire new line of very high margin inks and media (various photo grade papers, canvas, etc).

Being a company of very smart engineers, our product teams developed the ultimate in photography printing technologies. This new line was very highly automated, provided an incredible color spectrum for its output, pigmented inks provided hundreds of years of fade resistance, the image quality was immaculate, and the printer even had a built in color spectrophotometer. In all cases, this product was far superior to the pro-photo market leader's product (Epson). At the product level, mixed differentiation basically meant this was the world's most advanced, and fully automated pro-photo printer. Comparatively, HP had a PhD level printer versus Epson's lighter 'grade 8' level units.

But there was more to it. Despite having the best product in the world, there was a frustrating brand loyalty that Epson had built up over the years, in the pro-photo market. Product sales did NOT skyrocket within the first year, as expected. Unit inventories started stacking high in our warehouses around the world. We did a great job at differentiation by creating a vastly superior product, but building marketing distinction would take more time.

Marketing Distinction to Win

Winning over a new market takes more than a differentiated offering. This is an extremely important starting point, but it is just that. It is a starting point. To 'win' in market means you have to create a distinct position. This takes a very holistic approach, which includes your philosophy, product, soft services, business partnership approach, aesthetics, consistency, sales approach, and breadth of marketing efforts that brings it's own value to the offering. This holistic approach are elements of creating that marketing distinction.

It is not to say that HP did anything wrong, in the case above. We put out some great case studies, used professional influencers (very smart), had demo showcases, and so on. But creating that marketing distinction also required a long term commitment. The market required more time to adjust, and learn about the new and significantly better paradigm. Read more about the hidden story about how HP made an impact with a viral marketing effort in Viral Marketing: HyPe Case Study.

What is a Product Marketer to do?

Creating marketing distinction is a tall order. In B2B, it isn't just about creating a great brand image, good social media tactics, blogging, presence at events, good sales practices, social selling, ABM techniques, a good digital ad approach (SEM/SMM), and content marketing. It is about doing all these things well... AND ALSO about building a brand that adds value at every stage of the buying and usage cycle.

Marketing Distinction is about building a brand that adds value at every stage of the buying and usage cycle of your offering.

Ultimately, there are hundreds of options for marketers to help create this distinction. Besides the strategic elements (pricing, positioning, messaging development, etc), product marketers need to think about the how their content brings value to the prospect. Take a philosophy that the content must be useful to the prospect, to give your brand a distinct character. Your material isn't just there to persuade them to buy your product. Rather, it is there to help educate them, and guide them to the right decision - even if it weren't your offering. Doing so helps build your distinct character of credibility, expertise, and trustworthiness.

Think back to the initial remark about Apple. After purchasing an Apple product, they provide many core services to help the customer use it effectively. That includes help to configure, set up, and educate them on using various tools (software running on their systems). Beyond that, the Genius Bar is open to all customers for general help, and questions. Apple has taken their physical product experience, added core service offerings, and ensures they are doing well on their soft-services too. Soft services, being politeness, helpfulness, friendliness, and so on; of their staff. An Apple store is an inviting environment that adds value to the entire buying journey - that's marketing distinction!

Product differentiation is important, but don't stop there. Build marketing distinction into your brand at every stage of the buyer's AND user's journey.