Brand differentiation: price doesn’t cut it

A low-cost providerThere are several approaches to differentiating your business, product or service. As mentioned previously, looking inside at your strengths, your corporate culture and your vision, mission and values is a good place to start.

Then overlay that core with a look at competitive activity and consumer perceptions to see what positions are already taken by competitors and which may still be open and attractive and a fit for your offering.

Many companies take a different approach. They see an opportunity and rush in. Then they see if they can make the offering fit the position they’ve selected. Or perhaps a new CEO will try to differentiate using the same tactics used successfully in his/her last post. There are egos large enough to attempt to push their ideas through an organization not geared to accept or execute those ideas. Tension and confusion often results and the brand ultimately suffers.

Then there are several positions and methods of differentiation that are not easily executed or defended in the marketplace.

Low price is a poor differentiator

The first offender is low price. It’s not easy to differentiate by offering a low price because if a competitor wants the business bad enough all they need do is lower their price to buy it. Or perhaps they just periodically lower the price through volume sales, coupons, BOGO promotions, etc. And it won’t take long before you’ll have to lower your prices to maintain that position. It’s just a downward spiral where no one wins. Plus being lowest price doesn’t give you much room to promote those prices.

The one with the deepest pockets may drive others out or to another method of differentiating their business. However, raising prices will probably lose you market share because you’ve built your business attracting those to whom low price is the major buying influence. It’s hard to increase price without increasing value. But even if you do, most consumers will still believe you belong with the other low cost competitors and that the added value is just promotional chatter.

So unless you have the buying power of a Wal-Mart, playing the low-cost card is not a wise differentiator.

How about high price as a differentiator?

Now that’s a better idea – but only if you come to the table with additional differentiators. At the high end, people expect to pay more, but they don’t do so out of the kindness of their hearts. They expect to get their money’s worth. Whether it’s design, reliability, quality, rarity, heritage or some other differentiator valued by your target market, that’s what differentiates you, not the price tag alone.

So, in a nutshell, that covers pricing as a differentiator. My advice, look for a differentiator with more glamour and a higher barrier to entry.

Martin Jelsema

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