Many people think that to be successful, you need to have a unique, unprecedented business idea to be successful in self-employment. But this is a misconception. Often it is the new, unprecedented business ideas that carry the highest risk of failure. If you take a look at the business world, you will quickly realise that there are a large number of companies that do the same thing at the bottom line – whether it’s local bakeries, app development companies or the chic trendy pub. Many of them are also successful – for one important reason: differentiation
In order to get off to a successful start with an existing business idea, you should look at how you can differentiate yourself from the competition. Because with a 1:1 copy of an existing business idea it will be more difficult to get new customers than if a differentiation from the competition is offered.
Here are a few examples of possible differentiation strategies:
Differentiation with location
If you are opening a new place of business, it is often not a good idea to look for a place of business that is directly opposite the direct competitor – unless you are much better. In that case you can take away the customers from the competitor right under your nose. (But then you have to live with a guilty conscience)
Ideally, you should become active in a new geographical area where there is no business with your orientation yet. However, it is important that there are enough potential customers in that area. If you want to open a trendy restaurant in a run-down industrial area, you probably don’t have to fear any competition, but there are also only a few potential customers.
Differentiation through geographical catchment area
The geographical catchment area for a service company or an online shop can be what the location is for a retail shop. For example, if your competitors concentrate mainly on Western Europe, a differentiation strategy may be to enter the Eastern European market.
Differentiation with quality
If you look at the furniture industry, for example, you can see that many market players differentiate themselves from others through product quality. For example, there are inexpensive, mass-produced dining tables that you can assemble yourself at home. As a counterbalance to this, there are expensive dining tables, which are manufactured and assembled individually according to the customer’s wishes.
But for quality differentiation you don’t necessarily have to offer a physical product. For example, a translation agency that offers two correction loops can differentiate itself qualitatively from a translation agency that does not have a correction loop and can therefore offer it at a correspondingly lower price.
Differentiation with service & offer
A differentiation strategy can also start with the service and product range of a company. For example, a hairdresser can differentiate himself from the competition by being the only hairdresser in town to offer a special service for small children or to make home visits to elderly people or perhaps even companies. For restaurants, differentiation through the choice of food could work.
But differentiation with service & offer also works for companies without a shop. For example, a web space provider can differentiate itself from the competition by offering better server performance or exceptional support. An agency can differentiate itself by offering a product that other agencies do not have in their portfolio.
Differentiation with target group
Your customer target group can also be part of your differentiation strategy. As a gastronomy business you can, for example, focus on target groups such as students, gourmets, vegans or other groups of people. Your product range will then naturally go hand in hand with the target group. If your restaurant is aimed at students, your menu should include many reasonably priced dishes. If, on the other hand, your target group is gourmets, then you need to offer people the highest quality cuisine and can make financial demands on the customer.
Differentiation with presentation & image
The appearance of your company can also be used for differentiation. Depending on how your appearance is externally, you will address other target groups. Car brands from the premium segment, for example, do a great deal to ensure that the entire attitude to life that the brand conveys to the outside world appears high-quality and dignified. This is also reflected in the design of the cars. But this strategy cannot only be applied to physical products. If, for example, as a management consultant you want to differentiate yourself from suit wearers in your industry, then it might well be an idea to put on a leather jacket and take the Harley Davidson to a customer appointment. You can be sure that you will recommend people to others as the cool consultant with the Harley – assuming you do a good job.
Being better than all the others
Differentiation can also take place by simply being significantly better than the competition. You can take advantage of competitors’ weaknesses and use them for your differentiation strategy. For example, if people at the competition are on hold for half an hour on average, you can build up a telephone support service that is there for people within minutes. If a competitor’s product is known to give up the ghost after a few years due to wear and tear on plastic parts, design a product that uses metal parts and also offers a much longer warranty.
Ultimately, there is a variety of differentiation strategies with which you can lead an existing business idea to success on the market. Which one you ultimately choose best depends on your business plan and the individual starting situation.
Beitragsfoto: @jopanuwatd via Twenty20