Suppose your business creation project consists of establishing yourself in a market where there are already many competitors. In that case, it is preferable to work on a positioning that will allow you to differentiate yourself from your competitors. This strategy will allow you to interest a customer segment through your offer, better meet their expectations, and even build up a new market for you.
Why must the business creator differentiate himself from his competitors?
The search for a different positioning from that of your competitors must be one of your priority objectives for your company to create value. Moreover, in the presence of strong competition, it may even be the only possibility of successfully establishing yourself in the market.
Otherwise, you risk not being able to grow your business.
Suppose you have a similar positioning to your competitors. In that case, you will increase the supply in your market, which risks creating an imbalance with the demand level, thereby destroying value (by pulling prices down and therefore reducing margins).
This strategy can be justified if you enter a market where supply is significantly lower than demand; that is, your competitors are failing to meet the needs of a customers.
Differentiation from competitors can be based on the service provided, the product’s characteristics, or on innovations. To find avenues of differentiation with competitors, the business creator can work in stages:
- Identify and list your competitors,
- Describe the offer proposed by each competitor, using criteria to facilitate the work,
- Identify the purchasing criteria of the targeted clientele,
- Identify customer expectations that any offer has not resolved to date,
- Rank purchase criteria and expectations in order of importance.
Then, it will be a question of identifying if there are criteria or expectations for which no competitor has positioned themselves until today. If this is the case, you can take it into account in your positioning to differentiate yourself. Of course, you must have the means to adopt this new positioning. When innovation is essential, a sometimes very large budget may be necessary.
Two types of differentiation exist:
- The differentiation will allow you to fight against competitors, especially in the battle for quality/price ratio. However, your competitors can quickly position themselves on these. These differentiations do not create real value.
- Differentiation based on innovations will allow you to create a new market in which you will be alone (at least initially). It is these differentiations that contribute to the creation of value.