A differentiation strategy is an effort or action taken by producers to create meaningful differences in the products and services they offer so as to generate value for consumers while at the same time creating a distinctive and meaningful perception.
Through differentiation, producers can provide more unique differences or characteristics compared to competitors, so that with these differences consumers perceive that the goods and services offered have a higher value.
Definition of Differentiation
Differentiation is a strategy that can maintain consumer loyalty where by using a differentiation strategy, consumers get a higher value when compared to other products.
According to Kotler (2009), one of the competitive advantages of a manufacturer is by providing a difference ( difference ) offered by producers that will provide more value to consumers than what has been offered by competitors.
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The following are definitions and definitions of differentiation from several book sources:
- According to Kartajaya (2010), differentiation is all efforts made by producers to create differences among competitors with the aim of providing the best value for consumers.
- According to Kotler (2009), differentiation is a way to design meaningful differences with the aim of differentiating a manufacturer’s offering from its competitors’ offerings.
- According to Hermana (2006), differentiation is the act of a producer to establish a set of meaningful differences in his product with the aim of differentiating the producer’s offer from that of his competitors, so that it can be seen (perceived) by the target consumer as having significant excess value.
- According to Ferdinand (2009), differentiation is a strategy that can generate consumer value, generate perceptions that are unique and good and appear as different forms that are difficult to imitate.
- According to Sugiyanto (2007), differentiation, namely that a product or service is not only different from existing products or services, but is also a point of excellence compared to the others.
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Aspects of Differentiation
According to Kartajaya (2000), differentiation can be built based on several aspects or dimensions, namely:
The differentiation dimension refers to the “what” value that producers offer to consumers. This is the tangible part of differentiation. Content differentiation as the main offering of products and producers to consumers.
Is a dimension that refers to the “how” ( how to offer ) producers offer value to consumers. Where producers differentiate themselves from existing competitors based on how to offer value to consumers.
Infrastructure ( infrastructure ). Factors that enable ( enable ) the realization of content differentiation, the context, where this dimension shows the difference from competitors based on technological capabilities ( technology ), HR capabilities ( people ) and facilities ( facilities ) that support the creation of content differentiation and context .
Differentiation Terms
Differentiation is an effort to create characteristics or differences in terms of content, context, and infrastructure. The Differentiation is also formed not only to be different, but must have a strong difference in the long term. According to Kartajaya (2004), there are criteria or conditions that can be used as a reference in building differentiation, namely:
1. Creating Excellent Value
A differentiation must be able to create excellent value for consumers so that these differences have meaning in the eyes of consumers. The excellent value in question is that the value offered will be truly unique and/or useful so that it is not just seen as a gimmick.
2. Competitive Advantage
Producer differentiation must have advantages compared to competitors. A differentiation will be strong if it reflects differences with competitors and these differences reflect the superiority of the manufacturer’s offerings.
3. Has Uniqueness
In order for differentiation to be strong and sustainable , it must have uniqueness so that it cannot be easily imitated by competitors. In order not to be easily imitated, differentiation must be composed of a set of interrelated activity systems where these activities mutually support one another constructively.
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Types of Differentiation
According to Kotler (2009), there are several types or forms of differentiation strategy, namely as follows:
1. Product Differentiation
Product differentiation strategy is a way of differentiation that aims to provide high creativity in making unique products more attractive and comfortable. and safe so that it will be more in demand by consumers compared to competing products.
A manufacturer can differentiate a product physically such as consistency, reliability, durability, or repairability.
In product differentiation, the product has the meaning or value that the producer makes a new product that is perceived by all consumers as a unique and different product. Products that have unique and different differentiations can be used as a characteristic of a manufacturer.
In this case, an advantage in the form of a superior position in an industry or market so that producers can improve producer performance because competitive advantage can be achieved from various competencies that are owned and enhanced through strategic assets that are typical of producers.
2. Differentiation of Service Quality
Differentiation of service quality is to realize high creativity in combining various elements of the marketing mix with hospitality and broad employee insight, so that the quality of service perceived by consumers will exceed expectations.
Quality is a consistent and efficient way to give consumers what they need and want. In addition to physical differences, manufacturers may vary the services that accompany the product, for example; consulting, delivery, installation, repair, training, servicing, and so forth.
Service quality must start from understanding consumer needs and ending with consumer perceptions, consumer perceptions of service quality are an overall assessment or superiority of a service.
Service quality is an important indicator that is even said to be the basis for evaluating customer satisfaction as the basis for creating value for consumers.
Producers anticipate and manage consumer expectations and show and carry out responsibilities to fulfill what consumers want.
3. Image Differentiation
Image differentiation is a special or distinguishing characteristic of the appearance of a person or object.
The Image differentiation is the mix of image elements that create a brand. Many manufacturers are successful in selling their products because their products have a clear image that defines their position at a potentially attractive point in the wide choice of consumers.
Image is an important meaning in business, an important image for a consumer is an image that is felt to have a difference from a competitor’s image.
In this case, the image in question is in the form of an image of the product and producers and consumers feel that there is a difference from the product used.
The formation of a unique image through advertising and sponsorship activities is proven to be more effective in achieving brand equity creation.
If the producer already has a good brand for consumers and has high brand equity, then consumer loyalty can be built by itself or in other words the producer already has a competitive advantage in the minds of consumers.
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Stages of Building Differentiation
According to Kartajaya (2004), to create a strong and sustainable differentiation, it is necessary to carry out the stages in building differentiation, namely:
1. Segmentation, Targeting And Positioning
The first step to build differentiation is to carry out targeting segmentation which is then followed by the formulation of product, brand and producer positioning.
Segmentation is a process of mapping markets and consumers creatively, after the consumers are divided into various groups, they will be used as the target market.
By knowing the target market you want to go to, it can be seen more clearly everything that is in the minds of consumers. So that producers can determine positioning in the minds of consumers that will differentiate from competitors.
2. Differentiation Analysis
From this positioning, the process of properly organizing the possible sources of differentiation, both those that already exist and those that have the potential to become the basis for differentiation in the future.
This process is carried out by looking at the extent to which producer resources have advantages and disadvantages from sources of differentiation through content, context and infrastructure to make differentiation superior to competitors.
3. Test Sustainable Differentiation
Test differentiation whether it is sustainable or not by analyzing the basic possibilities of differentiation that can be produced by producers in terms of content, context and infrastructure.
Several things must be considered in assessing the extent of sustainable differentiation, namely not easily imitated and unique. If the manufacturer’s products and brands are unique, they will survive because they are not easy to compare with competitors.
4. Communication
The fourth stage is communicating the differentiation offered to build a better perception, every aspect of the producer’s communication program must show the differentiation offered.
A good product is meaningless if it is not well received by the market. Therefore, manufacturers must communicate well the differentiation that is owned by producers to the market. To communicate differentiation, there are several criteria that must be adhered to by manufacturers, namely:
- Simple , communicate the differentiation you offer in simple language and short words.
- Meaningful , simple differentiated language and short words don’t mean to lose meaning. Choose simple language and short but meaningful words.
- Focus , the language of meaningful differentiation does not mean to be too much meaning, so that the market is confused. The communication that is carried out must focus on one point where the manufacturer will be different and leave competitors behind.
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Strengths and Weaknesses of Differentiation Strategy
Each existing strategy usually has its own strengths and weaknesses as well as the differentiation strategy. The advantages and disadvantages of the differentiation strategy are as follows:
1. Advantages of Differentiation
The advantages or advantages of the differentiation strategy are:
Differentiation will make our product or service more memorable to consumers. The differences that exist in our products and services will make it easier for consumers to remember the products or services that we market because of the point of interest that we have, namely the uniqueness that other products or services do not have.
2. Weaknesses of Differentiation
Weaknesses or deficiencies in the differentiation strategy, namely:
If the buyer does not see significant uniqueness in the product, the differentiation strategy can easily be matched by the low price strategy.
Differentiation fails to produce a qualitative improvement effect for the purchaser of the good, for example an increase in status.
Management is unable to detect the real needs of consumers. In this case, management usually only emphasizes the main attributes of tangible products.
The differentiation strategy will not produce optimal profits if imitation of the product can be done easily and quickly. Thus, differentiation almost always demands sustainable uniqueness that is relatively long-term.
The differentiation strategy also contains risks that are inherent in the possibility of a small market share being controlled. The characteristics of the goods and the high price make the target market limited.
The differentiation strategy is also not easy to apply if the difference between the premium price offered and the price of competitors’ goods using the lowest cost advantage strategy is too great.
It is not impossible for buyers to be willing to lose satisfaction because they decide not to buy differentiated goods as a result of possible savings that can be made by buying other goods that are much cheaper. This error is more likely to occur because manufacturers over-differentiate.