This “Visible Expertise” will become the foundation of your professional services brand. If it can pass these three critical checks, it is worth developing into a broader differentiation strategy: Differentiators can’t be fabricated. We study the impact of trade liberalization on the international strategy of firms (to export and/or invest abroad as well as the number of products to be produced and exported) when product differentiation is endogenous. What Is the Cost of Video Production for the Web. Our research, positioning and branding services — as well as our Visible Firm® and Visible Expert® programs — are designed to do just that. Your differentiation strategy is the way in which you make your firm stand out from otherwise similar competitors in the marketplace. B. a. In this research, five dimensions of differentiation strategy were studied including pricing, value-added products, operating procedures, distribution network and customer incentive programmes. No special training. The risks of the differentiation strategy include: d. a decision that the differentiated features are not worth the price. Have you been competing for work that you are more than qualified to perform, only to be underbid by your competition? A. A differentiation strategy involves the firm creating a product or service, which is considered unique in some aspect that the customer values. Differentiation Strategy Rather than costs, a firm using the differentiation strategy tries to invest in and develop features that differentiate its goods or services in ways customers value. And that difference must be valued by your potential clients. If your firm has extended the differentiation of the workforce strategy to strategic workforce customization, the choice of "A" positions will be linked directly to the system of performance drivers that populate the firm's strategy map. In any market, a quality hierarchy exists for a particular type of product that ranks products of one kind from a position of low quality to the highest quality product. Why? Usually, it involves highlighting a meaningful difference between you and your competitors. If a firm wants to be the cost leader, then its best bet is to get in first in order to deter the competition. How do you know you have a good differentiator? , both buyers and sellers of professional services understand the importance of an existing relationship, but sellers consistently underestimate the role their reputation plays in the final selection. Your area of expertise or other differentiator should be broad enough to be enduring and relevant to your clients. b. firms create products that have features customers value and are willing to pay a higher price for. And remember, you’ll need to deliver on your promises. Thus, Differentiation strategy is being used by all top companies for their products. A differentiation strategy is key to building your competitive advantage. In this research, five dimensions of differentiation strategy were studied including pricing, value-added products, operating procedures, distribution network and customer incentive programmes. The value of these different techniques, when put together as part of a differentiation strategy, has been proven time and again by clients that go through our Visible Firm® or Visible Expert® programs. Developing expertise as a differentiation strategy sounds like a great idea, but there is a catch. Commonly recognized differentiated goods include Toyota’s Lexus, Ralph Lauren clothing, and Caterpillar’s heavy-duty earthmoving equipment. . A differentiation strategy involves the firm creating a product or service, which is considered unique in some aspect that the customer values. In terms of the two competitive dimensions described by Michael Porter, using a differentiation strategy means that a firm is competing based on uniqueness rather than price while continuing to seek to attract a broad market (Porter, 1980). They have done the trusty old SWOT analysis and listed their strengths and weaknesses. In the end, what is most important is what plays into your target prospects’ selection criteria and decision-making process. These products and services are used in distinguishing a business from its competitors and if the strategy is successful the firm can create a unique market. Let’s say that hourly billing is widespread in your industry. And even if you were able to pull it off, what’s to keep a competitor from emulating your approach? Lack of direct comparability forces the prospect to focus on the incremental value of your difference. For example, we know that highly visible experts accelerate the growth of a firm by 1) attracting new leads and 2) making it easier to close them as clients. Set the price of the product based on the features of the product and purchasing power of the customer. Subscribe to Our BlogProfessional Services Marketing Today, Branding and Marketing for Professional Services, 1851 Alexander Bell Drive, Suite 350, Reston, VA 20191. is the way in which you make your firm stand out from otherwise similar competitors in the marketplace. Here are some of the benefits. This brings us to the topic of expertise and why it is so critical to professional services. Differentiation strategy is where a firm will produce and provide products or serviceswith unique features to attract users. One strong one can even be plenty. The differentiation strategy is one of the three main marketing strategies, along with the low-cost provider strategy and the focus strategy. As we outline in The Visible Expert, there are certain strategies and techniques that can elevate the visibility of your expertise in the marketplace. A differentiation strategy is focused on elevating the presence of a business within a marketplace and highlighting the things that make it different from similar competitors. This “Visible Expertise” will become the foundation of your, research into professional services buyers. Then you need to build the tools to make that plan happen. This particular strategy focuses on market research data to understand the client and also to identify what the current competitors are doing to fulfill what the market is expecting. But the only proven way to make your expertise visible and turn it into a credible differentiator is to have a clear strategy. A strong differentiator will provide a competitive advantage for your firm.Michael Porter, the famous strategist, maintains that there are o… Figures 1, 2 and 3 show the average increase in visibility, perceived expertise and new business leads experienced by firms that went through. Public speaking, writing blog posts and articles, and publishing books are all effective ways to demonstrate your expertise. STRATEGIC IMPLEMENTATION: After completing the strategy formulation, SHRM implement the strategy which is involved with five important variables. 43. Brand differentiation is a part of any comprehensive marketing strategy that your business can use to distinguish itself from the other offerings on the market. 45. Why? The research on evaluating a differentiation strategy is still evolving. Business Development Strategy: A High-Growth Approach, A 10 Step Brand Development Strategy for Your Professional Services Firm, Strategic Marketing for Professional Services, Digital Branding for Professional Services, 10 Essential B2B Marketing Strategies to Grow Your Professional Services Firm, Digital Marketing Strategy for Professional Services, Rebranding Strategies: A Step-By-Step Approach for Professional Services, Elements of a Successful Brand 1: Brand Positioning, The Top 5 Business Challenges for Accounting & Financial Services Firms, Find Your Differentiator: 21 Ways to Gain a Competitive Advantage for Your Firm, Elements of a Successful Brand 4: Brand Promise. Any irrelevant differentiators are wasted effort. They have become inured to — and learned to ignore — empty claims. b. to be able to charge a premium price for its product. In any mixed-strategy equilibrium in the quality differentiation model, at least one firm randomizes only between the two extreme qualities while in the horizontal differentiation model both firms may randomize among an arbitrary number of different locations in a mixed-strategy equilibrium. It is rewarded for that uniqueness with a premium price. Differentiation Strategy. These could include patents or other Intellectual Property (IP), unique technical … If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer. Developing and implementing a differentiation strategy is a five-step process. By Lee Frederiksen, Ph.D.  |   Product differentiation strategies Lorenzo Cinetto & Alexandra Mason 2. is superior to the one of other firms’ contributes to its performance” (Buzzell& Gale, ... differentiation strategy in the Kenyan tea industry and its effect on market share of tea export firms. b. Differentiation strategies based on distribution systems are generally unsuccessful. Author: Lee Frederiksen, Ph.D. Who wears the boots in our office? approach in which a firm purposes to establish and market an exclusive product for various consumer segments Differentiation aims at the broad mass market and involves the creation of a product or service that is perceived throughout its industry as unique. If a firm can achieve cost leadership and differentiation simultaneously, the benefits are great because differentiation leads to premium prices, and at the same time that cost leadership implies lower costs. Privacy. If a firm can achieve cost leadership and differentiation simultaneously, the benefits are great because differentiation leads to premium prices, and at the same time that cost leadership implies lower costs. “It should be stressed that the differentiation strategy does not allow the firm to ignore costs, but rather they are not the primary strategic target.” [2] If you could boil the differentiation strategy down to a manageable sound-bite, it would look something like this; differentiation enables a firm to command a higher price. But what about the argument that professional services are “a relationship business”? Your positioning statement is a short statement that describes what your firm does, who it does it for and why a prospect should choose you. This is a related point to the appeal of your difference. Differentiation strategy is where a firm will produce and provide products or services with unique features to attract users. More than one firm can compete successfully based on differentiation in an industry. Your positioning statement is a short statement that describes what your firm does, who it does it for and why a prospect should choose you. One of the most commonly-used strategic typologies was developed by Porter (1980; 1985), who identified two generic strategies: product differentiation and cost leadership. Broad differentiation strategy for many companies often relies on strengths. It is one of the generic marketing strategies that can be adopted by any firm. 27. Which of the following is FALSE regarding how a differentiation strategy can help a firm to improve its competitive position relative to the Porter five forces model? However, we’ve learned some important things already. A differentiation strategy is one in which: a. firms concentrate on ways to reduce cost as their primary focus. 46. Increase in Perceived Expertise. We have found that firms that research their target client group tend to grow faster. Research will help you align your firm’s offerings with the desires and preferences of potential clients. We conducted extensive research on highly visible experts and the professional services buyers who hire them. The differentiation strategy is one of the three main marketing strategies, along with the low-cost provider strategy and the focus strategy. STRATEGIC IMPLEMENTATION: After completing the strategy formulation, SHRM implement the strategy which is involved with five important variables. Figures 1, 2 and 3 show the average increase in visibility, perceived expertise and new business leads experienced by firms that went through Hinge’s Visible Firm program, which is based on the principles we’ve outlined in this article. Porter [ 10] suggests two basic corporate strategies that can be distinguished: a differentiation strategy and a cost strategy. 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