Sometimes it’s difficult to find a truly compelling way to differentiate your product or service. Try as you may, you just can’t find anything meaningful to stake your claim on that is any different than the rest of the pack. Don’t be discouraged…this happens to the best of us.
If you’ve spent hours brainstorming with your team and running the ink out of your whiteboard markers without having one of those “eureka moments”, maybe it’s time to look down a different avenue to find your differentiation. Have you considered how you might differentiate your company based on your business model rather than your product or service?
Numerous notable companies have differentiated themselves based on their business model alone. Dell Computer is a great example. In the early days, Dell’s direct to the customer model blew its competitors out of the water. The direct model allowed Dell to offer customized products to each customer at a lower price because the product didn’t have to go through all the markups at each stage in the distribution channel. It also helped Dell minimize inventory which provided another competitive advantage. Their product was basically the same as their major competitors (HP, Compaq & IBM at the time). It was their model that gave them the edge to capture the dominant position in the PC market at that time.
Other companies like Pampered Chef and Southern Living also forced their way into crowded markets by implementing a unique business model. Both of these companies chose to forgo the typical approach to selling kitchen and house wares through retailers. Instead, they leveraged a large and willing network of housewives who wanted to make a few extra bucks while raising their kids. Using home parties that leveraged preexisting networks of relationships, sales at these companies exploded rapidly. Very Clever!
Adobe was able to quickly capture new customers by seeding the market with their Adobe Reader (which used to be called Acrobat). They solved a significant problem which was incompatibility of files types being shared across operating systems and application types. Major players like Microsoft, IBM and Apple controlled the space so it would seem impossible for Adobe to wedge into the market. But, they did by giving away the Reader which created a huge base of worldwide users very quickly. Then they made money off of end customers and other software companies who bought their software to convert files to into their standardized format. Ingenious!
Lastly, we’ll point to internet companies like Google and Yahoo. Do you pay when you execute a search on either of these sites? No. Why not? Because someone else is paying your bill for you. Google, Yahoo and many other companies use an advertising model where they offer a valuable service to one audience for free and make money by charging another audience (advertisers) who want to reach those customers. Brilliant!
Maybe there’s a way you can twist or tweak your business model that enables you pierce a bigger hole in the market. Rather than trying to differentiate on your product or service, you could find an innovative business model to employ. Consider the models described above and look across other industries to see if there’s a unique business model you could bring to your industry.
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