Most people are familiar with the famous study by Clayton Christensen, a professor at Harvard Business School, which found that more than 30,000 new products are launched each year and that up to 95% fail. That statistic alone shows the intense competition companies face when trying to make a significant impact in the marketplace with their products. While there are many factors that need to be addressed for a new product to become successful in the market, product differentiation is certainly high on the priority list. Companies need to find a way to make their products unique to stand out from the crowd, and Product Information Management (PIM) software is a useful tool for this.
WHAT IS PRODUCT DIFFERENTIATION?
Product differentiation is the process of distinguishing a company's product and service offerings from those of competitors. It is a comprehensive marketing strategy that involves selecting the unique features of a product to make it more appealing to the target audience and then communicating those unique selling propositions (USPs) through marketing and advertising campaigns. The main purpose of differentiation is to create a competitive advantage to drive stronger performance in the market.
Currently, most industries are facing the challenge of market oversaturation. New products are introduced to the market so often, making it more difficult and even more important for companies to differentiate their products from the alternatives. Differentiation can be even more difficult when the products in question are generic. For example, there is usually no real difference between the different bottled waters sold. However, the different brands must find a differentiator to convince buyers to choose their bottled water on their next visit to the supermarket. Therefore, product differentiation is essentially about implanting the USPs of the product in the minds of the customers.
While product differentiation may seem like a function of marketing alone, in fact it involves almost every team within the company. It starts with the product management team that, after thorough research of the competition, defines the distinguishing features of the product. The engineering team must ensure that design and performance specifications are met during the building and assembly of the product. The marketing department then disseminates information about what makes the product special through campaigns. Customer service can also contribute to this process by providing customers with the necessary information as they answer questions. Essentially, differentiation involves every team, otherwise the process will fail.
WHAT ARE THE TYPES OF PRODUCT DIFFERENTIATION?
Product differentiation is often based on factors such as price, performance and visual appeal. Therefore, a company can differentiate its product by communicating that it is cheaper than the alternatives or more expensive to position it as a luxury item. Similarly, a brand can distinguish its product with a guarantee that it functions better than the alternatives or has a superior style and design. Less common differentiators are strong customer support and availability in select locations.
Typically, product differentiation is grouped into three types:
VERTICAL DIFFERENTIATION: This type of differentiation focuses on objective and measurable USPs, especially price, quality and performance.
HORIZONTAL DIFFERENTIATION: Here the differentiators are more subjective and include factors such as design, style and features.
MIXED DIFFERENTIATION: This involved a combination of both horizontal and vertical differentiation.
WHAT ARE THE BENEFITS OF PRODUCT DIFFERENTIATION?
Brands that successfully execute a product differentiation strategy will stand out from the sea of competitors. Consequently, such brands will attract and acquire new customers by building brand reputation and improving customer perception of their products and services. This competitive advantage will increase sales and drive revenue growth in many ways. In addition to selling more units, differentiation can help a company justify higher price points by convincing customers that their product is worth the extra cost. Finally, product differentiation helps increase brand loyalty, especially when customers try your products and reap the benefits promised in the advertising and marketing campaigns.
HOW CAN PIM SOFTWARE HELP PRODUCT DIFFERENTIATION?
Product Information Management (PIM) software is a centralized platform for storing, enriching and distributing product data. As such, it could play several important roles in helping companies convince customers to choose their products over those of their competitors.
Here are the five key ways PIM software helps with product differentiation:
COMPREHENSIVE MANAGEMENT OF PRODUCT DATA
A successful product differentiation strategy requires brands to disseminate rich product information that showcases differentiators to customers. Because PIM software provides a centralized database for effective product data management, it enables companies to effectively communicate the unique features of their offerings. PIM enables companies to create detailed product descriptions that capture the features, functionalities, dimensions, prices, specifications, performance statistics and other relevant details. In addition, PIM enables companies to manage the media aspect of product information, including images, videos and 3D media for creating a more engaging product experience. With the effective use of PIM, companies can organize and distribute data in a way that makes them stand out.
MULTI-CHANNEL CONSISTENCY
Consistent product information across all channels is an important ingredient for product differentiation. It ensures uniformity of branding and ensures a seamless omnichannel customer experience. By having consistent product information across multiple sales and marketing channels, it improves customer confidence in your brand's trustworthiness and trustworthiness and provides greater assurance that the advertised USPs are factual. PIM software enables this much-needed multichannel consistency. By managing product information in a central location, the uploaded data is distributed consistently during syndication. It also means that real-time updates are uniformly displayed across all ecommerce websites and marketplaces, mobile apps and social media platforms. Therefore, customers will never have reason to experience doubts and confusion about your product.
ACCELERATED TIME-TO-MARKET
Getting a product to market faster than the competition can be important to your product differentiation strategy. In the event that rival companies intend to market similar products, customers are more likely to market first, forcing the competitors to find new ways to differentiate their own products. By providing a single source of truth for product data, PIM software can help your brand's top competitors to go to market. This is possible thanks to features such as automated data enrichment, fast and efficient content creation and seamless integration with ecommerce platforms. These features ease the task of the product launch process and help companies maintain the competitive edge necessary for differentiation.
LOCALIZATION AND GLOBALIZATION
Localization and globalization are important strategies for companies selling across multiple regions, countries and continents. These strategies must be executed carefully because there is a small margin of error when tailoring product information to specific markets. Errors in the syndicated data can spread the wrong perception about the product. For example, an error in translation can change the meaning of the product information and reduce buyer interest. Similarly, errors in unit conversions can lead a customer who prioritizes size to believe that the product is larger or smaller than it is, causing the individual to lose interest. Using PIM to execute localization and globalization strategies mitigates the risks of such errors while ensuring compliance with regional regulations and cultural preferences.
PERSONALIZATION AND CUSTOMIZATION
If your company's unique selling proposition is offering customizable products and tailored experiences, PIM software is sure to come in handy. For example, a furniture retailer might offer to let customers assemble their furniture by selecting upholstery materials, colors, and sizes. Similarly, a computer manufacturer may decide to allow customers to build custom computers by selecting their preferred processors, memory, storage, and chassis. In both cases, PIM software is required to manage the variations, attributes, pricing and configuration to ensure a smooth customer experience. That's why PIM software helps companies deliver tailored experiences that differentiate their brand.
In short, product differentiation is an important strategy to differentiate your product from the many alternatives on the market. Failure to achieve differentiation leads to poor sales, but success in executing that strategy will yield revenue growth and competitive advantage for years to come. PIM software is essential to that success by enabling efficient and seamless product information management.
