How does one differentiate?
People in the hospitality trade often ask me about differentiation. First of all, let’s examine the true definition of product differentiation. Product differentiation is a marketing strategy whereby businesses attempt to make their product unique to stand out from competitors. Businesses do this to gain an edge in industries where multiple competitors produce similar products. There are other methods businesses can employ to gain that edge, like pursuing a low-cost strategy and advertising, but while those are legitimate marketing strategies, they are different from product differentiation. Product differentiation means that some feature, physical attribute, or substantive difference exists between a product and all other alternatives.
Put simply; it is the process of distinguishing a good or service from others by providing something unique that is valuable to the buyers beyond simply offering a low price. I.e., making it stand out. An easy method of seeing product differentiation at work is to go to your nearest supermarket. Wander across to where the cereals are on display. There are several options – generic oats packed in very plain packaging, or Quaker oats – ‘serving up wholesome goodness in different ways’. Observe that the oats in the generic brand and those in the Quakers look almost the same. What differentiates one from the other is the superior and much more eye-catching packaging by Quaker.
Few, if any, businesses sell a product or service without any competition and being unique in the marketplace is a distinct advantage. However, as in our example, packaging alone, even when attractive, will not differentiate for long, unless the three elements of product or service differentiation are in-place. So, what are these three elements?
Convenience
Nowadays, no one likes to wait. In order to differentiate your product from your competitors, consider how you can deliver your goods and services precisely when they are needed. Did you know that 70 per cent of online shoppers say it’s important to see delivery times before buying? More significantly, 11 per cent – more than 1 in 10 sales – are lost if they aren’t provided. Precision allows customers to make choices based on their schedule and lifestyle. It makes buying online easier.
All of us at some point in time have faced a situation where the food we ordered at the restaurant took inexplicably longer than the twenty minutes it usually takes. I know of friends who avoid certain restaurants because everytime they went - they had to wait a long time for the food to arrive. One of many reasons why eating and dining are not the same.
Customisation
Customize to differentiate, but do it efficiently. The new generation of customers expects to get what they want, when they want it, customized to their taste.
We have moved from the era of mass customization to collaborative customization. Today, differentiated companies enable customers to determine the precise product offering that best serves that customer’s needs. For example, if I were renovating my hotel and ordered material for new curtains, a company that can deliver what I need… when I need it, will certainly earn my interest. However, the company that earns my business is one that in addition to promising the above, also offers to advise me on the style and colour that goes best with my hotel bedroom/s.
More hotels will make the effort to take the guest experience to higher, personal levels. This experience will become more customized, not just differentiated. A frustrating experience narrated to me by a friend was his visit to the dry cleaners. He dropped off his laundry at least once a week for more than a year. Yet every time he walked to the counter, he was asked his name and how he wanted his shirts cleaned? (it was always wash and press).Additionally, on every visit he had to tell them not to fold the shirts, instead put them on hangers. Not once did they greet him by name when he walked through the door! Now that’s a sad example of failure to customise.
Cost Recovery
Whilst customization is an important differentiation strategy, be sure to strike a balance between the revenue potential of the effort, versus the costs required to execute. Cost recovery does not mean been cheap. In fact it makes sense to spend a bit more to produce a product or service that most closely aligns with customer needs and expectations.
As Michael Walsh puts it “Companies that focus on providing the above three elements (apart from other factors), and keep improving on them continuously, will be in a stronger position to gain and retain a competitive advantage over their competitors. To put it simply, paying attention to these three ‘C’s will result in the Fourth: Commerce and commerce happens when your customer needs equal your ability to satisfy them, building in the process a steady flow of continued customer satisfaction and business growth”.
Shafeek Wahab – Editor, Hospitality Sri Lanka’, Consultant, Trainer and Ex-Hotelier
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