“Differentiate or Die!”
That’s a dramatic phrase isn’t it and it’s one I’ve seen a few times since I decided to specialise in helping small businesses to differentiate themselves effectively.
Differentiate or Die is also the title of a popular book by branding and positioning expert Jack Trout. I’ve seen it in the bookshops but I’ve been put off by comments that it is a rewrite of earlier books like Positioning by Jack Trout and Al Ries and the 22 Immutable Laws Of Marketing.
But is the phrase right?
Is it true to say that you either have to differentiate or be prepared for your business to die?I am biased and I believe in differentiation as a great way to profit but let’s not get too carried away.
I make it clear in my free report, The Profit Tipping Point, that there are five pathways to profit.
The first two relate to being an attractive industry where competitors are sensible and rational. Harvard Professor Michael Porter made in clear in his classic book, Competitive Strategy that there are good and bad industries depending on how the competitive forces apply.
If you’re in the right market at the right time, you can do well with little competitive advantage.
Indeed, I have to admit that in some markets, it does make sense to do what the best-selling competitors are doing and if possible do it a little better and sell it a bit cheaper.
What matters is winning customer preference and that doesn’t have to be by much – it’s like the old adage that the difference between an Olympic gold medal and silver is often a fraction of a second.
In this situation differentiate or die is an exaggeration.
Of course things do get more difficult when the market gets shaken up and demand no longer exceeds supply, if a new low cost and low-priced competitor enters the market with a good enough quality product or if customer needs change.
Returning to the work of Professor Michael Porter, if you don’t find yourself working in an unusually attractive industry where it’s easy to make good profits. Then you need a competitive advantage.
That competitive advantage is either:
- a cost advantage applied to a broad or focused market
- a differentiation advantage applied to a broad or focused market
There’s a clear message there too. You don’t need to differentiate if you have a cost advantage and trying to, could get you into the stuck in the middle problem. Ideally you’d want to be comfortably the lowest cost operator in your market but even being one of the lowest cost suppliers can be enough to give a good profit.
It is a hard life, scrimping and saving money in everything you do and that’s one of the big reasons why I believe that differentiation is a better way to work.
But with a clear cost advantage over the average competitors, it’s not differentiate or die.
The phrase “differentiate or die” is hyperbole.
It’s too dramatic.
The leopard hasn’t changed its spots.
I believe you should differentiate your business.
Even if you’re in an attractive industry where most firms can make good money, you’ll do better escaping the commodity trap and shifting focus away from price.
It’s also a much nicer way to build and run a business.
Differentiating a business focuses on giving your customers more of what they want and building a business to be proud of.
Logically and emotionally it makes sense to differentiate your business.
Differentiate or die? No.
But why make life and work more difficult than it needs to be?
Why encourage customers to be disloyal because you don’t do anything special?
It’s much better to think…
Differentiate and prosper.