Induced Differentiation

Posted by ben

July 2, 2008

Often, in this world of so many products we find that all of the products within a product genre share the same functional qualities. Finding a functional differentiator is extremely difficult. A functional differentiator is a product quality or feature that makes it different from another product in the same genre. For example, I sell a lot on eBay. I sell the same goods that a number of other people are selling. So, how do I differentiate and get people to buy from me instead of another seller? Smoke and mirrors.

The smoke and mirrors (aka induced differentiation) of marketing is the way that most companies position their brands to close sales. A colleague of mine worked for Associated Foods for several years in a product marketing advisory role. He tipped me off to a little known fact that I have used ever since.

Store label brands (Kroger, Topco’s, Great Value, etc.) are, 75% of the time, offer products that are in no functional way different from the brand names (Kraft, Duncan Hines, etc.). The only differences between these products are created through induced differentiation.

For example, the smoke and mirrors I utilize with my eBay sales are through more attractive listing pages. I use more pictures, more vibrant colors and better organization. In the screenshots I’ve posted above, I highlite some of the major differences that allow me to sell more than my competitors.

Take Home Message

To position your product closer to the pocket book of your prospective customer you need to differentiate it from the rest. If there are no functional points that can be advertised (and even if there are, ask yourself if the customer will be led to the sale from functional descriptions) then you need to induce the differentiation. This can be done with the following smoke and mirrors:

Status/Prestige: Change the label on your item and raise the price. Calvin Klein underwear, while it is almost exactly the same as the more generic Fruit of The Loom brand, sells for three to four times the cost because it has been differentiated as being a “high class” item for the prestigious. Poppycock? Yes, but it is poppycock that makes Mr. Klein a lot of money.
Style: Make it look different than the competitor’s product. I remember a time when Apple Inc. was on it’s way out. Then, through offering computers in bright and trendy new styles (while IBM was still making the boring old box) they were able to recapture a large share of the computer market. They have continued to differentiate their products through the use of style. David Sieger, a fellow blogger that watches Apple like a hawk, has a lot of great insight on how Apple has differentiated itself. In this post about next generation iPods he divulges us on this subject.
Affiliation: If Martha Stewart uses these towels, they most be quality. Shucks, forget I gave that antiquated example. A better example would be Tiger Woods. If he wears your watch, then it must mean that anyone who wears your watch is a great golfer, highly popular, or a friendly person. Why? Because all of those qualities are attributed to Tiger.