The differentiation strategy used in your business can be a critical element of success. I recently visited the Hunter Valley which provided a great case study on how small business can differentiate themselves in a competitive market. It was also clear, that in some small businesses, the owner themselves can be an important part of the differentiation strategy.

The Hunter Valley - Differentiation Strategy In Action

The Hunter Valley is a gorgeous part of Australia and is a premier wine growing region with the two main varietals being Semillon and Shiraz. With over 120 wineries there is plenty to keep you occupied. We enjoyed a one day wine tour while visiting that took in 6 wineries, an Irish Pub for lunch and cheese tasting. It was a great day and you get to really find out a lot when talking to the people who have made winemaking their business.

One aspect that really got me thinking was how do you make yourself standout when you have 119 competitors all on your doorstep? This is not an easy task, especially when everyone is essentially competing in the same market with the same product group (wine) and subject to the same environmental factors (e.g. weather and tourists). What differentiation strategy do you use?

A differentiation strategy can be based on various aspects of marketing – product, promotion, distribution, branding. Here are some of the types of differentiation strategy used by wineries:

Offering a unique product e.g. organic wines

Bringing in wine and/or grapes from other regions to make their own varietals not readily produced in the region

Creating a point of difference with their wine club (they all have a wine club). For example one winery includes local produce to complement the wine sent to members.

Limiting distribution to the cellar door and wine club members only which creates ‘exclusivity’.

Offering a complementary dining or food experience to allow customers to match wine and food.

Leveraging a big, well known brand eg Lindemans, Rosemount, McGuigans

It really was fascinating, but each of the wineries I visited employed an individual differentiation strategy and created their own unique experience. As a customer, I found some of these ‘experiences’ were definitely more enjoyable than others (not that there were any bad ones).

‘You’ As The Differentiation Strategy

Interestingly, the best experiences for me often came down to the ‘human factor’ and how well the product and brand were presented and explained. The wineries that absolutely triumphed were those where the owner was involved and their real passion for the product was evident. You can’t help but get drawn in by their story, making it all the more enjoyable.

As business owners, this emphasised what an important role ’you’ can play in making your business stand out from the crowd. Differentiate your business by putting yourself into it. There is only one ‘you’ and no-one else can copy ‘you’.

It is still important to look at other ways to get an edge, but this is one that will be truly unique to your business and create a differentiation strategy no-one else can replicate.

Until next time,
Samantha

Promotion Mix

The Promotion Mix is the mix of tools used to communicate with your target market and promote your business. While there are many different types of promotional tools that can be used in the promotion mix, their effectiveness and benefits can vary greatly from business to business. This is because all other marketing elements (target markets, product, price, distribution) combine to make every business a unique proposition in the market place. (Note: if there is nothing unique about the business, no amount of promotion will help in the long run).

Some of the promotional tools that small business owners can use in their promotion mix are listed below. This list is not exhaustive but gives an outline of the more common and cost effective options.

Advertising – local papers, newspapers, yellow pages, magazines, radio, online
Direct Marketing – direct mail, email marketing
Public Relations – online and offline submission of reports, articles and other newsworthy information
Promotions - trade shows, exhibitions, coupons, letterbox flyers,
Personal Selling – telemarketing, sales presentations,
Sponsorship – local fetes, community events, sporting teams
Website

While the above list may look daunting, it is likely only a few of these will be suitable for the promotion mix of your business. The important thing is to be using a range of tools, not just one or two. This creates multiple potential ‘touch points’ with your customers.

For example, if you are only using Yellow Pages, chances are you are missing business from anyone who no longer uses Yellow Pages, but now does all their searching on the internet. In contrast, Yellow Pages combined with some online advertising or direct marketing could round out the promotion mix and bring an increase in leads to your business.

A great example of a promotion mix using multiple promotional tools is Dell computers. Over the last 12 months I have personally seen the following promotions from them – Fax (one page specials flyer), Email (with links to website), Brochures (in the mail) and Advertisements (magazine and internet). I’ve been ‘touched’ many times, and guess what type of computer I use. Yep, a Dell. Their consistency and multiple touch points has, for me anyway, created top of mind awareness every time I’ve looked to buy a computer.

Now, while we don’t all have their budget, the point to note is they have utilised a diverse promotion mix to reach their customers. They would test and measure each tool in the mix - discard the ones no longer working, tweak the ones that are and try new ones.

Evaluate Your Promotion Mix

Firstly, list out all the promotional tools you currently use in your business. Of these, what are working and what aren’t? If you don’t know the answer to this, then it’s time to measure. Start by asking any new contact to your business how they found you and keep a tally.

It’s amazing how quickly you will get a picture of the effectiveness of your promotion mix. From here, you can start to make changes.

Until next time
Samantha

The economy may be in a downturn, but people still buy. They just spend their money differently than they would during better times resulting in recession proof products that actually prosper in such times.

The following changes in buying behavior highlight some recession proof products:

- Searches for domestic holidays are up as people cut back on overseas trips
- By exercising at home there is a saving in gym fees, so more people are searching for home gym equipment
- Sales of sausages have increased at the expense of steak
- Bread roll sales are up as more people eat at lunch at home or take it to work
- Cadbury has recorded a 30% increase in profits as consumers turn to chocolate as an affordable treat

More recession proof products are also discussed in the following video from CBS News.

Two major points from this report are – 1) People are buying what they need, not what they want and 2) Any product that has a ‘stay at home’ element, is prospering.

For small businesses that are already selling recession proof products, the news is good. Just remember, now is not the time to cut your marketing.

For others, it is important to respond to the current consumer mindset and behavior. Particularly if you have competition taking away sales as they are tapping into the changed behaviours (either intentionally or by default). There may be some simple changes that can be made to your existing products, or it may be necessary to completely review your offering. Either way, this needs to be a priority for your business.

Until next time
Samantha