1. A Secret Weapon for Startup Ventures
Differentiation
A Secret Weapon for Startup Ventures

2. Entrepreneurs have a million things to do. Why add one more?
11/11/2018
Mary Brice

3. What can good differentiation do for a startup?
Save time
Save money
Reduce uncertainty, which reduces risk
Increase revenue potential
Successful differentiation and positioning significantly reduce the number of items on your to-do list
11/11/2018
Mary Brice

4. So what is “differentiation”?
I want those things!
So what is “differentiation”?
(and how can I get some?)
11/11/2018
Mary Brice

5. Differentiation:
Is the process of creating and maintaining a meaningful and valuable difference between your product or service and those of competitors
Gives your product a distinct value, relative to competing products.
The process of differentiation gives you a competitive advantage. And it keeps you from having to compete on price.
11/11/2018
Mary Brice

6. Positioning:
Defines your product by the difference you identify or create
Communicating this difference gives your product a unique place in the minds of consumers
This process is just as available to entrepreneurs as it is to large corporations. And, often, entrepreneurs can do it better.
11/11/2018
Mary Brice

7. Differentiation requires 2 things1
A meaningful difference of your product from competing products 2
A specific target market you plan to sell to
Differentiation requires 2 things
11/11/2018
Mary Brice

8. But simply being different isn’t enough
But simply being different isn’t enough. Every product difference isn’t an added value.
11/11/2018
Mary Brice

9. Being competitive requires a product difference that is both meaningful and valuable to a particular target market.
11/11/2018
Mary Brice

10. A meaningful and valuable difference:
Comes out of customer insight (understanding the market need really well)
Drives which product features and benefits you include, and for what price
Is always relative to your competitors
Is always specific to a target market
Differentiation lets you be competitive against the big players in your market.
11/11/2018
Mary Brice

11. How do I set my product apart in a meaningful and valuable way?
Keep asking: “What does my customer really value?”
Stay hyper-focused on your customer insight
Ask your customers about their needs
Test any concept or MVP you have on customers
Don’t be a “focus group of one.” You are not always your customer.
How do I set my product apart in a meaningful and valuable way?
11/11/2018
Mary Brice

12. Don’t just copy competitors
Don’t just copy competitors. Instead, look for customer needs or wants they may have missed.
11/11/2018
Mary Brice

13. You don’t have to offer all the features your competitor does.
Don’t get attached to any one product feature.
Remove all features/benefits that are not needed or wanted by your customer
Don’t add features just because you can
Be willing to tweak features or even pivot as you learn about your customer
You don’t have to offer all the features your competitor does.
11/11/2018
Mary Brice

14. How can I find ways to differentiate my product?
Consider creative approaches to differentiation
Use analogy. Look at analogous products outside your competitive set. Also find analogous needs.
Add features and benefits that solve connected problems
Consider out-of-the box features
Remember that place is a feature. Consider different ways to deliver your product
How can I find ways to differentiate my product?
11/11/2018
Mary Brice

15. Yet different people value different things.
Okay, so I want difference, but only meaningful and valuable difference.
11/11/2018
Mary Brice

16. Sometimes very different.
11/11/2018
Mary Brice

17. 1 2 Positioning requires 2 things That’s why…..
Meaningful differentiation of your product from competing products 2
A specific target market you plan to sell to
11/11/2018
Mary Brice

18. What is a target market? Why can’t I just sell to everyone?
The particular set of customers you believe will have the most interest in buying your product
What is a target market? Why can’t I just sell to everyone?
Trying to sell to everyone spreads your marketing effort too thin
Then you can’t effectively sell to anyone
Defining a target market lets you maximize sales for any given marketing effort
11/11/2018
Mary Brice

19. Be clear about who you can sell to.
TAM—Total Available Market SAM—Serviceable Available Market SOM—Serviceable Obtainable Market
11/11/2018
Mary Brice

20. These limits to your market are actually good news.
Focus on the customers who want the differentiation you have created.
These limits to your market are actually good news.
Total available market (TAM): all potential customers of a product type
Serviceable Available Market (SAM): all potential customers for your particular product
Serviceable, Obtainable Market (SOM): limits your SAM by geography, sales channels, competition, trends, and other factors
11/11/2018
Mary Brice

21. How do I find my target market?
Ask these questions obsessively:
Who really benefits from your unique features?
Who is most motivated to change current behavior?
Who is left out by the current offerings?
11/11/2018
Mary Brice

22. Who is “just making do” with the current offering?
11/11/2018
Mary Brice

23. Any users, direct or indirect, could be potential markets
Look at all direct and indirect users of the product
Which users decide which features really matter?
Which ones have the money to pay for your product?
Which ones can you sell to least expensively?
Any users, direct or indirect, could be potential markets
11/11/2018
Mary Brice

24. The right market for your product may not even be the current buyer
And, finally, look at every link in the existing buying chain
Influencer
Expert
All other gatekeepers
Current buyer (for competitors)
Payer
Ultimate consumer/user
11/11/2018
Mary Brice

25. I get the 2 things required for positioning, but….
Let me get this straight.
I’m supposed to differentiate my product by adding features a particular market segment wants.
But I’m also supposed to find the market segment that will be especially interested in my product’s features.
This sounds circular (and possibly crazy).
11/11/2018
Mary Brice

26. So which comes first?
11/11/2018
Mary Brice

27. By the “right” mix, we mean the most-profitable one.
This is an iterative process
Either differentiation or target market identification can come first.
But they are usually developed iteratively, with changes to one leading to changes in the other.
Repeat the process until you find the right mix of features/benefits for the right target market.
11/11/2018
Mary Brice

28. And how exactly will this shorten my to-do list?
Differentiation will:
Save time
Save money
Reduce uncertainty, which reduces risk
Increase revenue potential
And how exactly will this shorten my to-do list?
11/11/2018
Mary Brice

29. 1. Differentiation saves lots of time, so you can be faster to market.
Seriously reduces time spent on:
Product design cycle
Marketing plan development
Customer identification
Selling story creation
Financial modeling (by limiting variables)
1. Differentiation saves lots of time, so you can be faster to market.
11/11/2018
Mary Brice

30. 2. It also saves money, reducing your costs.
Reduces all costs associated with time savings, plus:
Product production costs
CAC (cost of acquiring customer)
Wasted marketing spend
2. It also saves money, reducing your costs.
11/11/2018
Mary Brice

31. 3. Differentiation clarifies key unknowns, reducing your risk.
Reduces uncertainty (and therefore risk) around:
Which are the truly necessary features/benefits
What is the correct pricing
What are the right distribution channels
What are meaningful marketing messages
Which branding strategies will work best
11/11/2018
Mary Brice

32. 4. It increases your revenue potential.
Protects you from unnecessary price pressure:
Allows you to deliver the right features/benefits to the exact market segment that values them
So you can price your products to capture this value and
Avoid having to compete on price, which a startup can almost never do (Porter’s 5 generic competitive strategies)
If done well enough, your product captures the entire TAM or SAM of a smaller--but lucrative--market
11/11/2018
Mary Brice

33. How exactly is this a secret weapon for startup ventures?
11/11/2018
Mary Brice

34. Good positioning can give the startup a competitive edge.
It’s true that large, established companies use differentiation and positioning
It’s also true that they have lots of resources for research into market segments and customer needs
But the one thing that drives success in well- positioned products is customer insight
Good customer insight is not driven by $$$, but by fresh, creative thought
Differentiation and positioning rely on the strengths that come with being a startup.
11/11/2018
Mary Brice

35. These tools play to your strengths.
This favors the entrepreneur
You can understand customer better
You can see needs others miss
You can ideate features and benefits with a fresh approach
The key word here is “can.”
You can’t benefit from your competitive edge if you don’t use it.
These tools play to your strengths.
11/11/2018
Mary Brice

36. Micro-case study: Similar products, very different positionings
Traditional hotels
airbnb
Micro-case study: Similar products, very different positionings
Target markets:
Business traveler
High-end traveler
Large groups (i.e., weddings)
Risk-averse traveler
Time-sensitive traveler
Target markets:
Budget vacationer
Small groups (i.e., families, friends)
Risk-tolerant traveler
What features and benefits of each product help it appeal to its target market?
11/11/2018
Mary Brice

37. Leverage the strengths that come with being a startup:
your ability to get close to your customer
your insights into what your customer really needs and values
your speed in making product adjustments in response to these insights
Identify the right target market.
Differentiate your product in ways that have meaning and value for a particular market segment.
This allows you to position your product as meaningfully different from all of your competitors (even the largest ones) in the minds of your specific market segment.
Review of the steps
11/11/2018
Mary Brice

38. Using your secret weapon
How might differentiation work for your business?
11/11/2018
Mary Brice