While many companies focus on cost leadership as a competitive advantage strategy, others’ main goal is to stand out from the crowd with something unique that differentiates them from the rest. And of course, this approach isn’t precisely easy to undertake with success, especially when we are talking about highly competitive industries.
For this reason, today I will show you some differentiation strategy examples that will hopefully inspire you on your own journey to gaining a sustainable competitive advantage!
What is a differentiation strategy?
As opposed to cost leadership, the differentiation strategy allows companies to take on an innovative approach for their products, and charge premium prices for it. For example, Starbucks goes beyond selling coffee by providing a unique coffee experience in their coffeehouses.
Building a successful differentiation strategy usually requires good research and development, innovation, but most importantly – having an in-depth understanding of what the customer really needs and desires.
But of course, I believe that the best way to understand this concept is to take a look at some practical cases. So, without further ado, let’s see some of the most brilliant differentiation strategy examples:
When we talk about differentiation, Apple is one of the brands that will most often come to our mind. Started in 1976 by Steve Jobs, Ronald Wayne, and Steve Wozniak, the company has had an unquestionable impact on the consumer electronics and computer software industry.
In fact, nowadays it is considered one of the Big Tech companies, also known as the Big Five – among Amazon, Google, Facebook and Microsoft.
Ever since its creation, Apple has been well-known for its innovative products, including their Macintosh line computers, the iPod, iPad, and of course – the iPhone. And it has successfully managed to distinguish them from their competitors through a multi-layered approach:
The iconic, elegant and minimalist design on all Apple’s products is one of the first things that makes the brand stand out from its competitors. Their products not only display a different visual style which is aesthetically pleasing, but is also well-thought to simplify the use of each device.
Differentiation strategy examples: Apple
This elegance and simplicity is highly valued by customers. And they are willing to pay a premium price for it.
Another factor, which of course is considered a part of the product, is Apple’s unique operating system. However, I wanted to differentiate it in another section because Apple could have stopped at just having a beautiful and visual product. Which, in some cases and depending on the product, can be enough for a company to differentiate itself.
But they didn’t! Apple also wanted to differentiate their products with an operating system that further enhanced user experience, bridging the gaps that were unseen or unaddressed by competitores.
The company’s pricing strategy is another factor that takes part in their differentiation strategy.
The prices for most of their products are significantly higher than those of competitors, set with the idea of being proportionate to the level of quality – with Apple still maintaining high profit margins.
2. Tiffany & Co
Next on our list of differentiation strategy examples is Tiffany & Co.
The jewlery company, which you may also know from Audrey Hepburn’s iconic movie “Breakfast at Tiffany’s”, is famous for its stunning hand-crafted and timeless designs. Founded in 1837, Tiffany & Co has managed to built a strong brand name that allows them to target a very particular niche target market.
And that is, wealthy and affluent customers who appreciate the high quality products and the outstanding reputation of the brand.
Differentiation strategy examples: Tiffany & Co
In the same way that we saw with Apple, Tiffany & Co aims to differentiate its products with stunning, unique, and hand-crafted designs that undoubtedly stand out from the crowd.
Additionally, the iconic blue boxes in which the jewlery is carefully placed have become a trademark logo of the company. All this attention to design and detail shows very well how the brand is aiming to position as distinctive and exclusive on the market.
Although establishing a reputable brand name takes a long time, Tiffany & Co has really put the extra effort in positioning itself as an innovative company with timeless designs. Over the years, they have built a solid brand image that helps with their differentiation strategy.
And last but not least, it is worth mentioning another element that differentiates Tiffany from their competitors: the high prices for their jewlery.
Similar to Apple, the company wanted to match the prices with the high quality and exclusivity of their products. However, they went further by setting up even higher prices and profit margins to make sure that they only reach their niche, affluent audience.
With a single piece of jewlery costing thousands of dollars, it is not difficult to see how:
While airlines like Ryan Air and Wizz Air have chosen the approach of cost leadership as a competitive advantage strategy, other companies within the industry are looking for ways to differentiate themselves. For this reason, next on our list of differentiation strategy examples is Emirates.
Differentiation strategy examples: Emirates
Based in Dubai, Emirates is the state-owned airline and flag carrier of the United Arab Emirates. The company operates about 3,600 flights per week to more than 150 cities in 80 countries.
However, what really differentiates them is not the number of flights or countries they go to. Let’s see what makes Emirates stand out:
Exceptional customer service
Narrow spaces between the seats, no entertainment and a limited variety of foods and drinks…Emirates can’t relate! The company provides exceptional service and commodities to their passengers, taking great care of them throughout their whole flight.
Even Economy class, the cheapest one from their offerings, includes:
- High-quality, regionally inspired dishes from the flight destination;
- In-flight digital entertainment with over 4,500 movies to choose from;
- Excellent customer service and catering;
- Complimentary beverages;
- On-board Wifi;
You get the point! As for First Class, all I need to say is that Emirates was awarded the airline with the Best First Class for 2020:
An important part of Emirates’ differentiation strategy is the fact that they invest a lot of money in the latest technologies available on the market.
From using advanced navigation technology for their airplanes to ensuring the best entertainment on board, their dedication to innovation is a fundamental part of the customer-centric experience that they aim to provide.
In my previous blog post Hermes Marketing: Why People Spend $300,000 on a Purse, I discussed the unique Marketing strategy of the French brand Hermés, and how they managed to convert their iconic bags into actual investment tools.
For this reason, next on our list of differentiation strategy examples is precisely this brand. Their brilliant approach to differentiation, combined with powerful storytelling, is what makes people spend thousands of dollars on a purse…and keep coming back for more.
But let’s see more on that:
The most important aspect of the company’s differentiation strategy is exclusivity. Of course, exclusivity is a very generic word, and we could say that practically any high-end brand tries to achieve it as a part of their unique selling proposition.
However, Hermés took this one step further with their famous Birkin bags.
Differentiation strategy examples: Hermés
To position them as exclusive and beyond, Hermés took the following approach:
- Difficult access – you can’t simply enter a Hermés shop and purchase a Birkin bag. You need to have a history with the brand, having spent a good amount of money on it over a consistent period of time. In many cases, you will have to wait to be invited for the opportunity of purchasing a Birkin.
- Waiting list – if you want a Birkin bag, you will not only have to wait for your invitation to purchase. You will also have to wait for your Birkin bag to arrive, which could take weeks and even months!
- Lack of choice – now, if waiting for a few months wasn’t enough, you will most probably not have a saying in what your bag will look like. They will offer you a model, and you can take it or leave it.
- Scarcity – Hermés Birkin bags are handcrafted, and the lack of massive production processes, combined with the high quality of the products, means that there will be not many bags like yours.
For example, there are less than 10 bags from the famous albino crocodile skin model in the whole world! And the most expensive one was sold at an auction for the incredible 380 thousands dollars!
As I just mentioned, the Birkin bags, but also all the brand’s purses and handbangs, are hand-crafted. In fact, they are all handmade by one artesan in a process that can take up to 48 working hours.
Despite the existing mass production tools and automatization processes, the company is still using traditional processes. Which is highly valued by their customers as well!
Next on our list of differentiation strategy examples is Tesla.
With a mission to accelerate the world to sustainable energy, the American electric vehicle company initially entered the market with the idea of targeting affluent customers in the luxury sector. Then, move into larger markets at lower price points.
Differentiation strategy examples: Tesla
But what makes the company stand out and differentiate from its competitors?
The first and most important point is product innovation. Tesla entered the automotive industry offering market-disruptive electric vehicles that people absolutely loved.
Their cars are not only environmentally friendly and extremely high tech, but also have a very distinctive and beautiful aesthetic. Over the years, many companies have tried building electric or hybrid cars, but none of them with the detail and elegant design that Tesla achieved.
But these are not the only aspects of Tesla’s product differentiation. Some others include:
- The possibility to customize your car;
- Regular software updates;
- Solar panels and supercharging compatibility;
- And self-driving features.
From the tech functionalities to the materials the cars are built it, it is no surprise that Tesla really managed to differentiate from competitors.
Another point of differentiation for Tesla is their Marketing strategy…or the lack of one.
According to Forbes, the company focuses more on referrals and word of mouth advertising rather than traditional TV advertisements and pushing their products onto the target audience.
And of course, let’s not forget that its CEO Elon Musk is a walking advertisement himself. From his iconic interviews to his even more iconic Tweets (and more than 30 million followers), he is constantly attracting the attention to both himself and Tesla.
And constantly creating controversy around himself as well!
6. Happy Socks
In this section, we are quickly moving from electric vehicles to colourful socks for our next company on the list of differentiation strategy examples: Happy Socks.
Differentiation strategy examples: Happy Socks
Happy Socks is a Swedish manufacturer and retailer of socks, underwear and swimwear, but they are mostly famous for their super colourful and vibrant sock designs.
From starting small in Stockholm, the company has now grown to over 12,000 points of sale across 90 countries, becoming a $100 million eCommerce business.
And here is why:
Again, we have another example of how a differentiation strategy can become successful by focusing on the product, and making sure that it stands out from competitors.
Happy Socks saw the opportunity to convert a simple everyday garment that people didn’t care much about to a fashion trend. Nowadays, you see many people proudly wearing extra colourful and over-the-top socks as a part of their outfit, in the most visible way possible (and it’s awesome!).
Differentiation strategy examples: Happy Socks
The company created high-quality socks with gorgeous and unique designs, and put them in beautiful distinctive boxes. In fact, they created such a great product that people started buying socks as a gift to their family and friends.
Storytelling & Happiness
Of course, it is not only about their fun and creative design that makes Happy Socks so unique. The company managed to build a great storytelling behind it.
From the Sock Factory, which is “like Charlie in the Chocolate Factory but with socks instead of candy” to the Sock Scientists (the founders of the company), the enchanting storytelling really gets you excited about the brand. You can read more about it here.
7. Harley Davidson
Our differentiation strategy examples list continues with the bike sector, or more specifically, the brand Harley-Davidson. Founded in 1903, the American motorcycle manufacturer is one of the oldest and most reputable companies in the industry.
Differentiation strategy examples: Harley Davidson
According to Wikipedia, it was also one of the two major motorcycle manufacturers to survive the Great Depression, among with many other periods of poor economic health over the years.
And although this information may not seem so relevant to our article, I think that this strength and resilience over the years has helped the company establish and maintain a rock solid reputation even today.
But here is what also differentiates them:
The sound of the V-twin engine in Harley-Davidson motorcycles is so distinctive that the company filed a sound trademark application in 1994. And although it was opposed by competitors and not given to Harley, this unique sound distinguishes the brand even today, at every point of customer interaction.
But this is not the only thing that makes the Harley-Davidson motorcycles so unique. The company is also noted for a customization style that gave rise to the chopper motorcycle style.
Community & brand culture
Harley Davidson has become so iconic over the years that it has established an entire community and brand culture around its motorcycles. The company has hundreds of fan clubs around the world, the oldest one of which can be found in Prague (founded in 1908).
There are also theme restaurants, such as the Harley-Davidson Las Vegas Café. The company attracts a loyal brand community all over the world.
With our next example, we are going to do switch direction a little bit, and move on to the Software-as-a-Service industry. Having said this, next on our list of differentiation strategy examples is Shopify.
Differentiation strategy examples: Shopify
Shopify is a Canadian multinational ecommerce platform that provides the necessary tools so that people can build their own business online. But what makes it so different from competitors? Let’s take a look:
The company is known for its excellent customer service. From 24/7 support to a live chat and a Help Center, Shopify has got its clients covered in case they need to contact them, no matter the time of the day.
However, Shopify also identified the communication and social media channels that their customers most often frequent, and took their support even further. The company actually made a Twitter account dedicated entirely to providing help to their customers.
In this account, people can tweet their issues and problems to Shopify, and they will receive responses for immediate assistance.
This company has managed to stand out in a very saturated market: cosmetics. For this reason, I couldn’t help but put it on our list of differentiation strategy examples.
Lush is a UK-based cosmetics retailer that has grown to operate in 49 countries, and is quickly building its way in the highly competitive industry. Here is what makes the company stand out:
Differentiation strategy examples: Lush
The first differentiation point for Lush is quality – not only in terms of ingredients, but also when it comes to the production of the final product.
All Lush products are 100% vegetarian, and about 85% are also vegan, often containing fruits and vegetables such as grapefruit juice, fresh papaya, vanilla beans, avocado butter, and aloe vera. Their products are also handmade, which is highly valuated by their customers.
The company’s values are also aligned with those of their target customers in terms of ethics and social responsibility. Instead of testing on animals, the company actually tests on human volunteers before selling their products to the public.
They are also involved in a series of donation and charity campaigns, such as the Charity pot campaign. Launched in 2007, the campaign generated over $33,000,000 in profits, of which 100% were donated to small organizations in the areas of human rights, animal welfare, and environmental conservation.
10. The Coca Cola Company
I decided to include the next company among our differentiation strategy examples because it is a very clear example of how to stand out across multiple areas. Let’s be honest, The Coca Cola Company is one of the most powerful brands in the world, and we can definitely learn a lot from it!
Differentiation strategy examples: The Coca Cola Company
Trademarks & Patents
Starting from their trademarks, The Coca Cola Company has done everything to ensure that their product will remain unique in the market of soft drinks.
The Coca Cola Corp owns the trademark to the name Coca Cola, including the trademark for the bottle shape, and even the graphic representation of the brand name. All these elements help distinguish the company’s iconic products on the market.
But of course, this is not all! Coca Cola also owns the patent of their famous soft drink formula, which means that no other company is allowed to make their cola using the same formula. They are also famously quite protective of it, too.
The Coca Cola Company achieves its differentiation not only through special packaging and branding, but also through its carefully positioned advertising.
The brand is famous for its unique and powerful campaigns that help spread their core values and mission: to inspire moments of happiness and refresh the world.
Differentiation strategy examples: Coca Cola
A great example is their multi-national Share a Coke campaign, in which they printed out cans and bottles with the 250 most popular names in each country. The campaign was subsequently rolled out in 80 countries, and managed to generate an incredible global impact.
As you might have probably noticed already, a lot of our differentiation strategy examples are focused on product differentiation. It is one of the most powerful and sustainable ways to stand out from your competitors.
Our next example, Nespresso, is following the same path. The Swiss-based operating unit of the Nestlé Group is a premium price coffee, and it is mostly known for its single-use coffee capsules.
The capsules, offered in stunning elegant boxes, are made of Aluminum and hermetically sealed, preventing the coffee aroma to degrade over time. (As opposed to a pack that has been opened).
Differentiation strategy examples: Nespresso
The company is currently offering a huge variety of options on the market, selling 28 different Original Line arabica and robusta capsules. They also release Limited editions occasionally, allowing their customers to select from a wide range of carefully selected flavours.
Additionally, the beautiful, elegant packaging gives out a sense of luxury and premium quality.
Another way Nespresso differentiates from its competitors are the company’s physical locations. The majority of its competitors doesn’t have stores exclusively for their capsules, and you are only able to purchase them in conventional stores and supermarkets.
Additionally, the company’s shops are not just any randomly looking shop. They are designed to create an experience once you are there, and feel that you are purchasing a very premium product.
The way their capsule boxes are ordered by colour and flavour only adds up to the high-end experience. You can also try their coffee right there, in the shop, which is something that competitors are not able to offer in a conventional store. Unless they do a specific try out campaign within the store.
Differentiation strategy examples: Royce-Royce
Next on our list of differentiation strategy examples is Rolls-Royce. Since its establishment in 1998, the British luxury automobile maker has been extremely successful in positioning itself as the provider of superior quality branded products, and here is why:
One of the main reasons why Rolls Royce has managed to establish itself as a leading super-luxury product is its exclusive craftsmanship.
The company, now owned by BMW, stands firm by their handmade motto, confirming that very little robotics is involved in the production of their cars. Some parts of the process, such as the paintwork, are automated by only for consistency.
In fact, no two Rolls-Royce are ever exactly the same – customers tailor their vehicles with variations in wood leather, colour, and other requirements. According to Business Insider, a whopping 84% of Phantom customers customized their cars with some sort of unique and bespoke design.
The luxury brand notes that “no request is left unexplored”. In the past few years, their design team has matched leather colours to customer lipstick, sourced wood from a tree on the buyer’s real estate, and they even found ways to incorporate wine glasses and picnic sets into their cars.
Differentiation strategy examples: Zalando
Our list of differentiation strategy examples continues with Zalando, a European e-commerce company based in Berlin, Germany that offers fashion and lifestyle products across 17 European markets.
The company has really managed to differentiate itself among thousands of other competitors in the clothing industry, and here is why:
Zalando offers an oustanding delivery and return service. In fact, you have 100 days (3 months!) to return your clothes for absolutely free, which is more time that most clothing and fashion companies will ever offer.
And the best part is, you will not have to explain yourself on why are you returning the clothes. You can select the reason if you want, but it’s optional and is only for their feedback in order to improve.
Another way in which their return service is exceptional is that they can actually come to collect your clothes from your own home if you don’t want them. Yes, you don’t have to go anywhere, and is completely free as well.
Another way in which Zalando stands out is user experience. Their platform is extremely intuitive and easy to navigate through, and you can easily mark clothes in favourites or check other buyers’ reviews.
Additionally, the platform will regularly offer you selected clothing pieces and collections based on what you’ve marked as favourite or what you’ve purchased. In other words, they build tailored collections that you may like, and needless to say – it’s working really well.
And I think that was all for today! Thank you for taking the time to read my article on differentiation strategy examples, and I hope I will see you in the next one! If you want to look at more examples, I suggest that you visit my articles:
- 3 Great SWOT Analysis Examples with Real Companies
- Top 7 Brilliant Cost Leadership Examples (in 2021)