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 Work at Home Moms > General Internet Marketing Articles > Price Differentiation

Price Differentiation

Learn how to "sell" what makes your business different from the hundreds of others out there. From price differentiation to focus differentiation to product/service differentiation and customer service differentiation.

Are you ever frustrated or hesitant when you talk to prospective customers because you can't readily explain why they should come to you rather than go to your competitors? Sure, you might have your 30-second elevator speech, but then they ask you that dreaded question, "So what makes you different?" Then, all those self-doubts creep in, and you just aren't sure what to say. Differentiation can boost confidence--yours in yourself and that prospective customer's confidence in you!

   Dif-fer-en-ti-ate v. tr. To perceive or show the difference in or between; discriminate.

In business terms, to differentiate means to create a benefit that customers perceive as being of greater value to them than what they can get elsewhere. It's not enough for you to be different--a potential customer has to take note of the difference and must feel that the difference somehow fits their need better. (Other words that mean virtually the same thing: Competitive Advantage; Unique Selling Proposition; or Value Proposition.)

As you are building your business, you can use differentiation to attract more customers. Once you have momentum, differentiation allows you to charge a higher price because you are delivering more value to your customers. Make a point to evaluate and adjust your differentiation methods at least annually.

The various methods of differentiating your businesses fall into four general categories:

Price Differentiation
Focus Differentiation
Product/Service Differentiation
Customer Service Differentiation

Price Differentiation
Differentiating on price is probably the most common and easily understood method. HOWEVER, for Solo Entrepreneurs, caution is in order. On the one hand, potential customers might expect a lower price from you than from your larger competition because they perceive you as having less overhead, etc. On the other hand, cheaper prices can evoke perceptions of lower quality, a less-stable business, etc. And if you compete on price against competitors with deeper pockets, you can price yourself right into bankruptcy. Be creative with this differentiator by competing on something other than straight price. For example, you might offer:

--More value--offer more products or services for the same price.
--Freebies --accessories, companion products, free upgrades, and coupons for future purchases.
--Free shipping, etc.--convenience sells, especially when it is free!
--Discounts--includes offering regular sales, coupons, etc. (see cautions above)

Focus Differentiation
For Solo Entrepreneurs, this is the most important method of differentiation, and in many ways, the easiest. Why? Because as a Solo Entrepreneur, you simply can't be everything to everybody, so you must pick a specific way to focus your business. Once you have done that, you have an automatic advantage over larger companies because you can become more of an expert in that one field --and you can build close relationships with key customers that will be hard to duplicate. For example, you might differentiate yourself through:

--Location--take advantage your closeness to prospective customers.
--Customer specialization--be very specific about what characteristics your customers will have-for example, racing bicycle enthusiasts or companies with a spiritual conscience.
--Customer relationships--know customers really well, form partnerships with them, and get them to speak for you!
--Affinity relationships--associate your product/service with a well-known person or organization.
--One-stop shopping--offer everything your target market needs, in your area of expertise.
--Wide selection (within your niche)-although this one may seem to be the opposite of focus--the key is to be very specific in one dimension and very broad in another.

Product/Service Offering Differentiation
How much you are able to differentiate your product or service offering will vary based on what type of business you are in. For instance, if you are in a highly regulated business, your options may be limited. Explore a totally new market or type of product or service, however, and the possibilities abound. The key to successful differentiation in this category, again, is to know your customers, really, really well. Talk to them often, and you will know what they need most and be able to offer it, long before your competitors know what is happening. For example, your product or service could stand out in one of these ways:

--Quality--create a product or service that is exceptional in one or more ways. Examples: Lasts longer
--Better
--Easier to use
--Safer
--New/First--be the first one to offer something in your location/field.
--Features/Options--offer lots of choices, unusual combinations, or solve a problem for a customer in a way no one else does.
--Customization--as a Solo Entrepreneur, you may be able to more easily handle special orders than big, mass-market competitors.

Customer Service Differentiation
Have you noticed how customer service seems to be out of vogue these days? This situation makes excellent customer service a great opportunity for differentiation and another natural advantage for Solo Entrepreneurs that already know what's important to their customers. Build your reputation on making customers feel really good about doing business with you. Works great with referral marketing, too. Examples:

--Deliver Fast--next day, or one-hour--make it faster than customers think possible.
--Unique channel--offer a service over the phone or Internet instead of in person or in their office rather than yours.
--Service-delight customers!--it may seem expensive to offer exceptional service--but it pays off in word-of-mouth advertising.
--Before/during/after-sales support--provide technical or other support to customers using your product. --You might use joint ventures to provide that support--but customers will perceive it as being from you!
--Guarantee/warranty--offer 100% money-back, or free replacement parts.
--YOU--offer yourself, your unique blend of talents and skills, to attract customers. Make sure they get access to you, too!

Keys to Successful Differentiation:

--Know your customers, really, really well.
--Pick a blend of differentiation methods that, in the eyes of your customers, truly sets you apart.
--Talk about your differentiation in terms of customer benefits.
--Tell everyone about what differentiates you--often.
--Keep your differentiation fresh by listening for changing customer needs.

******Find more articles like this at http://www.Solo-E.com - Keeping Solo Entrepreneurs Juiced in Business and in Life. Network with solo and small business owners in our forums, enjoy our newsletter and find other training opportunities.*******

biotext: Terri Zwierzynski is a coach to small business owners and Solo Entrepreneurs. She is also the CEI (Conductor of Extraordinary Ideas) at Solo-E.com. Contact her at: http://www.FastLaneDreams.com
articletext: People do business with people that they know and trust. As a solo entrepreneur, your goals will be to make yourself known to your target market and then elevate the relationship to the trust level. This process of building relationships can take many forms. Take a few minutes to review what is working for you in this area. Then consider these ideas to add to your relationship building toolkit.

30 Second Introduction

Have you upgraded your 30 second introduction lately? If you haven't revised it in the past year chances are the impact may be stale. A new introduction can spark your own energy which will show when you introduce yourself. Consider the use of powerful action words such as create, design, compose, organize, generate, solve, produce, and supply. Deliver it in front of a mirror and see what others see.

What do you have to give?

We often think of what we want to get from relationships. Things like a request for proposal, a new resource, a potential alliance, or a business contact or sale. Flip this over and consider what you are willing to GIVE to your network of potential customers. Do you offer sample products or trial services? Do you have free information that your target market can use? Can you provide a free evaluation of your client's current service provider? Keep in mind that building relationships is a two way flow that begins with you. Approaching these relationships in a giving, proactive mode is a terrific beginning.

Follow up, Follow up

The simple act of following up with individuals that you meet for the first time will make you stand out. Very few people use a consistent follow up method over a period of time. You must have contact information in order to implement this step. Successful follow up actions include handwritten notes (they stand out), e-zines, newsletters, holiday or birthday cards, an article of interest, and invitations to an event. Choose several actions that fit your personal style and do them consistently. Watch your network grow as you demonstrate an interest in building the relationship.

Tracking System

Consistency in building relationships will be difficult to maintain without a method to capture and maintain contact information in a practical way. This means being accessible and easily updated for changes. Contact software such as ACT, Goldmine, and Outlook were created for this purpose. Other options include business card files, Rolodex, Palm Pilots, and planner systems such as Day-timer or Franklin. Choose the system that fits your work style and schedule time for communication with your contacts and maintenance of the database. This nut and bolts step is an important part of building relationships over time.

Plant a Seed

Think of building relationships in the same way as planting seeds. In order for the seeds to grow, they need water, food, and sunlight over time. For relationships to grow, you provide opportunities for your network to get to know you, what you provide, and ultimately trust you with their business.

 ******Find more articles like this at http://www.Solo-E.com - Keeping Solo Entrepreneurs Juiced in Business and in Life. Network with other solo and small business owners in our forums, enjoy our newsletter and find other training opportunities.*****

biotext: Charlotte Farrior is a coach who works with people willing to invest in themselves.  Learn more about Charlotte at
http://www.corporatecoaching101.com.

 

 

 

 

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