Competitive differentiation describes the methods a business uses to stand out from competitors and increase its market share when speaking and selling to a target audience. Differentiation strategy can take many different forms, whether changing a [marketing strategy](https://www.masterclass.com/articles/marketing-strategy-guide) to highlight a specific value proposition or investing in [product development](https://www.masterclass.com/articles/product-development-process) to create a model that can appeal to more potential customers.
Gaining a competitive advantage is essential in a crowded marketplace. With many distribution channels and [promotional campaigns](https://www.masterclass.com/articles/promotional-campaign) competing for customers’ attention, you must find a way to stand out from the competition. 

Competitive differentiation involves more than outdoing competitors’ products. Ideally, it entails creating a holistic business model that allows customers to view you as the superior business along multiple criteria for comparison.
When it comes to distinguishing yourself and your company, there are multiple ways to do it. Instead, several modifiable factors together serve a similar purpose:

1. __Brand differentiators__: Brand differentiators are how potential customers perceive your company as distinct from the competition in a [target market](https://www.masterclass.com/articles/target-market-guide). Creating greater brand awareness or [rebranding](https://www.masterclass.com/articles/rebrand-guide) is an essential aspect of standing out since the market is full of similar products that people may not be able to parse between based on product specs alone. 
2. __Channel differentiators__: The avenues you use to sell your product can also make a difference. Especially for a small business, going direct-to-consumer could be an excellent way to avoid getting lost among more prominent brands online or at brick-and-mortar stores.
3. __Price differentiators__: Naturally, price is often a significant factor for customers choosing between your and another company’s products. Developing a new product that you can sell at a lower price is one approach to price differentiation. On the other hand, creating a luxury product that you sell at a higher price point could also be a sound action plan. A higher-priced product may be part of an overall strategy to <a href='https://masterclass.com/articles/robin-robertss-tips-for-effective-communication' target='_blank' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://masterclass.com/articles/robin-robertss-tips-for-effective-communication","linkCopy":"communicate","category":"automated-link"}' automatic='true'>communicate</a> that yours is of higher quality than the competition.
4. __Product differentiators__: Product differentiators are the specific product features that make what you’re selling noticeably better than competing products.
5. __Service differentiators__: Customer experience is another differentiating factor in product marketing. If your company provides a higher level of service than the competition, customers may come to prefer your product. For example, investing in a responsive helpline to address customer needs and pain points can engender brand loyalty.
Differentiation strategies vary widely from business to business, but a preliminary approach to formulating one can start with the following:

1. __Conduct market research__. Studying customers’ habits and preferences will provide you with a basis for understanding their priorities and decision-making process. Learn [how to conduct market research](https://www.masterclass.com/articles/how-to-conduct-market-research) for your business.
2. __Perform competitive analysis__. It helps to understand what steps your competitors are taking—and whether they’re working—so you can stake out your corner of the market using a different set of strategies. Learn how to use [competitive analysis](https://www.masterclass.com/articles/competitive-analysis-guide).
3. __Synthesize and adjust__. Using factors like your available budget and target timeline, develop a plan to adjust your current strategy or devise an entirely new strategy if you’re rolling out a new product. Then execute.
4. __Follow through with appropriate marketing__. Once your reformulated strategy is in place, it’s time to communicate your position and what you have to offer to your customers. Learn [how to market a new product](https://www.masterclass.com/articles/how-to-market-a-new-product).
5. __Evaluate periodically__. Differentiation is an ongoing process as the market changes over time, so it’s a good idea to check in on both the competitive landscape and your customers' habits periodically.
Get the [MasterClass Annual Membership](https://www.masterclass.com/) for exclusive access to video lessons taught by business luminaries, including Sara Blakely, Chris Voss, Robin Roberts, Bob Iger, Howard Schultz, Anna Wintour, and more.
Figuring out the most effective way to differentiate from competitors is one of the most critical challenges a business faces. Competitive differentiation can take many forms and involve multiple parts of a company’s organization.

Figuring out the most effective way to differentiate from competitors is one of the most critical challenges a business faces. Competitive differentiation can take many forms and involve multiple parts of a company’s organization.

Differentiate From Competitors: 5 Ideas for Your Business

Competitive differentiation describes the methods a business uses to stand out from competitors and increase its market share when speaking and selling to a target audience. Differentiation strategy can take many different forms, whether changing a <a href='https://www.masterclass.com/articles/marketing-strategy-guide' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/marketing-strategy-guide","linkCopy":"marketing strategy","category":null}'>marketing strategy</a> to highlight a specific value proposition or investing in <a href='https://www.masterclass.com/articles/product-development-process' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/product-development-process","linkCopy":"product development","category":null}'>product development</a> to create a model that can appeal to more potential customers.

What Is Competitive Differentiation?

Gaining a competitive advantage is essential in a crowded marketplace. With many distribution channels and <a href='https://www.masterclass.com/articles/promotional-campaign' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/promotional-campaign","linkCopy":"promotional campaigns","category":null}'>promotional campaigns</a> competing for customers’ attention, you must find a way to stand out from the competition. Competitive differentiation involves more than outdoing competitors’ products. Ideally, it entails creating a holistic business model that allows customers to view you as the superior business along multiple criteria for comparison.

Why Is It Important to Differentiate From Competitors?

When it comes to distinguishing yourself and your company, there are multiple ways to do it. Instead, several modifiable factors together serve a similar purpose:<ol class="mc-m-4"><li class="mc-my-4"> 1. Brand differentiators: Brand differentiators are how potential customers perceive your company as distinct from the competition in a <a href='https://www.masterclass.com/articles/target-market-guide' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/target-market-guide","linkCopy":"target market","category":null}'>target market</a>. Creating greater brand awareness or <a href='https://www.masterclass.com/articles/rebrand-guide' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/rebrand-guide","linkCopy":"rebranding","category":null}'>rebranding</a> is an essential aspect of standing out since the market is full of similar products that people may not be able to parse between based on product specs alone. </li><li class="mc-my-4"> 2. Channel differentiators: The avenues you use to sell your product can also make a difference. Especially for a small business, going direct-to-consumer could be an excellent way to avoid getting lost among more prominent brands online or at brick-and-mortar stores. </li><li class="mc-my-4"> 3. Price differentiators: Naturally, price is often a significant factor for customers choosing between your and another company’s products. Developing a new product that you can sell at a lower price is one approach to price differentiation. On the other hand, creating a luxury product that you sell at a higher price point could also be a sound action plan. A higher-priced product may be part of an overall strategy to <a href='https://masterclass.com/articles/robin-robertss-tips-for-effective-communication' target='_blank' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://masterclass.com/articles/robin-robertss-tips-for-effective-communication","linkCopy":"communicate","category":"automated-link"}' automatic='true'>communicate</a> that yours is of higher quality than the competition. </li><li class="mc-my-4"> 4. Product differentiators: Product differentiators are the specific product features that make what you’re selling noticeably better than competing products. </li><li class="mc-my-4"> 5. Service differentiators: Customer experience is another differentiating factor in product marketing. If your company provides a higher level of service than the competition, customers may come to prefer your product. For example, investing in a responsive helpline to address customer needs and pain points can engender brand loyalty. </li></ol>

5 Types of Competitive Differentiators

Differentiation strategies vary widely from business to business, but a preliminary approach to formulating one can start with the following:<ol class="mc-m-4"><li class="mc-my-4"> 1. Conduct market research. Studying customers’ habits and preferences will provide you with a basis for understanding their priorities and decision-making process. Learn <a href='https://www.masterclass.com/articles/how-to-conduct-market-research' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/how-to-conduct-market-research","linkCopy":"how to conduct market research","category":null}'>how to conduct market research</a> for your business. </li><li class="mc-my-4"> 2. Perform competitive analysis. It helps to understand what steps your competitors are taking—and whether they’re working—so you can stake out your corner of the market using a different set of strategies. Learn how to use <a href='https://www.masterclass.com/articles/competitive-analysis-guide' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/competitive-analysis-guide","linkCopy":"competitive analysis","category":null}'>competitive analysis</a>. </li><li class="mc-my-4"> 3. Synthesize and adjust. Using factors like your available budget and target timeline, develop a plan to adjust your current strategy or devise an entirely new strategy if you’re rolling out a new product. Then execute. </li><li class="mc-my-4"> 4. Follow through with appropriate marketing. Once your reformulated strategy is in place, it’s time to communicate your position and what you have to offer to your customers. Learn <a href='https://www.masterclass.com/articles/how-to-market-a-new-product' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/articles/how-to-market-a-new-product","linkCopy":"how to market a new product","category":null}'>how to market a new product</a>. </li><li class="mc-my-4"> 5. Evaluate periodically. Differentiation is an ongoing process as the market changes over time, so it’s a good idea to check in on both the competitive landscape and your customers&#39; habits periodically. </li></ol>

How to Differentiate From Competitors

Get the <a href='https://www.masterclass.com/' target='_self' class='mc-text--link' data-mc-segment-trigger='true' data-mc-segment-event-type='Article Page Click' data-event-obj='{"textTag":"p","href":"https://www.masterclass.com/","linkCopy":"MasterClass Annual Membership","category":null}'>MasterClass Annual Membership</a> for exclusive access to video lessons taught by business luminaries, including Sara Blakely, Chris Voss, Robin Roberts, Bob Iger, Howard Schultz, Anna Wintour, and more.

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Figuring out the most effective way to differentiate from competitors is one of the most critical challenges a business faces. Competitive differentiation can take many forms and involve multiple parts of a company’s organization.

Figuring out the most effective way to differentiate from competitors is one of the most critical challenges a business faces. Competitive differentiation can take many forms and involve multiple parts of a company’s organization.
