Sunday, April 3, 2011

Making A Difference (Apple, Wal-Mart)

Think Different 67/365
One of the things they teach you in business school is the importance of differentiation. How is your business going to distinguish itself from the competition? There are many different approaches that can be taken. You can differentiate based on cost like Wal-Mart. You can differentiate based on experience like Apple. You can differentiate based on quality like Rolls Royce, etc. It's important to know what your key differentiator is early and stay focused on it because this choice has significant implications on all aspects of your business. 

For instance, on the operational side of things if you are competing on cost you'll need to be obsessive about efficiency. This is the path Wal-Mart took. They are always looking to get a few extra pennies out of their vendors and find ways to save money. They developed their hub and spoke distribution model and invested heavily in technology early on because these innovations and others allowed them to deliver the appropriate products to their stores more quickly and at a lower cost. These operational efficiencies lowered their costs which in turn allowed them to maintain their desired margins while lowering the prices their customers paid.

It's important to keep in mind that you can't be everything to everybody. You can't be cheap and luxurious. You might appeal to the bargain hunter but people looking for luxury will almost universally ignore you even if your product does somehow manage to pull off being both inexpensive and of high quality.

Apple has been doing a great job of selling products based on creating a lifestyle for a long time now. They are very good and deemphasizing the technology that underlies their products and keeping the experience/functionality front and center. When the iPad 2 came out it was pretty much impossible to find the technical specs until members of the blogosphere got their hands on one and pulled it apart. Apple doesn't want you to know what is inside and they aren't going to tell you. This drives hard core geeks a little crazy but at the end of the day what matters in the case of Apple is the quality of the experience and for the vast majority of people the technical specifications do little or nothing to enhance that. In fact they can do the opposite. The iPad 2 is going to have a twelve month life span if past product release cycles by Apple are any indication. Right now the technical specifications of the iPad 2 are fairly impressive but in the fast moving world of consumer electronics the odds are they won't be six or nine months from now. By not touting the technical specifications of the iPad 2 Apple has framed the debate on what a tablet is supposed to be in a way that is very favorable to them while making it more difficult for their competition to gain traction. This is what good marketing is supposed to do.

Knowing what you want to sell is only part of the equation. Arguably it is less important than knowing who you want to sell to and what kind of approach is most likely to appeal to your target audience while distancing you from your competitors.

Image by bump via Flickr

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