Is product homogeneity serious? 4 dimensions to teach you how to break through successfully!

If you are a company that produces cosmetic contact lenses, there were fewer competitors in the market in the past few years, and your products were of superior quality and reasonably priced, so you have been doing well.

However, driven by high profits, a large number of competitors have suddenly entered the market in recent years. The fierce competition has led to the gradual improvement of product quality in the entire industry. Consumers have more choices, but their own advantages have disappeared, and business has become increasingly difficult.

Why is this happening?

I believe many people know that this industry has become obviously homogenized.

When brands face homogeneity, the most common way to solve the problem is to lower prices - since their product quality cannot compete with yours, they will defeat you with low prices.

It seems that any marketing problem can be solved by lowering prices.

• "Product sales are not as good as before, so we're reducing prices"
• "The initial promotion of the product was slow, and the price was reduced"
• “Users reported that the product is a bit expensive, so we lowered the price.”

But it is undeniable that price reduction is in most cases a means for merchants to avoid thinking, rather than being used as a marketing strategy. Therefore, such "price reduction" is nothing more than a means of shifting the burden. It seems to work immediately, but it leads to the neglect of more fundamental solutions, thus creating a greater reliance on "price reduction".

So, as a business, when faced with the "invasion" of homogeneity, what can you do to successfully break through?

Of course it is differentiation.

That's strange. "Then price reduction can also be considered differentiation. With the same quality, my price is lower, which differentiates me from my competitors. Then how can you say that price reduction is not a solution to homogeneity?"

This is because price reduction is often used by businesses as a means to "escape thinking" rather than as a strategy to achieve differentiation. In this case, it cannot solve the problem of "homogenization". (We will discuss later in which cases “price reduction” can achieve differentiation)

I wrote an article before and talked about the essence of differentiation, which is to provide customers with a reason to choose you instead of others.

Yes, customers will choose you over your competitors for your low prices. But think about it again, how long can this state of "choosing you instead of your competitors" last?

It doesn't seem to last long, because once you get good benefits from these "differentiations", your competitors will quickly follow your strategy.

"Okay, if you lower your price, I'll lower it even more than you do."

So, in the short term, you differentiate yourself from your competitors. But in the long run, the final result will still be homogenization.

So what is the right approach to establishing differentiation?

The most common approach is to find an advantage that is commonly relied upon for survival in the industry, and choose to give up this advantage, making it difficult for competitors to follow up or not care about your strategy, thereby achieving differentiation.

What are the dimensions that can be considered to achieve "differentiation"?

1. Products

Differentiation in product dimensions is often carried out in an innovative manner.

Let’s look at the example of Southwest Airlines.

In the U.S. aviation market at that time, there were not only many airlines, but the services they provided were also relatively similar, so competition was very fierce.

Therefore, in order to break away from homogeneity, some airlines began to win customers by means of "lowering prices". This is of course very effective. The same service at a lower price can attract more customers. But the good times did not last long. Other companies saw the results and began to try to lower prices, and their determination to do so was even greater. In this way, the US aviation industry fell into a vicious circle of price wars.

Ultimately, the entire industry had to survive on meager profits, with some companies even facing losses, turning the aviation industry into a "public welfare undertaking."

Southwest Airlines is very smart. In order to avoid being involved in a price war, it abandoned the advantages on which it relied for survival in the industry (such as catering, high-quality services, etc.) since its first day of establishment. They do not have fixed seats, do not provide catering, do not have transfer services, and even cut their long-distance flight business, and only do short-distance flights.

However, in most people's perception, an airline company must enter the long-distance flight market, and short-distance travel is the business of trains and buses. This is tantamount to giving up the advantageous market on which the aviation industry depends for survival.

Therefore, this decision, which goes against the golden rules of the aviation industry, was not made lightly.

But how does this strategy perform in the long run? Can differentiation be maintained in the long term?

Of course. Imagine you are a member of the board of directors of an airline and you are asked to vote on whether to follow the Southwest Airlines model. Would you vote for or against?

It must be opposition.

If this model is copied, it means that flight routes, target users , service pricing, and even aircraft structure will have to change, which is obviously impossible for a company with an established business.

Therefore, due to the dilemma (the so-called dilemma is that even if they understand the reason, they cannot make changes), even if other airlines face bankruptcy, they will not imitate this model or follow this strategy.

In short, if you want to differentiate yourself from your competitors, you must find the advantages on which they rely for survival, even if this advantage is the "golden rule" in the industry, and you choose to give up this advantage in order to create continuous differentiation.

Just like, in the era of feature phones led by Nokia , the golden rule in the industry was "a phone with long battery life and not easily damaged is a good phone." However, when Apple launched the iPhone, it removed the advantages that feature phone manufacturers were most proud of - not only did the iPhone have poor battery life, but its large screen also made it not resistant to falling.

This way, Apple can maintain its differentiation over the long term.

Because mobile phone manufacturers, including Nokia, look down on Apple, believing that the iPhone is a "gadget" full of defects, not a regular mobile phone, and is unlikely to pose a threat to them.

In addition, as a disruptive product, the iPhone has a relatively small market size. Even if other companies want to follow up and make a similar product to compete with the iPhone, they will have to give up this business due to the company's growth needs.

This means that no feature phone manufacturer will easily follow Apple's approach.

This short-sightedness also led to the rapid decline of feature phone brands led by Nokia, with some transforming and some going bankrupt. But Apple has become the most valuable technology company in the world.

Similarly, in the radio industry, do you have the courage to abandon the golden rule that "radios should be huge?" If you can do it, you will be Sony's walkman. In the walkman industry, can you give up "the most important advantages of the walkman - screen display and song switching?" If you do it, you are Apple's iPod.

So think back, what are the widely recognized golden rules for the products in your industry, and what advantages are the most important for your industry to survive.

If faced with homogeneity, do you have the courage to abandon it all in order to establish new competitive advantages?

2. Channels

If you have tried many times and still find it difficult to find opportunities to differentiate the "product itself" (for example, if you are selling coal briquettes, it is difficult to establish differentiation), you can try the channel.

Here are two ways to maintain differentiation in channels over the long term:

1. The shift from “transactional e-commerce ” to “content e-commerce”

If the products in your industry are relatively homogeneous (for example, you sell books), and most brands survive in transaction-based e-commerce (such as Taobao ), in order to avoid homogeneity, you can transfer the channel to "content e-commerce."

In transaction-based e-commerce, there is fierce competition among book merchants. This is because books are extremely standardized products. Under the influence of the bidding mechanism, merchants have to consider factors such as the price of books, which are what consumers care about most.

Therefore, in the end, only two types of merchants can survive: bookstore brand merchants with high credibility and merchants who can offer truly low prices. However, many online bookstores are just small shops. Since it is difficult to become a reputable brand bookstore, in order to survive they can only lower the price of books to the lowest to attract readers. And when all small businesses think this way, a price war will not be far away.

Therefore, in the early days, Luoji Siwei did not open a store on Taobao (it later had a Taobao store because it purchased the exclusive copyrights of most books). Instead, it used popular video programs to attract traffic to its official account and opened a book mall on the official account.

The advantages of doing so are obvious. Compared to transaction-based e-commerce, which needs to lower prices to attract consumers, products in content e-commerce are not subject to too many restrictions on price because they are evaluated individually. Often, the emotions evoked by an article can drive sales.

(Recall the time you clicked on the link “Master workplace communication skills in 21 days” at the end of an article that said “If you can’t communicate, you’ll never get promoted” and placed an order.)

Let’s analyze further, will other bookstore brands follow Luoji Siwei’s example and become a content e-commerce company?

Most likely not.

Although content e-commerce does not face competition, it is far less than the huge traffic in transaction-based e-commerce. Even if it only makes a small profit, the final profit is still much higher than that of content e-commerce.

Luoji Siwei has no pressure to make a profit. The most valuable asset of an Internet company is its massive number of accumulated fans and users. Selling books is not a means of profit in the future (for example, its initial success was due to the huge number of users accumulated by Luoji Siwei).

The main profit point of an online bookstore is selling books. It is obviously difficult to meet profitability requirements by engaging in content e-commerce, which is a waste of time. Therefore, in the long run, online bookstores will not follow this strategy.

2. The shift from offline to online under the Internet thinking

What was the most important advantage of the mobile phone industry five or six years ago?

Well, it is a capillary-like channel that can penetrate into towns and villages. In the era when the Internet was not yet popular, the competition in the mobile phone industry was actually a competition for channels, and mobile phone manufacturers with more channels occupied more market share.

Offline channels require years of cultivation, and new mobile phone manufacturers have no competitiveness at all. So Xiaomi simply abandoned the "traditional channels" and only engaged in online direct sales.

So, in the long run, can Xiaomi maintain this channel differentiation?

In other words, will mobile phone manufacturers like vivo follow Xiaomi's example and also make Internet phones?

Let's take vivo as an example to see if it has the courage to follow Xiaomi's example:

If vivo also operates online, the online price can be reduced a lot because multiple layers of middlemen are cut out, but this will also seriously affect offline sales and damage the channels that have been cultivated for many years.

What if offline pricing is based on online pricing? Because of the different cost structure, offline operations will result in losses. If the online prices are the same as those of Xiaomi, the prices will be much higher than Xiaomi's and will not be competitive because they do not have the cost control ability of Xiaomi.

So to sum up, for a long time, mobile phone manufacturers such as vivo will not touch online channels. This gives Xiaomi enough

3. Pricing

As mentioned at the beginning of the article, many businesses reduce prices not to achieve differentiation, but just to boost sales. Such price reductions will not differentiate you from your competitors in the long run because competitors can easily follow suit.

Only when your cost control ability is stronger than that of your competitors can price reduction be used as a means of achieving differentiation. Because of cost constraints, it is difficult for competitors to continue to follow your strategy, so your low prices can become an advantage.

Let’s take Xiaomi as an example. The scale effect brought by the hot-selling Xiaomi mobile phone and the cutting of all intermediate channels have reduced the cost of Xiaomi mobile phones to the lowest level. Coupled with Lei Jun ’s Internet thinking of “making money from value-added services rather than hardware”, the gross profit margin of Xiaomi mobile phones is extremely low and is sold almost at cost price.

How can mobile phone manufacturers who only sell hardware imitate this?

For example, the market for razor holders is highly competitive, so Gillette simply offers razor holders for free and makes money by selling complementary products such as "razor blades." In this way, when the knife holder is only provided free of charge as a diversion product, those manufacturers who only produce knife holders will have no room for survival. This is not differentiation, this is annihilation of the opponent.

In short, if you want to differentiate yourself from your competitors by lowering prices, you must either have stronger cost control capabilities than most competitors in the industry, or you must have profit points other than products, such as making money through follow-up services or selling complementary products. All of these can maintain your differentiation in the long run.

4. Dissemination

In communication, the most common way to establish differentiation is positioning. Conversely, the positioning process is also the process of establishing differentiation. If the positioning is successful, differentiation will be established.

This is because after positioning, in the eyes of consumers, you are the number one in the new category. Business wars take place in the minds of consumers. Once you have a firm grasp on a concept, your competitors will not be able to follow.

Just like Uber’s main positioning as “fun” back then, as a competitor, will Shenzhou succeed if it emphasizes that it is also “fun”? Obviously not. Uber has already occupied the concept of "fun" in private cars, and no matter how much latecomers emphasize it, it will not change the situation.

So later, Shenzhou Special Car found its "interesting" disadvantage - insecurity, and released a series of posters focusing on "safety", and only then did it find its own advantageous position.

Therefore, the differentiation brought by positioning is difficult to be shaken by competitors, and the differentiation brought by this method is the most lasting.

But the core idea is still to find the advantage that competitors in the industry rely on most, then abandon this advantage, discover your own unique advantage, and thus successfully position yourself and establish differentiation.

Back then, there was a small island in the Caribbean with a very high unemployment rate - Grenada. Therefore, the local government is particularly eager to develop the tourism industry to solve urgent problems.

what to do? Is it really necessary to develop tourism like other local islands?

Not necessarily. As Grenada's competitors, the biggest advantage of other small islands is that they have been developed into tourist destinations.

Can we give up this advantage in order to differentiate ourselves?

The local government discovered that Grenada is the only undeveloped island in the entire Caribbean region. Because no one has developed it, it has become the island in the Caribbean Sea that has best preserved its original appearance.

So in the end they gave up the development plan and positioned Grenada as "the only island that retains the original appearance of the Caribbean Sea", which made Grenada famous almost overnight.

Conclusion

When an industry is plagued by homogeneity, the first thing most brands and businesses think of is differentiation, and to achieve differentiation they often choose to lower prices.

But in most cases, price reduction is not a strategy to establish differentiation, but simply a means for companies to avoid real problems.

In fact, to establish differentiation, price reduction also has prerequisites, such as you have stronger cost control capabilities than others, or have other profit points.

Just like in a long-distance race, you can slow down at will, but the prerequisite is that you must have the ability to "control rhythm" which most people do not have. Otherwise, once you slow down, you will never be able to speed up again.

The article introduces how to establish differentiation from four dimensions. But the core idea is just one thing - find the advantages that are generally relied on for survival in the industry, and choose to give up this advantage, making it difficult for competitors to follow up or not care about your strategy, thereby achieving differentiation.