Book Review: Differentiate or Die by Jack Trout

Posted on February 3, 2009
Filed Under Book Reviews |

Knowing how to differentiate your product or service in these challenging times is not only increasingly important, it is vital to the survival of your business.

The second edition of “Differentiate or Die” was released this year (2008) and includes up-to-date information and tactics on how businesses can survive in an “era of killer competition.” More than ever before, business owners and managers – regardless of the size of your organization – must have a strongly defined competitive positioning, and Trout explains what warrants ‘differentiation’ and how to position a differentiating or unique idea.

Recent studies show that the absence of clear differentiation is on the rise and this is a troublesome trend, especially for small business owners. Differentiation is based on the consumer’s perceived value of your product/service. Sometimes it is real value; sometimes it is based on individual perception. Sometimes it is rational; sometimes it is emotional. The bottom line is if you are not leveraging your uniqueness and attempt to be everything to everyone, you are undermining your true value and specific niche in the marketplace.

Generally speaking, the marketplace is saturated and consumers are overwhelmed with the number of endless choices of where to spend their money. While variety and choice are considered to be good from a purchasing perspective, at some point too many choices are just too confusing for consumers. This is why a clearly defined value proposition of why you’re better or different than the next best alternative is imperative.

Trout reiterates that every business owner needs to identify and articulate his or her Unique Selling Proposition (USP). If you have not determined what makes you and your product stand head and shoulders above the crowd, follow these simple steps:

  1. Every message or promotion to your customers must make a proposition to the consumer. Clearly state what benefit(s) they will receive if they purchase your product. Give them a reason and desire to make a purchase.
  2. Your proposition must be unique enough that your competitors cannot easily copy it. It should be based on something your competition does not – or preferably cannot – offer.
  3. Your proposition must be so unique and powerful that it will draw new customers. The more you de-emphasize price and emphasize value, the better. (As a matter of fact, do not base your differentiation solely on price. Without strong branding, your prices will fall, your competitor’s prices will fall, and so will profit margins all the way around.)

It goes without saying, but never lose sight of the fact that the consumer is king. Their behaviors, thoughts, perceptions, and actions can make or break your company. Be sure you not only keep up with their ever-changing demands, but that you exceed their expectations. Your products or services should be positioned so you are offering your customers MORE than they think they need or MORE than they have come to expect from such a product. Again, it all comes down to their perceived value.

Michael Porter, an accomplished author and professor at Harvard Business School, is also a world-renowned expert on competitive strategy. In a paper entitled On Competition, Porter clarifies the difference between operational effectiveness and strategic positioning. Trout summarizes it as follows (pg. 42-43):

Operational effectiveness means simply performing better the same activities your competitors perform. This can be a source of short-run competitive advantage, but in the long run it’s nowhere near sufficient. As companies race to benchmark each other, [they] become more alike. “Operational effectiveness means you’re running the same race faster [than your competitors],” Porter says. “But strategy is choosing to run a different race because it’s the one you’ve set yourself up to win.”

Lead your own race. Focus on being the very best at one thing. Never stop educating yourself on your industry and your customers. The more you understand your customers and how their minds work, the better you will understand product positioning. Constantly refine your offering and your message to stay at the forefront. At the same time, never lose sight of your original identity, brand, and uniqueness as your company grows. In the long run, your company will be well positioned to succeed because you have based your USP on real value and differentiation. Failing to address these foundational aspects will hinder your efforts to grow and your ability to surpass your competition. Back to the original message: differentiate or die.

This book – and it’s simple message – is a must read for all marketers and entrepreneurs. It is a rather quick read, but chock full of great insight and ideas to help refine your competitive positioning. Pick up a copy to discover which differentiating ideas really have staying power and are most effective for your business.

On a scale of 1-5 (5 being the highest):

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