Marketing success through differentiationof anything Any product oi service can he differentiated, even the commodity that seems to differ from competitors’ offerings only in price Theodore Levitt On television we see product differentiation all the time, whether the subject of the commercial is a distinguishable good like an automobile or an indistinguishable good like laundry detergent. These are packaged products. How does the marketer differentiate a so-called commodity like isopropyl alcohol, strip steel, commercial bank services, or even legal counsel?
The author describes the attributes of products that give the marketer opportunity to win the customer from the competition and, having won him, to keep him. Finally, the author describes the alert, imaginative state of mind that characterizes good management of product differentiation. “The way in which the manager operates becomes an extension of product differentiation,” he says. Mr. Levitt is the Edward W. Carter Professor of Business Administration at the Harvard Business . School and head of the marketing area of instruction there. His articles in
HBR, which number nearly two dozen, include the well-known “Marketing Myopia” (published in i960 and reprinted as an HBR Classic in September-October 1975) and “Marketing When Things Change” (November-December 1977). His most recent book is Marketing foi Business Growth (McGraw-Hill, 1974)- There is no such thing as a commodity. All goods and services are diflferentiable. Though the usual presumption is that this is more true of consumer goods than of industrial goods and services, the opposite is the actual case. In the marketplace, differentiation is everywhere.
Everybody-producer, fabricator, seller, broker, agent, merchant—tries constantly to distinguish his offering from all others. This is true even of those who produce and deal in primary metals, grains, chemicals, plastics, and money. Fabricators of consumer and industrial goods seek competitive distinction via product features—some visually or measurably identifiable, some cosmetically implied, and some rhetorically claimed by reference to real or suggested hidden attributes that promise results or values different from those of competitors’ products.
So too with consumer and industrial services— what I call, to be accurate, “intangibles. ” On the commodities exchanges, for example, dealers in metals, grains, and pork bellies trade in totally undifferentiated generic products. But what they “sell” is the claimed distinction of their execution—the efficiency of their transactions in thir clients’ behalf, their responsiveness to inquiries, the clarity and speed of their confirmations, and the like. In short, the offered product is differentiated, though the generic product is identical.
When the generic product is undifferentiated, the offered product makes the difference in getting customers and the delivered product in keeping them. When the knowledgeable senior partner of a wellknown Chicago brokerage firm appeared at a New York City bank in a tight-fitting, lime green polyester suit and Gucci shoes to solicit business in financial instrument futures, the outcome was predictably 84 Harvard Business Review January-February 1980 poor. The unintended offering implied by his sartorial appearance contradicted the intended offering of his carefully prepared presentation.
No wonder that Thomas Watson the elder insisted so uncompromisingly that his salesmen be attired in their famous IBM “uniforms. ” While clothes may not make the man, they may help make the sale. The usual presumption about so-called undifferentiated commodities is that they are exceedingly price sensitive. A fractionally lower price gets the business. That is seldom true except in the imagined world of economics textbooks. In the actual world of markets, nothing is exempt from other considerations, even when price competition rages.
During periods of sustained surplus, excess capacity, and unrelieved price war, when the attention of all seems riveted on nothing save price, it is precisely because price is visible and measurable, and potentially devastating in its effects, that price deflects attention from the possibilities of extricating the product from ravaging price competition. These possibilities, even in the short run, are not confined simply to nonprice competition, such as harder personal selling, intensified advertising, or what’s loosely called more or better “services. To see fully what these possibilities are, it is useful first to examine what exactly a product is. What’s a product? Products are almost always combinations of the tangible and the intangible. An automobile is not simply a machine for movement visibly or measurably differentiated by design, size, color, options, horsepower, or miles per gallon. It is also a complex symbol denoting status, taste, rank, achievement, aspiration, and (these days) being “smart”—that is, buying fuel economy rather than display.