Although often defined as a marketing process, product differentiation is much more than that. In fact, it’s related to every aspect of the product and every part of your team, which is why it belongs right here, in the chapter about product strategy.
Unless you have an incredibly unique idea for a product that nobody has thought of before, chances are you’re going to enter a competitive market with lots of similar products already available. Product differentiation should answer the following question - what does your product offer that other similar products on the market don’t? What is the unique value of your product that makes it stand out from the competition?
This differentiation can be focused on any aspect of your product. Maybe you’re planning to offer a better, more beautiful design. Maybe you’re going to develop some unique features that your competitors don’t have. Or, you’re simply planning to offer a cheaper price and better customer support.
All these aspects are an opportunity for product differentiation, and ultimately product differentiation should motivate the customer to choose your product over another one.
Ideally, product differentiation should explain to your target audience how your product offers everything other similar products do and more.
Of course, to be able to differentiate your product from the competition, you first need to know who your competitors are and what they are offering. This is called competitive analysis.
First of all, you’ll need to create a list of your ten biggest competitors. After you compile that list, it’s time for a thorough analysis. You’ll need to define all relevant factors in your niche such as:
One of the most important things to analyze when it comes to SaaS products are the feature segments. Feature segments are the groups of features that are commonly found in your niche and defining them will help you create your initiatives and build your product roadmap.
To define the feature segments in your niche you’ll need to do the following steps:
Once you have your feature segments and a list of competitors. it’s time to create a competition grid where you will visually present your analysis. You can do that by using a table in Infinity.
Here’s a product differentiation example from Infinity.
1. We created feature segments such as Structure, Views, Attributes, Customization, Usability, Design, Pricing, etc. Each segment being a separate item.
2. Then we created a column for each of the competitors (including Infinity) in the shape of the ‘Rating’ attribute.
3. In each segment, we rated each tool according to how accomplished they are in this category - one star denoting poor performance and five stars denoting excellent performance.
For example, Infinity gets five stars in ‘Structure’ because of its powerful folders and subfolders, but it gets two stars in ‘Accessibility’ because it only has a web app for now, while mobile and desktop apps are on their way.
Check it out in the image below:
To create your competition grid in Infinity, you just need to edit our example in the template. Here's how:
Once you set up your competition grid, you will be able to see your competitors’ weak points and discover exactly how your product fits into the market and how it can stand out - whether it’s design, features, price or anything else.
But, with feature segments, you’ll also be able to notice your product’s potential weak points, which will help you understand how you can improve the product to outperform competition and give your users something unique and valuable.