Market segmentation alone is not enough to bring success. Other businesses will compete in any and every segment. So it is important to tailor an offer so that customers will see it as superior benefit to that of competitors. This is known as having a differential advantage.

Differential advantage is the unique benefits or characteristics of a firm, product/service or program that sets it apart from its competitors in the customer’s viewpoint.

Differential advantage can be obtained from almost any element in the marketing mix or a combination of both – superior product, more attractive design, better service, more effective distribution or better advertising.

The key is understanding that advantage is gained through research into what customers really value. The differential should be developed after careful consideration of:

• your product/service and its value to your customers
• significant benefits that it brings
• the difficultly in your competitors matching your offering.

A products/services differential advantage should be clearly defined in the marketing plan.

Visit the marketing module of the Small Business Tool Kit for further information, quizzes, case studies and interactive market planning tools.