Product Strategy — Part 4: Strategic differentiation

Create a unique and hard-to-copy product

This article is a part of the Product Strategy series. (Paid subscribers can access the template at the end of the article)

Netflix

I’ve been subscribing to Netflix for a while.

I find it hard to move to the other service like Apple TV+ or Disney plus.

With its original content, Netflix makes me think twice when I want to consider the other services. Not to mention, I can always get personalized recommendations based on my watching activities. Netflix has a unique product to offer.

That's precisely why product practitioners should care about strategic differentiation. As Michael Porter pointed out [1], if a product or service is unique, this strategy provides high customer loyalty. How could we continuously build a unique and hard-to-copy product?

Two steps to develop strategic differentiation.

First, you want to map out the competition around your product. Remember that your users can always access other products. The purpose of mapping the competitors is to give you a starting point on how would you differentiate your products.

Second, you can start brainstorming to find different ideas to identify unique attributes that make your product unique and hard to copy.

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Step 1: Defining your competitive landscape

The way to think about the competition is to consider two things: The direct competitor and the indirect competitor.

Direct competitors are companies that offer similar products. For example, Uber's direct competitors are Lyft or local Taxi. While indirect competitors are companies that offer different products that solve the same problem. Uber's indirect competitors are public transport, bike rentals, and walking on foot.

Even if the other products aren't directly related could be your competitor. We need to broaden our thinking. In the past, I have worked on a project to make a bookkeeping app for small businesses. One of the hard competitors to beat is basically pen and paper. Small business owners have created a paper-based system to manage their cash flow.