Product differentiation: intangible and actual use

Marketing strategy development usually follows an STP approach: segmentation, targeting and positioning. In the targeting phase, marketers attempt to identify and articulate what differentiates their product from the competition. Normally, this product differentiation is based on two types of use criteria: intangible and actual use.

Toften and Hammervoll (2009) remind us that “intangible use criteria are related to non-economic purchase motivations such as style, prestige, or brand connotations”. Marketers will often use storytelling techniques to develop attractive intangible criteria for their brands. For example, food marketers frequently tell stories about how the ingredients are sourced, emphasizing environmentally friendly techniques. In another example, wine producers often develop elaborate stories about their regional identities, i.e. Tuscan reds, thereby highly differentiating wine originating from that region.

Actual use criteria are directly related to the product itself, such as taste, quality, functionality, ease of possession, or time. Again, using food producers as an example, marketers may talk about their transportation techniques to emphasize the freshness of their highly perishable food products. In another example, commodity food producers frequently emphasize the flexibility of their product, i.e. the product’s usage in multiple situations.

From a marketer’s perspective, the most effective targeting strategies use a combination of intangible and actual use factors to develop product/brand stories. Since consumers are most comfortable with a purchase when both their intangible and actual product needs are met, these combination stories appeal to both sides of a consumer’s internal product analysis.

References:

Toften, K., Hammervoll, T. (2009). “Niche firms and marketing strategy. An exploratory study of internationally oriented niche firms”. European Journal of Marketing. 43 (11/12), pp. 1378-1391.

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