Differentiation is Also a Sacrifice

The act of being different is also an act of exclusion. The very characteristics that make a product uniquely appealing to one market segment will inevitably make it unappealing to another. There is no choice in this matter: be different and sacrifice part of the market, or be generic and die.

The Two Sides of Differentiation:

• Inclusion: By tailoring a product to the specific needs and values of a target segment (e.g., Apple's "computer for the rest of us" for students and educators), you build a strong, loyal customer base.
• Exclusion: That same positioning and image can actively offend or alienate other segments (e.g., corporate America, which was put off by Apple's anti-establishment image).

The Strategic Imperative:

Companies, especially in high-tech, often have difficulty intentionally giving up a market. However, this is the very essence of a successful segmentation strategy. The barriers that you build to keep competitors out of your chosen segment also serve to confine you within it.

This is not a flaw; it is the desired outcome. A company should want to be in this "velvet trap" because it signifies a strong, defensible, and profitable market position. The alternative is to appeal to no one in particular and be vulnerable to all competitors. You must establish your company's differences forcefully, or someone else will establish them for you.