What Is the Differential Threshold in Marketing?

When a new small business arrives on the scene, it must differentiate itself from the existing competition in some way. The same goes for a new product or service. If your products are the same as all the others, a consumer would not have a reason to seek them out, and they could not be marketed as different or new in any way.

The differential threshold measures the limits of product similarities and brand redundancies to judge how much of a gap is required between them to be successful. This judgement can help to determine whether your marketing message delineates these differences and changes clearly enough to be understood by the consumer, and whether the differences listed are significant to the customer. When the threshold is reached, your message may begin to blend with the messages of your competitors, leaving the consumer unclear as to why your product or service should be considered. Separation from others and a clear product or brand identity are two goals of good marketing. The differential threshold helps to achieve and maintain those goals.

When developing a new product or brand and marketing for it, the differential threshold can be your guide. A comparison between your new products or services and those already offered by your competitors is an essential part of the process. New products should have new features, new functions or a new design that makes them different from everything else out there. Without a way to differentiate between your merchandise or service and that of your competitors, a consumer has no reason to choose yours. In some cases, even other products your own company produces should be considered to ensure that a new product is not so similar that it cannibalizes your own customer base.

New small businesses and brands must create a place for themselves in the existing market. For that to be accomplished, the message and placement of existing brands must be taken into account and a unique and separate strategy created. For example, if your competitor has a glossy ad campaign that portrays her products as super high-end, you may not wish to mimic the same approach. Instead, a campaign that utilizes clever phrasing and humor may help you to create a contrast between the two brands. Should your image be too similar to that of other brands, a consumer may not understand the difference between the two, and your company will fail to create its own identity, or "positioning," within the market.

In some cases, the only necessary difference is price. For example, if you are set to release a new product that performs the same functions as your competitor's line, with a retail price that is 50 percent lower than theirs, a consumer may not need to know anything else about it. In such cases, the more similarity there is between two products and two brands, the better. Consumers will appreciate that an item with the same features as a much more expensive brand is available to them at a fraction of the cost. Lower cost is a powerful factor that can move the differential threshold in your favor with no need for other considerations