--- title: The Importance of Differentiation for Your Long-Term Strategy description: Differentiation is not only important when it comes to pricing, but also for creating scope for innovation. image: https://blog.pricebeam.com/hubfs/Blog/pexels-photo-296881.jpeg --- [Skip to content](https://blog.pricebeam.com/the-importance-of-differentiation-for-your-long-term-strategy#main-content) [![PriceBeam](https://blog.pricebeam.com/hs-fs/hubfs/lead-flow-images/PBLogoTransparent%20(1).png?width=400&height=100&name=PBLogoTransparent%20(1).png)](https://www.pricebeam.com/) - Solutions ![RGM360](https://blog.pricebeam.com/hs-fs/hubfs/RGM360_Headlines.png?width=319&height=255&name=RGM360_Headlines.png)[PriceBeam RGM360](https://www.pricebeam.com/rgm360) is an end-to-end Revenue Optimization Platform, offering unmatched value by integrating market research, internal data with AI and next-generation simulation and optimization tools. 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[Newsletter](https://www.pricebeam.com/newsletter) - [RGM Pulse Survey 2026](https://www.pricebeam.com/rgm-pulse-survey-2026) - About - [Company](https://www.pricebeam.com/about) - [News & Events](https://www.pricebeam.com/news) - [Partners](https://www.pricebeam.com/partners) - [Press](https://www.pricebeam.com/press) - [Careers](https://www.pricebeam.com/careers) - [Contact](https://www.pricebeam.com/contact) ![Search icon](https://5018647.fs1.hubspotusercontent-na1.net/hubfs/5018647/Design/Icons/Font%20Awesome/search.svg) [All posts](https://blog.pricebeam.com/all) August 15, 2017 # The Importance of Differentiation for Your Long-Term Strategy ![Picture of PriceBeam](https://blog.pricebeam.com/hs-fs/hubfs/Images/PBLogoBadge240x240.png?width=50&name=PBLogoBadge240x240.png)   PriceBeam  ·  1 minute read ![differentiation](https://blog.pricebeam.com/hs-fs/hubfs/Blog/pexels-photo-296881.jpeg?width=1024&name=pexels-photo-296881.jpeg "differentiation") In a [**recent article**](https://blog.pricebeam.com/price-differentiation-a-success-story-frommcdonalds), we praised McDonald’s for its successfully executed [**price differentiation**](https://blog.pricebeam.com/price-positioning-long-term-effects-of-short-term-strategies). Their latest financial results show that McDonald’s move was clearly well-received by customers, but more importantly, it shows an interesting change of direction for the fastfood giant. Since it was founded, McDonald’s has strived to offer very cheap food very quickly. As long as prices were low, and you could get a Big Mac in less than a minute, McDonald’s pretty much delivered on its brand’s promise. Clearly, this business model has been successful, but at the same time, it has constrained McDonald’s’ scope for innovation. How can someone whose entire business is based on low prices and quick service improve their offering? By lowering prices and optimizing the operations. However, there is a lower-bound to both - eventually, lowering prices any further makes the business unsustainable, and the restaurants are already operating incredibly efficiently, so even if a self-service counter can reduce service time by a fraction of a minute, the added value from this improvement is insignificant. Oh, and then it’s easy to emulate. Several fastfood chains now use self-service counters too, and everyone can reduce prices. Sure, McDonald’s may possess some cost-leadership that allows them to take price-reductions a bit further than the competition, but we typically see that competitors catch up eventually. To put it in the words of Michael Porter, McDonald’s has quested operational excellence to beat the competition, and according to Porter this is a poor long-term strategy. Firms that compete by achieving operational excellence will eventually hit a wall, which Porter coined the *productivity frontier*. When McDonald’s shifts focus to premium burgers, it takes a clear strategic stance; *price* is no longer *the* competitive priority, and now that quality is becoming a priority, both in terms of actual quality and branding, McDonald’s won’t be constrained by any frontiers. Its competitive priorities have become more heterogeneous if you will, which makes the sky the limit rather than cost. [![New Call-to-action](https://no-cache.hubspot.com/cta/default/2519095/cab19d42-5cdf-42ee-9865-236c80069a7b.png)](https://cta-redirect.hubspot.com/cta/redirect/2519095/cab19d42-5cdf-42ee-9865-236c80069a7b) Share: [facebook-f icon](http://www.facebook.com/share.php?u=https://blog.pricebeam.com/the-importance-of-differentiation-for-your-long-term-strategy) [linkedin-in icon](http://www.linkedin.com/shareArticle?mini=true&url=https://blog.pricebeam.com/the-importance-of-differentiation-for-your-long-term-strategy) [twitter icon](https://twitter.com/intent/tweet?url=https://blog.pricebeam.com/the-importance-of-differentiation-for-your-long-term-strategy) [pinterest-p icon](http://pinterest.com/pin/create/link/?url=https://blog.pricebeam.com/the-importance-of-differentiation-for-your-long-term-strategy) [envelope icon](mailto:?body=https://blog.pricebeam.com/the-importance-of-differentiation-for-your-long-term-strategy) ## Related posts [![pexels-photo-139681.jpeg](https://blog.pricebeam.com/hubfs/Blog/pexels-photo-139681.jpeg)](https://blog.pricebeam.com/price-differentiation-a-success-story-frommcdonalds) #### [Price Differentiation: A Success Story from McDonald's](https://blog.pricebeam.com/price-differentiation-a-success-story-frommcdonalds) [![pexels-photo-325153.jpeg](https://blog.pricebeam.com/hubfs/Blog/pexels-photo-325153.jpeg)](https://blog.pricebeam.com/product-bundling-why-individual-price-setting-still-matters) #### [Product Bundling: Why Individual Price Setting Still Matters](https://blog.pricebeam.com/product-bundling-why-individual-price-setting-still-matters) [![](https://blog.pricebeam.com/hubfs/businessman%20hand%20working%20with%20new%20modern%20computer%20and%20business%20success%20as%20concept.jpeg)](https://blog.pricebeam.com/10-pricing-areas-that-marketing-should-be-involved-in) [Marketing](https://blog.pricebeam.com/topic/marketing) #### [10 Pricing Areas that Marketing Should Care About](https://blog.pricebeam.com/10-pricing-areas-that-marketing-should-be-involved-in) **Pricing Right, Made Easy** Almost all companies struggle to price right. They use methods such as cost plus a fixed margin. They use guesses and gut feel. They peg their price to a competitor’s. They price themselves too low, leaving money on the table, or too high, forsaking sales volume. They lose out on the profits they should be earning. PriceBeam changes all that. With a methodology that is confirmed to be accurate in thousands of projects, PriceBeam provides AI-powered market insights software that generates actionable insights into consumers' willingness-to-pay, competitive price positioning, packaging and assortment dynamics, promotional benchmarking, and opportunities from new product pricing. 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