Traditionally, small firms have attempted to develop competitive advantage and differentiation based on several practical benefits: delivering your goods to customers better, cheaper, or faster. Few small firms can compete in all of these areas and some may not be very effective with any of the strategies due to their limited size and scale of operation. Experience has shown that small firms will rarely win the price competition game and thus should not use it as a differentiation strategy (National Retail Federation, 2005).
 

          A differentiation strategy seeks to develop a competitive advantage and attract customers by positioning its offerings in a unique and distinctive way. It must be truly different in the eyes and mind of your customer. The element(s) upon which a firm positions

itself must be something important to customers---it must be something they value. Once this is discovered, a small business can then begin to charge (maybe even a higher price) for this offering (Pine & Gilmore, 1999).

        This diagram reflects the continuum of elements a small firm can use to develop a unique combination of offerings and achieve differentiation in the marketplace (Kotler, 1997, p. 2830.  Note that experiences can complement the other offerings or could be the primary offering.