In the last installment ofThe Art of Retail Management,I gave you some reasons why retailers prosper when they differentiate their package of products and services in ways that delight customers. In fact, you can delight them so much that they willingly pay a premium for your store's package.

We also reviewed customers' and retailers' opposing interests. Specifically, customers search for the optimum product first, and then try to find at least two suppliers who will compete on price. They want to compare one good apple to another good apple, not a good apple to a good orange. That allows them to narrow the issues down to price. They leave sellers at an impasse called "commodity selling."

Retailers, by contrast, benefit when they can differentiate their product/service package, so that it is both unique and desirable. If their differences in their package exceed customers' expectations, they can earn a premium on their offerings.

The challenge for you, in this race for product leadership, is to stay ahead of the pack. Competitors will copy you, and may undercut your price. To win, you must always learn faster than competitors, and constantly improve.

If you want to become the product leader in your area or market, where exactly can you differentiate yourself?

Start with the look and feel of your store. Product leaders' stores look, sound and feel different. Look around your store with fresh eyes. Watch your employees, and watch your customers. Do they look, sound and feel much like your competitors do? Does your product package march to the same drummer as the competition?

What about your merchandise itself? Are your lines the same as what the guy down the street sells? When you shopped his store last time, did you simply copy his great ideas?

Instead of copying, I'd recommend that you study what he does. Look at the great results. Then, imagine how you could achieve those same customer-delighting results in different ways. How could you differentiate your warranties, services and products? How about your ads? Does your Yellow Pages ad boast the same benefits as your competitor's ad?

It takes serious thought, and a bit of wild imagination, to become a product leader. You may save yourself the cost of a consultant -- often thousands of dollars -- if you focus on the four dimensions that are critical to a differentiated position. (Remember, your market position is the image that customers keep in their minds about you and your store. You are fighting for their "mind share.")

The first dimension of market positioning is visual. Because people believe more of what they see than what they hear, your business should stand out visually. The store's front, signage, company logo, colors, furnishings, and interior need to be integrated with each other, as well as differentiated from competitors. Seek to stand out from the pack. (Customers find that most stores look alike.)

The second dimension to your market position is how you sound. How do you express your advertising messages to customers? Do you have a catchy jingle? Do your ads copy the tone in your competitors' ads -- best prices and best service? Are your ads believable? One store's ads showed a picture of its installers in uniforms, clean-cut and well groomed. The picture was captioned, "Our certified installers. We wouldn't send just anyone to install your new floor."

The third dimension is emotional. How does the shopping experience in your store make your customers feel? Do they feel welcomed? Cared about? Do your employees act like they want to be at work? Do customers find it fun to shop your store? Or, do they have more fun at your competitors' stores?

Does your store captivate the customer? Are you retailing or enter-tailing? "Enter-tailing?" you ask. Today's consumers (especially women) seek a buying experience. So, how might you enhance their experience? How can you make shopping more memorable? How might you transform the process of buying floor coverings from a non-experience to a joy that customers impulsively tell their neighbors about?

The final dimension of differentiation is functional. Which impressions do customers remember about the transaction with your people? How did your people interact with consumers? Is it typically a hassle-free experience for the customer? Do your systems consistently deliver your product and service to every customer? Does your package exceed customer expectations?

Remember that those very customers, who want to be delighted by the sights, sounds and feel of buying from you, also want a simple, hassle-free, functional business deal. For example, when I fly, I'm more interested in getting to my destination safely than how the airline sounds, looks and makes me feel. That may be more of a man's perspective, but women appreciate function, too.

Once you achieve product leadership by differentiating your image in the customers' minds, you rise above the price wars. You leave behind the battle of commodity selling, and enter the arena of customer pleasing. Product leadership protects you from the price merchants.

The biggest danger from a mass merchant is not that it will put you out of business. The danger is that you will run YOURSELF out of business by competing on its terms - low prices. The easiest way to compete with a price merchant is not to compete on price.

Because few retailers can stock their stores with entirely different products, you'll have to find ways of differentiating yourself other than through exclusive products. Remember, it's easier to differentiate yourself from a service aspect than from a product aspect.

So, if you decide to become a product leader, where do you start in each of those four dimensions? I submit that you differentiate yourself by doing the things that your customers value.

As I stated previously, product leadership is a never-ending journey. When you offer a great idea, smart competitors will try to copy it. (You should, of course, feel pleased. Imitation is the sincerest form of flattery.) You may find that you have to revise your package again. Don't give up innovating.

Customers will never believe you are the best, unless you are different. Customers have a need to compare. They like to compare apples to apples and oranges to oranges. Don't let them!