Since the tactics I’ve mentioned are well-known, I will not discuss them in detail. My research shows, however, that three conditions determine their efficacy. First, smart businesses don’t use these tactics in isolation. For instance, Bang & Olsten is able to compete effectively against low-cost electronics manufacturers with its design capabilities. Second, companies must be able to persuade consumers to pay for benefits. The ability to do so usually depends on the products they sell. However, when the company deployed a similar strategy for Duracell batteries by emphasizing longer life, many consumers balked at paying higher prices after a certain point. That’s because they found it almost impossible to notice the better performance and longer life of Duracell Ultra batteries. The third condition necessary for a successful differentiation strategy is simple: Companies must bring costs and benefits in line before implementing it. That takes time. After years of restructuring, Hewlett-Packard may finally be catching up with Dell in the personal computer business. Strategies that help an established player coexist with low-cost rivals can work initially, but as consumers become more familiar with low-cost options, they tend to migrate to them