Differentiating your brand cost effectively

It takes time, effort, creativity and money for brands to successfully differentiate themselves from the competition. It takes brilliance in innovation or design or advertising creativity or customer service or a combination of these and other factors to develop a brand that stands out from the crowd.

All this effort has its reward. Differentiation translates into products and services that are worth more to people. They will pay more for them and be more loyal to them. If the products are really differentiated, people may even queue all night for them.

But will consumers pay enough for all the brilliance and hard work? Can you drive enough revenue from your sources of differentiation to cover the cost of the resources required to create them?

This was a key principle expressed by Michael Porter in his book: Competitive Advantage, celebrating its 25th anniversary this year. As Porter says: "Differentiation leads to superior performance if the price premium achieved exceeds any added costs of being unique." It's the net benefit that counts.

This way of thinking comes in handy when considering brand architecture. In a typical scenario, we will be working with a business that has grown organically or by acquisition and has more brands in its portfolio than it can manage or support. The principle of net benefit provides a framework for evaluating the portfolio. Which brands are pulling their weight? Which are not? Could a streamlined portfolio widen the gap between differentiated-driven revenue and costs? Often it turns out that less is more, even when portfolios are made up of well-known brands.

And that's the beauty of this net benefit principle. It creates a bias towards simplification and puts the focus on sources of value. There are many ways to differentiate. The net benefit principle can help you evaluate which of all those ways is the most effective.

Photo: and sometimes I have to do it all in COLOR by Robert S Donovan on Flickr

Day of the Clones: Either a brand is different or it is dead

Photo: adactio (Flickr CC)

And after that gentle title, Simon Silvester launches into:

"Tom is a brand manager. His approach is thoroughly professional. He’s searching the world for best practice, and is bringing it to his brand. He’s also benchmarking his brand against competitors, making it look as good as they do. And he’s optimizing his communication plans, ensuring they’re best-in-class. What’s the problem? ‘Seeking best practice’, ‘benchmarking’ and ‘best-in-class’ sound important. But they all mean Tom is copying his competitors. And because his competitors are professionals too, they are copying Tom back. In today’s world, everyone is searching for the same best practice. Everyone benchmarks against each other. And everyone optimizes their communications plans. Everyone is copying each other. And so their brands are becoming clones."

He points out that in a world of perfect information where everyone has access to the same quality research and online information, there's a tendency for Tom and everyone else in an industry to come up with the same insights at the same time, launching the same products with the same key messages.

Which is a problem because it's differentiation that's drives brand strength and it's differentiation that's threatened by analysis that puts everyone on the same road instead of the road less traveled.

Getting the balance right between points of parity (things that you must do to be perceived by consumers as credible in your category) and points of difference that can help you stand out from the rest has always been a tough marketing challenge. I think that Simon's report is a useful reminder that we should get so besotted by the power of sophisticated tools that focus on points of parity (like benchmarking) that we forget about the trickier challenge of finding ways to be different.

What do you think?

Sources:
1) Day of the Clones: Simon Silvester (pdf)
2) Three questions you need to ask about your brand: Keller, Sternthal and Tybout

Oil and gas don't mix either

Are you someone who cares what kind of motor oil you put in your car? I'm not. All I look at is whether it's the right number "W" that it's supposed to be (and I have to check that each time). But it turns out that most people care more than that.

I was talking to someone a while back who knows more than I do about this. He told me that people generally hold motor oils that are not associated with retail gas station brands in much higher regard than the ones that are. So, Pennzoil is thought to be "better" than Exxon motor oil even though Pennzoil is owned by Shell (a fact scrupulously not shared on the Pennzoil website). Same goes for Havoline (owned by Chevron) and Castrol (owned by BP).

Turns out that motor oil is a good example of a category where focused brands do better than ones that are not--therefore, a very good example for me to tuck away in my imaginary folder called: "Before you go extending your brand all over the place, let's see if there's any risks that we should consider."

In this case, I think Pennzoil and the other motor oil-only brand benefit two ways: a) they win on perceived expertise because of their focus and b) retail gas brand oils lose because they can't escape looking like Private Label brands.