Competing in a world of ever-increasing choice
As consumers we are generally spoilt with choices. In just about every walk of life we have many options in what and how we consume. At its core, this is the goal of free competitive markets. Take for example whisky. A quick review of Dan Murphy’s online store suggests that consumers can choose from over 850 products associated with over 300 discrete brands that are sourced from over 15 countries, and ranging in price from $30 to $50,000. Yes you read correctly $50,000 per bottle!
So how do companies win in a competitive game characterised by high levels of product and brand proliferation?
The challenge of differentiation as a differentiator
The traditional school of thought in relation to competitive advantage would suggest that differentiation is the answer. Understand your attributes, features and benefits and use this to position and distinguish your offering to your target market relative to your competitors. Naturally, the differentiated offer must be valued by customers and deliver relative benefits that outweighs the relative costs of competing offerings. The offering must be perceived to be different in order to win, maintain, and grow market share. Competitive market theory suggests – the greater the differentiation, the more loyal the customers and the more resilient the offering is to emerging and changing competition. The advertising principle of promoting a ‘unique selling proposition’ is a natural bedfellow of this theory of competitive advantage.
However, there are two empirical shortcomings with this traditional approach to competitive advantage. Firstly, while differentiation may support profitability objectives it is likely to hit constraints in growing scale with highly differentiated offering only being suitable for select groups of consumers or only satisfying needs in specific situations. This seems counter to empirical market evidence where winning offerings can appeal to multiple customers groups – they just secure more buyers than their competitors. Secondly, market studies show that consumers remain loyal to brands despite product differentiation perceived to be small.
This is not to say that differentiation doesn’t matter. Purposeful execution of the marketing trilogy of understanding market segments, making discrete decisions on which segments to target, and adopting clear positions (products/services) in relation to these target segments remains fundamental. Furthermore, in most instances, the price versus quality relationships still holds. However, differentiation alone seems to be less effective in defining why some whisky products are ‘walking off the shelf’ more regularly than the other 100 products and 60 brands positioned at a similar price point ($50-$60 per bottle). While differentiation does not seem to hold the answer, neither do the alternatives of competitive convergence or perfect competition.
Distinctiveness reduces the cognitive effort to think, scour and search
What is becoming more evident is the mind’s coping mechanism in dealing with immense choice presented in every aspect of daily living. The distinctiveness of a product, brand or offering reduces the cognitive effort to think, scour and search – thus making life simpler for consumers. Distinctiveness of identity supports high levels of mental availability. While in some sense this may help to make the brand ‘differentiated’, it is different to that offered by differentiation associated with intrinsic features and value. Distinctiveness is critical to answering the question before, during and after consumption – how will they know it is me?
A distinctive element can be anything that communicates the brand at its most basic level. It is the brand codes that are replicated repeatedly in packaging, advertising, instore displays, sponsorship – actually in any activity or interface where there is a desire to link consumers to the brand. The most obvious distinctive characteristic is the name – trademark law helps ensure that this is truly unique. However, distinctiveness is reinforced by a series of other qualities that can substitute for the brand name – including things such as logos, taglines, colours, symbols, celebrities or advertising styles. Their aim is to create, refresh and reinforce consumers memory structures in order to build high levels of mental brand equity (mental availability), and or to facilitate actual purchase by making the brand easier to locate (physical availability). The stronger these distinctive qualities, the more the links to memory are reinforced and the easier it is for consumer to identify and consume the brand offering.
Distinctiveness needs to be centre stage in brand strategies
Importantly, it is not a necessary precondition for marketers to convince buyer that their product offering is unique in order to get them to buy it. In many cases this is a near impossible task anyway. However, paradoxically, this makes the job of brand management even more important. If brands are not considered to be truly different, then the incentive for the buyer to search for a particular brand amongst a sea of look-a-likes is low. To ensure that consumers keep buying a particular brand, it needs to stand out so that buyers can easily, and without confusion, identify it.
Equally important is consistency in how the brand is communicated to consumers across all media and over time. Marketers should concentrate on refreshing and reminding consumers of core messages, using consistent and repeatable methods, rather than constantly searching for new unique points of difference that risk focusing on areas of little value to the consumer. Consistently reinforcing distinctiveness minimises the risk of brand communication being attributed to the wrong brand.
The implications of a reduced role of differentiation in buying decisions is that distinctiveness needs to be centre stage in brand strategies. The goal of branding and marketing is to build unique associations that simply makes it easier for consumers to notice, recognise, recall, and importantly, buy the brand.