The competitive terrain for most brands today is difficult to brutal. Many are contending with overcapacity, downward price pressures and eroding margins. Whole classes of products are stale, improvements are quickly copied, and proliferation only confuses people and ultimately turns them off. For many consumers, competing brands are essentially the same. In this context, it is increasingly hard to create and maintain points of differentiation, one of the main drivers of brand strength.
The power of differentiation in building brand strength has been documented by Young & Rubicam Inc.’s Brand Asset Valuator study, a global survey of brand equity conducted every few years that covers more than 35 countries, 13,000 brands, 450 global brands and 50 measures organized along four key dimensions — differentiation, relevance, esteem and knowledge. As one Y&R expert put it, “Differentiation is the engine of the brand train — if the engine stops, so will the train.”1 Successful new brands consistently score highest on that dimension, and mature brands — even when they remain strong on relevance, esteem and knowledge — start to fade when they lose clear points of differentiation.
There is considerable logic behind such results. If a brand fails to develop or maintain differentiation, consumers have no basis for choosing it over others. The product’s price will then be the determining factor in a decision to purchase. Absent differentiation, the core of any brand and its associated business — a loyal customer base — cannot be created or sustained.
Creating or obtaining points of differentiation is a challenge. It is difficult to come up with new products, features, services or programs that in the eyes of customers are truly distinctive and deliver worthwhile benefits. Worse, even when a company does develop a point of difference, aggressive competitors often quickly copy it. The solution is to brand the differentiator. While a specific point of differentiation can be copied, a brand can be owned and actively managed to create a lasting point of difference in the customer’s mind.
A branded differentiator can be a feature, service, program or ingredient. To be worthy of the term “differentiator” — to be more than just a name slapped on a feature — it must be meaningful to customers; that is, it must be both pertinent and substantial enough to matter when people are purchasing or using the product or service.