Imagine two ice-cream sellers on a beach. Where would each of them stand in order to maximise their sales? The obvious answer, after a little thought, would be in the middle. Next to each other. That way they maximise the number of potential customers. If either ice cream seller chooses any other position he hands over a bigger catchment area to his rival.
As they face each other under the sweltering sun, what would our ice cream vendors think? Probably something along the following lines. “If I could make myself seem that much better, different, or special, then I could steal some of my rival’s custom.” Differentiation becomes an over-riding concern, but only because business logic has driven them into identical strategies.
Now, differentiation is one of the most basic and powerful concepts in marketing. Is this what it boils down to: the icing that makes the difference between two otherwise identical cakes?
Try another thought experiment. Imagine a landscape where the peak of the highest mountain represents the highest feasible profitability and competitiveness. Naturally, every company will make head for that peak. But most will never get there.
To get to that mountain they will need to pass through foothills, and getting to the top of each hill requires that they adapt technology, products, people, systems, organisational and cost structures to their environment. Once a hill of adequate profitability has been climbed, the last thing they’ll want to do is to go down again, especially if they’re eyeball to eyeball with a competitor. Going downhill means accepting reduced profitability and competitiveness. It’s not that they can’t be different. At root, they don’t want to be. So the only differentiation they’re prepared to contemplate is that icing on the cake.
You can see the phenomenon of fundamental strategic similarity hidden by superficial “brand differentiation” in many of marketing’s great head-on battles: Coke versus Pepsi, Ariel versus Persil, Sainsbury’s versus Tesco, Ford versus General Motors. It’s perfectly natural, an almost unavoidable consequence of competitive circumstance.
The danger comes from marketers’ reactions to such circumstances. The first is an over-the-top obsession with differentiation. Difference for the sake of it. Gimmickry. In fact, copycat methods and me-tooism are often a damn good idea. Where markets are underdeveloped, deregulating, or driven by burgeoning new technologies, it’s usually much better to cooperate to build the market than kill each other in a struggle to be king of a very small castle.
Me-too strategies can also work in branding. Take the cola wars. They bring Coke and Pepsi huge returns in terms of free publicity. And the more they battle it out on the hype and image front, the harder it is for competitors like Royal Crown or Virgin to challenge them on price.
In fact, me-tooism can be essential when every new development in product, technology, systems or service is copied almost overnight and falling behind is as simple as falling off a log. So don’t knock me-tooism. It’s often another word for survival.
Which leads us to the second reaction, which is far more dangerous. This is when marketers try to work unpropitious circumstance into a grand theory of marketing’s ultimate contribution to business. You can hear it almost everywhere, in various versions.
It goes like this. Because nowadays everything a business does – product, price, service etc – can be copied so fast, none of them gives a true competitive edge any more. The battle is moving inexorably onwards to the final frontier of marketing: “the brand”, emotional brand values and the communications that surrounds it. The brand is the only true, sustainable source of differentiation, the last bastion of competitive advantage.
Drivel. All right, the theory has bought a lot of marketers their Porsches. But it’s drivel nonetheless. Deleterious, debilitating drivel at that.
Far from remorselessly running down to some vanishing point of sameness, the modern world is characterised by astonishing and ever-increasing complexity and diversity. The speed of change nowadays means that parity in product, service, cost and so forth is always being upset. And the intensity of competition means the slightest departures from parity – the real delivery of real value – are becoming more, not less, important.
Increasingly, the problem lies with marketers’ insistence that brand differentiation is created, not in the bowels of the business, but primarily through its communication wrapping.
This theory fails to recognise the critical importance nowadays of choosing which way to be different. Which waves of change in technology, product, restructuring, reengineering, time quality management (TQM), IT systems, geographical diversification, distribution channels are best to deliver real added value?
Consider those famous head-to-head battles again. Each of the brands now faces challenges from truly different competitors. In the US, Ford and GM competed happily for years on issues like design and comfort until the Japanese came along asking questions like “does you car start first time every time?”. Then again, Sainsbury’s Novon isn’t out to lead the detergents category. It’s there as a weapon of supermarket supremacy. Sainsbury’s, meanwhile, is surrounded by would-be flankers: discounters, home shoppers, fast food outlets, none of which want to adapt their strategy to their particular competitive hill. On the contrary, they’re reshaping their hill to fit their strategy.
These competitors come across as different because they really are. Their brands stand for alternative business systems and philosophies. Such brands are not a source of differentiation. They sum it up. They are its expression. As Added Value’s Andrew Seth remarked recently: “The brand is the concrete realisation of your company’s DNA.”
As long as marketers (and agencies) keep peddling a theory of differentiation that’s little more than self-serving inversion of reality they’ll find themselves branded as gimmick-mongers – and kept out of the corridors of business influence.v