Should We Kill Brand Differentiation?

There is a fascinating book named “This Idea Must Die,” whose premise is that genuinely new ideas (whether scientific or societal) are often developed by first abandoning the old ones.

Indeed, throughout history, old truisms and theories have often blocked progress. For instance, previous generations believed that crunches and sit-ups were great for your core, that Earth was at the centre of the Universe, or that infinitesimal doses could cure a disease of the substance that caused it (homeopathy). For the truth to come out, society, first, had to retire old beliefs.

That retirement process, however, is not easy. When asked “how new ideas become mainstream,” the late theoretical physicist Max Planck said:

“A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows familiar with it.”

Right now, we are witnessing a similar dynamic in marketing.

Generations of marketing practitioners grew up believing that differentiation must be the centerpiece of their brand strategy. Decades-long data collected by the Ehrenberg-Bass Institute for Marketing Science, on the other hand, shows that differentiation plays a much lesser role than conventionally assumed!

Let’s take Pizza Hut and McDonald’s. One sells pizzas, the other burgers. So, common sense says that brand-level differentiation must exist between the two brands. Consequently, there should be separate pizza-lovers and burger-lovers categories, each of which finds their favorite brand different. Sounds straightforward and logical, right? Oddly enough, that is not the case!

The data the Ehrenberg-Bass Institute gathered around the world shows two interesting facts:

1. The two brands share the majority of their respective customer bases. So, there is no clear-cut pizza-lovers and burger-lovers category. Instead, there is a fast-food-lover category.
2. Each brand’s customer base thinks that its brand is, at best, mediocrely different or unique. So, Pizza Hut and McDonald’s fans don’t find their favorite brand different.

Further analysis of British and Australian fast food buyers revealed a similar pattern. Only 16% thought their favorite brand was different.13% said it was unique, while 20% said either. In other words, more than half of fast food buyers didn’t perceive any brand-level differentiation!

The Ehrenberg-Bass Institute ran the same analysis in different categories, ranging from electronics to cars, soft drinks, and banking. The results did not change! In most categories, consumers did not find any brands particularly unique. Moreover, brand user profiles rarely differed significantly in demographics or other customer identifying variables.

That led the Ehrenberg-Bass Institute to advocate an alternative strategy centered around distinctiveness. But, wait a minute. Aren’t differentiation and distinctiveness the same thing?

Differentiation vs. Distinctiveness

In essence, differentiation and distinctiveness are two different concepts. While the former happens primarily on the strategic level, the latter is more tactical. Let’s dive a bit deeper.

We talk about brand differentiation when customers perceive a clear-cut difference among brands. In such cases, customers have a reason (USP) to choose you over your competitors. Think hybrid cars 20 years ago or electric vehicles a decade ago.

Unfortunately, market forces erode competitive advantage over time, eventually eliminating USPs. That explains why so few brands worldwide are perceived as different: because it is damn too hard to keep offering a USP.

To reiterate, the Ehrenberg-Bass Institute doesn’t say there is no such thing as brand differentiation. Brand differentiation exists and is very useful. However, if your primary objective is to grow your brand, brand differentiation is a highly unsustainable and unreliable tool. Instead, the engine of brand growth is mental and physical availability.

In markets where brands mainly compete as if they are near lookalikes, brands that are easier to buy — that is to say, more available — have more market share. That’s where distinctiveness comes into play.

The brand distinction is about obtaining a unique look and feel that would not be mistaken with competitors. It is about how easy it is for customers to identify your brand within the marketplace.

Suppose you have distinctive brand assets, such as a logo, color palette, font, tagline, images, or ad template. In that case, you will make it easier for customers to notice, recognize, recall and, importantly, buy your brand. The pioneer market research company System 1 calls this Fluency. According to their research, the easier customers recognize a brand, the more premium they are willing to pay.

It is essential to underline that distinctive qualities do not motivate customers to buy brands. Instead, they help the customer notice and remember the brand in competitive settings at different stages of the buying and consuming process.

How to Create Brand Distinctiveness?

Marketing common sense says that unless your brand is significantly better than the competition (meaning at least 30%), you should communicate your difference than your performance. That’s why the primary communication challenge for most brands is to create brand distinctiveness. But, how do you build distinctive assets?

A distinctive element can be anything that communicates the brand name at the most basic level. It can be:

• Colors — such as the Starbucks green;
• Logos — such as the Mercedes star;
• Taglines — such as Nike’s Just Do It;
• Symbols/characters — such as the Energizer bunny;
• Fonts/typefaces — such as American Apparel;
• Music/jingles — such as Intel sound mark;
• Celebrities — such as Michael Jordan for Nike;
• Advertising styles — such as the HSBC template;
• Pack shapes — such as Toblerone triangular prisms.

The goal is to create, refresh or reinforce customer memory structures. The more distinctive your brand assets and the more links you have in memory, the easier it is for the customer to identify your brand.

For example, 84% of customers who saw the following color palette correctly identified McDonald’s.

That is a tremendous competitive advantage for a brand that doesn’t have a USP!

How to Measure Brand Distinctiveness?

The Ehrenberg-Bass Institute has developed a proprietary two-step system for measuring the strength of any distinctive asset. Let’s take Starbucks green as an example.

First, we need to measure how many category buyers link Starbucks to green color. This metric is called Fame. Next, we must measure the share of responses for the green color that goes to Starbucks (versus competitors’ brands). This metric is called Uniqueness.

Low levels of Fame mean the green color is not (yet) valuable to Starbucks. That can be addressed by investing in the brand asset. On the other hand, low Uniqueness means competitors are also linked to the green color, which is a significant concern. Depending on the Uniqueness score, Starbucks might have to consider changing its corporate color.

The Ehrenberg-Bass Institute uses 50% as the cut-off level for both Fame and Uniqueness. If an asset has 50% or more Fame, then category buyers are more likely than not to trigger the brand; if an asset has 50% or more Uniqueness, then it is the dominant brand retrieved.

Should We Kill Brand Differentiation?

Brands are different from one another and are perceived as such. After all, they are not commodities like lentils or chickpeas. Consequently, brand differentiation is still the golden standard of marketing.

That said, creating a genuine USP is beyond the control of a marketing professional. To have a USP, the entire organization, from R&D to manufacturing and sales, has to sing from the same page. The bigger the brand, the less realistic that becomes. Moreover, keep in mind that no matter how great your USP, market forces will eventually chip away at it.

That’s why decade-long data shows that differentiation plays a lesser role in how brands compete than you would have expected. Instead, mental and physical availability is the key to buyer behavior.

The late great psychologist James Hillman once said,

“Attention is the cardinal value of psychology.
What gets attention tends to grow.”

Likewise, nothing happens to a brand if customers don’t notice it. Distinctive assets make it easier for consumers to see, recognize, and recall a brand.

So, while you should not kill brand differentiation, you should deprioritize it. Instead, you are better off emphasizing the distinctiveness characteristics of your brand.

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