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Brand Differentiation

Is Your Brand Destined For Sameness?

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It is an indisputable fact that purchasing in product and service categories obeys the law of Double Jeopardy. This is – stated at its most simplistic – an empirical generalization that higher market share brands achieve stronger customer loyalty than lower market share brands in the same category. But the thing that always intrigues me is whether all brands obey the Double Jeopardy law to the same degree all of the time.

Take pretty much any data set at a point in time and plot brands on a graph comparing a penetration metric with a loyalty metric, and you will find a consistent relationship between the two; the higher a brand’s penetration the higher the loyalty. The metrics could be awareness and claimed trial, familiarity and favorable brand attitudes or actual penetration and repeat purchase, and the pattern will be there and favor the bigger brands. The obvious conclusion to be drawn from Double Jeopardy is that to grow market share, a brand must first grow its customer base.

But Double Jeopardy only holds if brands are broadly substitutable and appeal to the same target audience. And having spent more time than I care to think about looking at brand scatter plots like the one described above, I have noticed that some brands manage to break away from the category relationship. A few appear to do so on a consistent basis, and others do so only temporarily. Brands that manage to achieve a higher loyalty than is predicted by the category relationship tend also to be the ones that have managed to innovate, and create a perception of meaningful differentiation versus the competition. The ones that fall short tend to be premium brands that have lost their differentiation.

This observation makes me wonder if over time brands tend to revert to the category mean. In other words, from time-to-time brands find a way to innovate – either tangibly or intangibly – creating meaningful differentiation that allows them to command more loyalty than their size would normally dictate. But competitive pressures then erode that advantage, returning the brand to the category norm.

But a return to sameness is not pre-ordained. In today’s hyper-competitive marketplace, tangible product innovation may not provide a sustained advantage but the same cannot be said for intangible differentiation created by effective marketing. Events, sponsorship, games, causes and communications all provide a mechanism by which marketers can reinforce what a brand stands for in the minds of its consumers.

Even a small advantage in terms of consumer loyalty should be worthwhile provided it can be sustained over time. If you can retain more purchasers or encourage them to purchase more often, then the return on acquisition costs should be higher.

But a temporary advantage is less likely to provide a good return on investment. But then marketing is not just about justifying differentiation in order to sell more stuff to more people. Marketing is also about selling more stuff at a higher price. Depending on your aspirations for your brand, maybe you are better off not worrying so much about volume growth but making sure your brand justifies its price premium.

So what do you think? Are brands destined to revert to the sea of sameness? And is it possible to sustain a price premium without adequate brand differentiation? Please share your thoughts.

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