Differentiate Or Die: More Than Words

Jack TroutJuly 24, 20074243 min

Coca-Cola Brand Slogans

In the year 2000, I put the word “differentiation” in play, just as 20 years earlier I’d put the word “positioning” into the business language. It was the subject of a book I wrote entitled Differentiate or Die.

Once again, it has proved to become a very popular concept. Just in the one-year period from June 2006 to May 2007, the Factiva database of business, industry and news publications calculated more than 1,600 headlines that used the word “differentiate” or “differentiation.” The articles covered every imaginable aspect of business and could be spotted all over the world.

Here are some examples.

In financial services: “Retail Banks Failing to Achieve Competitive Differentiation, Study Shows” ( Global Banking News), “Online Brokers Look to Differentiate” ( Nikkei Weekly), “Differentiation Is Called Key to Wealth Managers’ Success” ( Investment News), “Little Differentiation Among Insurers in Utilization, Quality Measures” ( U.S. Federal News). In the construction world: “Tile Roofs Add Value, Differentiate Builders” ( Business Wire), “Differentiate to Stand Out from your Competition” ( Residential Design & Build). In automobiles: “Dodge Nitro SUV: Company Figures Out How to Differentiate Its Model in a Crowded Field” ( Syracuse Post-Standard/Herald-Journal). In beverages: “Beer Differentiation Seen as Crucial” ( The Nation-Thailand).

In media: “Differentiation Is Big Factor in Crowded FM Radio Space” ( Business Standard). In economic research: “Product Differentiation and Dynamic Price Behavior in Fish Markets” ( International Advances in Economic Research). In Internet businesses: “Differentiation Can Be Brutal in the Web Search Business” (Traffick.com). Even entrepreneurs are using the concept: “Differentiation–Smart Marketing Strategies for the Solo Entrepreneur” (PowerHomeBiz). Tom Peters, the world-renowned lecturer and author, has a seminar entitled “Be Distinct or Extinct.” IBM (nyse: IBM – news – people ) landed a multimillion-dollar ad campaign promising to help companies “Be Special.”

Yet despite all this advice, I see more and more commoditization creeping into business categories as increasing competition continues its relentless drive. One can only assume that, as with “positioning,” talking and writing about it is easy in business. Doing it is tough. Lou Gerstner, of IBM fame, put it well when he said that “strategy is execution.” And the advertising industry hasn’t been of much help in this regard, as many have been pushing emotion, bonding or show business instead of differentiation. Instead of going for laughs, they should be looking for that point of difference and dramatizing it in a memorable way.

Two recent Coca-Cola (nyse: KO – news – people ) ads being touted for this year’s Cannes Advertising Awards Festival point to the problem. One is called the “Happiness Factory” and is a Willy Wonka-ish fantasy following the life of a Coke inside of a vending machine. The other, entitled “Video Game” is a spoof of “Grand Theft Auto” only with a Coke and a smile instead of mayhem. Show business, not differentiating.

The problem that seems to surface its ugly head more than any other is that of a lack of focus on that point of difference. Many years ago, Coke successfully differentiated the brand from Pepsi (nyse: PEP – news – people ) by becoming the “Real Thing.” Then they lost focus by trying to be a new thing, a diet thing, a flavored cola thing and, more recently, a zero thing. No focus, no point of difference and little success, as Coke sales have gone nowhere but down.

Often the cause is the siren song of growth. The rationale: I can sell more by increasing more varieties of my product. But what often happens is that more turns out to be less as you undermine your point of difference.

A better strategy is to figure out how to use your difference to counter a competitive challenge rather than loose your focus. For fun let’s go back in time to the early Cola Wars. Pepsi attacked Coke with a sweeter version (“The Pepsi Challenge”) and a brilliant youth strategy (“Choice of New Generation”). Coke reacted by dropping their “Real Thing” strategy and introducing a sweeter “New Coke.” That turned out to be one of the great marketing mistakes of all time. Luckily, they quickly saw the error of their ways and retreated back to “Classic Coke.” What they should have done is to use the “Real Thing” idea against the Pepsi generation.

Here’s the message: “When all of you in the Pepsi generation grow up and are ready for the real thing, we’re here for you. After all, young kids like sweet stuff. Grown-ups don’t.” Trust me, that would have been the end of the Pepsi generation.

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Jack Trout


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  • Daniel Sitter, Idea Seller

    July 24, 2007 at 3:03 pm

    I agree wholeheartedly about the importance of differentiation and focus, at every level, and have written often about it.

    Many entrepreneurs think that everyone should be their customer, as they employ the “shotgun approach” in their marketing and sales efforts. Without differentiation and a clear focus, they simply get lost in the shuffle and lose.

  • Rick Wilson

    July 27, 2007 at 5:11 pm

    Your thoughts about “differentiation or die” are spot on. In fact, we find that the most powerful differentiation decisions emerge from fresh insights into customers and their needs. We call the process of getting them “Strategic Conversations”.

    In fact, our experience shows that the most successful entrepreneurs launch their businesses based on customer insights. In many cases they are “frustrated customers.”

    For example, a building contractor takes a family driving trip in the early 1950s and is outraged by the conditions and prices of accommodations in “tourist cottages.” Thus began Holiday Inn. Two lovers at Stanford grow frustrated with their email systems’ inability to communicate. They seize upon a product developed by a kindred spirit in the Department of Medicine, leading eventually to commercialization of something called a router and a company named Cisco. In distribution, Richard Sears, Fred Smith, Foster McGaw were geniuses at projecting into the mind of the customer, and revolutionized their industries.

    Inevitably, even great ventures begin to exhibit erosion in their understanding of the customer. Why does that happen? Usually “distractions” are to blame-building the organization, setting up controls, answering to analystsand regulators. Direct exposure to the market is replaced by the routine and institutionalization of marketing research departments and an accumulation of sales field memos, customer satisfaction surveys, industry reports. Customers are entertained at conventions. All sensible steps, but no substitute for “becoming the customer.

    The great irony is that most people love to talk about their business. And yet, we stop listening-especially in a creative way. If we take the time to listen to a cross-section of people from a customer organization talk about their business, their goals, their frustrations (instead of talking about ourselves, our products/services), there are insights to be gained. If we come to an understanding of their business model, how their world is changing, what is sub-optimal, imperfect, or what needs to be preserved we just might be able to improve our value proposition to them.

    And, do not expect the customer to give us the “answer.” It is our job to understand them and our capabilities and to develop creatively a superior and profitable value proposition. Perhaps it is time to get back to “becoming the customer” as companies re-think their distinctiveness and go-to-market models.

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