Coherent Ideas Build Brands, Win Customers, Add Value
It pays for a brand to be meaningfully different from the competition.
Across over 1000 brands in China, both local and international, being considered meaningfully different by target consumers produced a 37 percent higher contribution to brand value. In other words, if a brand's contribution to overall brand value is US$1 billion, meaningful differentiation has the potential to add another $US370 million. In addition, well-differentiated brands are 12 times more likely to grow in value than brands with only average differentiation. Poorly differentiated brands tend to decline in value.
These are not small or insignificant consequences. They indicate the importance of differentiation to any boardroom discussion of brand value and brand strategy. The findings are based on analysis using Millward Brown's BrandZ™ database, the world's largest brand equity database with information on more than 50,000 brands gathered from over two million consumers in over 30 countries. Brand contribution, a brand's uniqueness or differentiation, is one of several factors, including financial performance, that determine brand value.
Defining what is meant by meaningful differentiation appears to be simple, yet it requires some clarification especially regarding what it is not. First and foremost, it is not just relevance. Relevance is important, of course, but relevance alone doesn't provide sufficient brand appeal. If your hair is dirty any shampoo is relevant. But having dirty hair doesn't influence you to choose one shampoo brand over another.
Second, meaningful differentiation is not being different for its own sake. Video sites like Youku in China and YouTube across the globe are littered with brand attempts to be different by having striking marketing material that lacks any connection to what the brand is fundamentally about. Being different from other brands may be attractive in its potential for disruption and buzz, but without any anchoring principle in what is special about this brand the approach falls short of the mark.
To embrace meaningful differentiation marketers must acknowledge what philosophers observed hundreds of years ago and what Millward Brown has written about with increasing frequency recently: We humans find it difficult to think of something in isolation. We find it necessary to consider what something is and is not within some kind of context, often with similar or very close alternatives. We look to distinguish between objects within these contexts in order to evaluate the options in terms of attractiveness.
Achieving Meaningful Differentiation
To simply achieve differentiation brands seek to distinguish themselves vis-à-vis alternatives. But to achieve meaningful differentiation requires that these differences are important to consumers, and that they are based on an insight that has a business value attached to it. In short, to be meaningfully different, brands require distinguishing features, alternatives that are important to consumers and from which financial profit can be gained. Nigel Hollis of Millward Brown and JWT's Tom Doctoroff have explored these ideas in great detail.
In addition, there are arguably different degrees of meaningful differentiation. For example, marketing communications is often called upon to create perceived meaningful differentiation with memorable communications. But memorable doesn't mean convincing. A communication can leave a viewer or reader entertained but without any clear understanding of why to select one brand over another.
Therefore, marketers more and more don't view marketing communications as the exclusive agent for defining and explaining how a brand is meaningfully differentiated. A glance at the 2013 BrandZ™ Top 50 Most Valuable Chinese Brands provides some insight. Brands that effectively differentiated themselves—Yunnan Baiyo or Haier, for example—did not limit their efforts to branded communication but infused all aspects of the enterprise, product to service delivery, with the brand essence.
Yunnan Baiyao leverages its heritage of medicinal remedies, for example, while Haier has a powerful service model it employs throughout China. Consider the definition of a brand offered by Nigel Hollis: "A brand consists of a set of enduring and shared perceptions in the minds of consumers. The stronger, more coherent and motivating those perceptions are, the more likely they will be to influence purchase decisions and add value to a business."
Context, Insight and Value
All meaningful differentiation is perception based. However, some will stem from marketing communications that makes the brand seem special (e.g. the potato chips I like have better advertising), while others will weave all the brand's meaningful differentiated aspects into their communications, from product functionality and actual experience, to how it makes you feel (e.g. my washing machine is a smart choice because it's durable and maintenance is a reliable and makes me feel great). Arguably, the latter is a more powerful and solid foundation on which brands should invest to meaningful differentiate. It permeates through all aspects of the brand experience including, but not limited to, marketing communications.
Finally, there is a popular saying: "The definition of a fool is someone who tries to make everyone happy." There is a lesson here. A meaningfully differentiated brand is not all things to all people. Meaningful differentiation is a carefully thought out and executed business and brand strategy that looks for important differences for a brand in a relevant context, grounded in insight, targeted at certain people, and magnified for consumer admiration and ultimately business value.
Key Initiatives for Differentiation
- Be Distinctive
Being different from the competition is important, but difference alone isn't a winning strategy. The difference needs to benefit the lives of consumers in a distinctive way that they recognize and appreciate.
- Be Memorable
Consumers are bombarded with a lot of information. Don't add to the noise and confusion. Instead, cut through it with one simple idea, an easy-tounderstand proposition that clearly identifies the brand.
- Be More Than Memorable
The simple idea that cuts through the noise is more likely to build long-term brand equity if it's not simply clever communication, but also an expression of the brand's real emotional and functional benefits.