Mastering Momentum analysis, which found that brands which over-performed across different stages of the buyer lifecycle grew an average of 48%."> Mastering Momentum analysis, which found that brands which over-performed across different stages of the buyer lifecycle grew an average of 48%.">


Long-term brand growth requires building perceived differentiation

by Nigel Hollis | June 29, 2020

Last week I posted about an update of the Mastering Momentum analysis, which found that brands which over-performed across different stages of the buyer lifecycle grew an average of 48%. The time frame used for the analysis was an interval of three years, making it one of few studies to study brand growth over a longer period of time.

While the BrandZ Top 100 Most Valuable Brands Ranking (sign up for this year’s Global Diginar here) has often identified the factors most correlated with strong growth over the course of a decade, it does so based on a small and rarefied set of brands that were included in the Top 100 over ten years ago. While looking at a shorter time frame, the Mastering Momentum analysis covers a much wider set of brands, many of them local and specific to one country. The interesting thing is that both analyses point to the importance of perceived differentiation in driving longer-term brand growth.

Ignoring the different stages of the buyer lifecycle and just comparing brands that grew over three years with those that did not does not reveal big differences in perceptions. On average brands which grow start with a set of perceptions better balanced between meaning (perceived to meet needs and be liked), difference (perceived to be different from other brands or setting the trends in its category) and salience (how easily the brand comes to mind). Brands that decline tend to have stronger salience than meaning or difference.

However, there is an important factor that muddies the analytical water, that of brand size. Brands that decline tend to be bigger than those that grow and have more users who will be more likely to comment favourably on their own brand. If we strip out this brand size effect and level the playing field the difference between brands that grew and those that declined becomes much clearer. Relative to what might be expected, on average brands that grow started by being more likely to be seen as different, brands that declined were a little weak on difference but strong on salience.

Put another way, brands that were more likely to be perceived as different tend to grow, brands that rely on salience tend to decline. Why might that be? Because perceived difference conveys three important benefits to a brand:

  1. A reason to make choice between alternatives easier
  2. A justification for paying the price asked
  3. And an easy justification for why the brand was chosen, leading to higher satisfaction

By contrast, brands that rely on salience may come to mind easily – definitely a good thing – but, if people are forced or want to (re)consider their brand choice, many will come to realize that the salient brand is neither meaningful to them nor different enough to justify its price compared to cheaper alternatives.

Of course, perceived difference alone is not enough to help a brand grow, at least, not appreciably. That is where marketing comes in. Part of the job of marketing is to make what the brand stands for – the things that set it apart from the competition – as salient and meaningful as possible. Until now, we have only considered what the brand’s profile was in the first year of the analysis, but what is apparent is that brands that grew over the next three years did so by growing their salience and meaning. To grow, a brand needs not only to be perceived as different, it must also amplify that difference and make it salient and relevant to a wider audience.

All of which raises a fundamental question, how does a brand create perceived differentiation? The obvious place to start is with the product or service, which is why investment in meaningful innovation is so important. But product innovation alone is not enough to unlock growth. The Indonesian brand Wardah led the way with its Halal beauty products, but its success rests as much on the way it respects local culture as the products themselves. The Chinese brand Yunnan Baiyao has leveraged its heritage as a traditional Chinese medicine to find success in the toothpaste category, stealing share from multinational brands. Neither brand would be as successful today if the origins of success rested solely in its product. It is the combination of functional and emotional relevance that is important.

So rather than think about perceived difference originating from a specific product or service, we need to think more broadly. Competitive advantage can be found in design, how customers can access a brand, customer service, societal purpose, or unique marketing content. Innovation should apply to all of these, not just the product, and the intent to should be to find a unique advantage that the brand can live up to and has the potential to appeal to a wider audience than those just buying the brand today (but which at the same time does not undermine existing users’ understanding of the brand).

Finding patterns in data is easy, particularly when you have many years of data to play with for a wide variety of brands but finding that one factor that will help differentiate your brand in the eyes of its potential consumers is hard. There is no one-size-fits-all answer. In every case, the brand needs to assess its standing now, compared to its potential alternatives and seek the best way to create perceived difference with the potential to be meaningful to a wider audience. And maybe the fact that it is not easy is why only 7% of brands in our BrandZ data set grew significantly over three years. But then, maybe it is also because too many people seem to think that perceived difference does not matter. What do you think?

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