There is a fundamental challenge confronting marketing organizations in 2001, and we don't seem to be getting any better at meeting this challenge than we were 20 years ago. If anything, we may be getting worse.
The challenge? Building and maintaining brand differentiation. In an increasingly cluttered and confusing marketplace, the need for brand differentiation clearly intensifies.
There is certainly widespread recognition of the desirability of strong brand differentiation. Dodge says it: "Different." Saturn says it: It is a "different kind" of car company. "Different" is important.
In spite of the claims of "different," there is an alluring, but dangerously slippery slope of "me-too" brand marketing that continues to attract marketers of everything from hamburgers to hotels, and from washing detergents to Web site locations.
Let's play follow the leader
"Me-too" marketing involves using the very same brand-building
weapons as the competition, and in much the same way. It entails
looking to the leader, and following along. Why follow the leader?
Because it's assumed that the leader knows the way. If the leader
offers a 99-cent burger, free checking, or a $500 rebate, we better
do so as well. If the leader adds extra cheese, lemon scent,
walnut-toned dashboards, or stays open to 10 p.m., we should
probably do the same.
"Me-too" marketing is alluring because we all want to duplicate the success of others. We want to "Be like Mike." "Me-too" marketing is also pervasive because companies, marketers and brand managers tend to confuse sales volume with brand strength. Their measures of success are often those of sales turn, not of brand loyalty. "Me-too" marketing can at times deliver the former, but it cannot deliver the latter. It cannot build enduring relationships.
We can couch these "me-too" approaches under the guise of meeting the competitive challenge head on, or of simply following "best practices," but it nevertheless remains at its core an attempt at brand-building by imitation. Imitation may be the sincerest form of flattery, but how much does it contribute to building an enduring brand relationship? We may talk about breaking the rules, the importance of the unexpected sharp right hand turn, "zigging" when others "zag," but how much do we practice what we preach?
Brands versus commodities
To the extent that competing brands follow or largely duplicate
their competitors, they contribute to minimizing the differences
between brands. They erode whatever brand differentiation might
exist. To the extent that there are insignificant differences
between brands, we have a commodity marketplace. In commodity
categories, brands are simply names. They represent nothing more
than different locations or addresses that are attached to products
and services that are in all other ways interchangeable.
Not a problem for most companies, we might assume, where there are designated "brand managers" and brand teams who are tasked with marketing and promoting the brand. Not a problem for those companies, perhaps, because they maintain a substantial investment in brand marketing and brand communications. Maybe this is a real problem for industrial solvents, table salt or steel, but certainly not for restaurants, automobiles or beer?
True? Not nearly as true as we might think.
Over the past few years, The Gallup Organization has been tracking consumers in several product and service categories as part of its ongoing commitment to learn more about what creates and maintains brand relationships.
The results are not only surprising; in some cases, they're frightening.
Listening to customers: What makes a difference
Despite considerable marketing expenditures aimed at establishing
clear differences between brands, customers don't always get the
message. Or, perhaps more likely, they get the message but they
just don't buy it. That's because what is "different" to the
company may not be meaningfully different to the customer.
What claims do companies make? Founded in 1842? The widest selection in town? The category leader around the world for more than two decades? The distinctive blue bottle? The first company to introduce X? More pulp? Darker crystals? "Different" claims, perhaps, but so what?
The problem is that many marketers focus on attributes that may be unique to a brand, but which customers don't recognize as representing benefits exclusively tied to that brand. Just stating that your product is "unique" does not mean that customers will actually perceive it that way. Importantly, "uniqueness" is a conclusion drawn by the consumer and not merely a statement made by the company and its legal department.
How are we doing in applying our considerable marketing muscle toward the creation of meaningful brand differentiation? Not so hot. Consider the following.
When Gallup asked thousands of customers about the products and services they buy, and about the brands that they feel stand out as different, large numbers of current customers expressed their belief that all brands are essentially the same. In many customers' eyes -- and those are, of course, the only important ones -- there are simply no meaningful differences between the available brands!
For example, when we talked to banking customers in the United States, only a few (9%) reported that one bank stood out as "the best." The majority (58%) of current banking customers said that "all brands are the same." Similar numbers of airline customers (45%) said that they felt all airlines are "the same." Almost three fourths (74%) of those who buy computer diskettes and almost half (45%) of those who purchased outdoor clothing agreed: They saw no differences of consequence between the available brands.
Is the new world of e-marketing changing that picture? Is it building perceived brand differentiation, based on demonstrably enhanced convenience and direct accessibility? It seems not. A majority of online retail purchasers (54%) reported that all online retailers are essentially the same. Those numbers are quite similar to the mass merchandiser shoppers (50%) who believe that all retailers are "the same."
Are we getting better at creating brand differentiation? In 1997, half (50%) of those purchasing consumer electronics at retail stores said that there was no difference between retailers. Last year, the number was 54%. If we're trending, it seems we're trending in the wrong direction -- down the slippery slope to commoditization.
Making a difference through product and promotion
But what about other heavily promoted product categories, which
purportedly enjoy clear and distinct images and/or visible and
vivid product features? While there is clearly greater perceived
brand differentiation than with airlines, banking or retailing,
almost a quarter of those who regularly buy beer (24%) or who
purchased a new car (24%) also stated that all brands are "the
same."
How can this be? Can't consumers see -- or taste, or experience -- the difference? In a word, no. Or at least an appreciable group of them cannot. They perceive functional equivalence and, for all intents and purposes, they see "commodities" where marketers see "brands." And, again, it is the consumers' vision, supported by their actual experience, which is all-important.
Surprisingly, in spite of our large brand marketing budgets and heavy promotional expenditures, customers in the United States appear to see even less brand differentiation than is the case in some emerging brand-building economies. For example, while 58% of U.S. customers said that all banks are the same, only 43% of consumers in China agreed. While 24% of U.S. customers state that all auto brands are the same, a somewhat smaller number (19%) of China's consumer population agrees. A slightly smaller number of beer drinkers in China state that all brands are about the same (22% in China versus 24% in the United States). Not a particularly strong testimony to the power of U.S. brand builders.
A more established history of brand promotion does not, therefore, guarantee a more clearly differentiated brand landscape. In fact, the opposite may be true. Why? A myriad of available alternative brands, whose intended differentiation is unfortunately supported via "me-too" marketing!
Business-to-business: Creating difference where it
matters
What about categories that are less visibly promoted? Are they even
more "commoditized?" No -- or, at least, not necessarily. The
business-to-business brand-marketing situation paints a contrasting
picture of brand differentiation, at least in some categories.
Buyers of various ingredient and industrial products, in seeming
contrast to the buyers of TV sets and airline tickets, do not
necessarily feel that the providers of these industrial products
are interchangeable. For example, only 20% of industrial adhesive
buyers and 38% of those purchasing medical imaging supplies say
that they feel that all brands are the same.
Could it be that industrial adhesives brands are more clearly differentiated than automobiles? Perceived commoditization is apparently not an inescapable result when competing products have similar appearances, similar packaging or similar performance characteristics. Nor is a high degree of brand differentiation the automatic result when considerable attention is paid to product development, product styling or product advertising. How, then, is differentiation built -- and how do industrial supply marketers achieve higher levels of brand differentiation than insurance companies or clothing manufacturers?
Brand differentiation through the power of people
Where are the real opportunities for enhancing brand
differentiation?
Our research has consistently identified an often-overlooked or ineffectively leveraged marketing weapon as a key driver of brand loyalty: The people who represent the brand.
In business-to-business marketing situations, we've found that customer-facing representatives contribute greatly to the expressed loyalty of customers. In cases such as these, it is apparent that brand differentiation is heavily driven by people differentiation. That same opportunity (and challenge) exists in consumer marketing. Fast food. Airlines. Retail. It exists every bit as strongly, our research shows, where consumer contact is indirect or infrequent. Banking. Telecommunications.
Products can of course be copied, and they often are. Prices can be duplicated. Locations can be mimicked. Claims and ads can be imitated. Differentiation based on people performance is less readily copied.
Why? People represent a resource less easily managed, and less typically directed or guided by those with marketing or brand-building responsibility. Consistency of "people" experience is far more difficult to assure than is consistency of product experience or communications contact.
Still, it is not merely the claim of a "people" difference that results in enhanced brand differentiation or a stronger customer relationship. It is the claim of meaningful "people" promises that are consistently kept. Keeping the brand promise represents, as always, the foundation of any brand relationship.
As we've noted in earlier columns, people who "live the brand" and deliver on the brand promise have a particularly powerful impact on repeat business. And that, of course, is the real key. Only differences that actually make a difference to customers can create and support the real foundation of any brand: Brand differentiation.
So, how are we doing? Overall, not very well. At least if "differentiation" is our intended goal. Meaningful brand differentiation is clearly lacking in many categories, and it doesn't seem to be getting better.
What's the prognosis for brand differentiation in 2001 and beyond? Not great, if we use the recent past to predict the likely future. It heavily depends on whether today's brand champions can resist the lure of "me-too" marketing. On a positive note, it's certainly possible. Some brands have done it. And, there are even some largely ignored weapons that have proven to be enormously powerful in this war. Importantly, however, success is neither inescapable nor inevitable, and it is indeed a slippery slope to commodity-land.
