What has changed in business over recent decades is the amazing proliferation of product choices in just about every category.
It’s been estimated that there are 1,000,000 SKU’s (Standard Stocking Units) out there in America. An average supermarket has 40,000 SKU’s. Now for the stunner: An average family gets 80% to 85% of their needs from 150 SKU’s. That means there’s a good chance they’ll ignore 39,850 items in that store.
The dictionary defines “tyranny” as absolute power that often is harsh or cruel. So it is with choice. With the enormous competition, markets today are driven by choice. The customer has so many good alternatives that you pay dearly for your mistakes. Your competitors get your business, and you don’t get it back very easily. Companies that don’t understand this will not survive. (Now that’s cruel.)
Just look at some of the names on the headstones in the brand graveyard: American Motors, Burger Chef, Carte Blanc, Eastern Airlines, Gainesburgers, Gimbels, Hathaway Shirts, Horn & Hardart, Mr. Salty Pretzels, Philco, Trump Shuttle, VisiCalc, Woolworth’s.
And this is only a short list of names that are no longer with us.
In this global killer economy you have to find a way to differentiate yourself–or have very low prices. To do this, here are the steps you must follow:
Step One: The Context
Arguments are never made in a vacuum. There are always surrounding competitors trying to make arguments of their own. Your message has to make sense in the context of the category. It has to start with what the marketplace has heard and registered from your competition.
The context also includes what’s happening in the market. Is the timing for your idea right?
Nordstrom’s differentiating idea of “better service” played perfectly into the context of a department store world that was reducing its people and service as a way to cut costs.
Lotus launched the first successful network on “groupware software” called Notes just as corporate America was networking its PC’s. IBM ended up buying Lotus and Notes for $3.5 billion.
It’s like riding a wave. If you’re too early or late, you’ll go nowhere. Catch it just right and you’ll get a long and profitable ride for your difference.
Step Two: The Differentiating Idea
To be different is to be not the same. To be unique is to be one of a kind.
So you’re looking for something that separates you from your competitors. The secret is understanding that your different-ness does not have to be product related.
Consider a horse. Yes, horses are quickly differentiated by their type. There are race horses, jumpers, ranch horses, wild horses and on and on. But in racehorses, you can differentiate them by breeding, by performance, by stable, by trainer and on and on.
A product or service can be differentiated by feature, leadership, preference, heritage, specialty, how it’s made and on and on. (I wrote a book on this subject if you want more ways to differentiate your brand.)
Step Three: The Credentials
To build a logical argument for your difference, you must have the credentials to support your differentiating idea. This will make it real and believable.
If you have a product difference, then you should be able to demonstrate that difference. The demonstration, in turn, becomes your credentials. If you have a leak-proof valve, then you should be able to have a direct comparison with valves that can leak.
Claims of difference without proof are really just claims. For example, a “wide-track” General Motors’ Pontiac must be wider than other cars. British Air as the “world’s favorite airline” should fly more people than any other airline. Coca-Cola as the “real thing” has to have invented colas. When it’s “Hertz and not exactly,” there should be some unique services that the others don’t offer.
You can’t differentiate with smoke and mirrors. Consumers are skeptical. They’re thinking, “Oh yeah, Mr. Advertiser? Prove it!” You must be able to support your argument.
Step Four: Communicate Your Difference
Just as you can’t keep your light under a basket, you can’t keep your difference under wraps.
If you build a differentiated product, the world will not automatically beat a path to your door. Better products don’t win. Better perceptions tend to be the winners. Truth will not win out unless it has some help along the way.
Every aspect of your communications should reflect your difference. Your advertising. Your brochures. Your Web site. Your sales presentations.
In marketing, the rich often get richer because they have the resources to drive their ideas into the mind. Their problem is separating the good ideas from the bad ones, and avoiding spending money on too many products and too many programs.
Unfortunately, without the proper resources, even the best differentiating idea won’t get off the ground. Look what happened to AT&T in recent years. They failed to differentiate themselves from Sprint Nextel and MCI. The result: A price war that ended in the ignomy of being bought by a Baby Bell.
As I said, differentiate or die.