Differentiation

In this post I'm going to cover less ground than in the previous posts; however, there are several aspects of differentiation that warrant discussion.

First, I wanted to mention the Young & Rubicam Brand Asset Valuator study. I was not aware of this but when time permits I'll definitely do more research into the study. Basically the BAV study meaures 13,000 brands, 450 global brands, covers more than three dozen countries and applies more than 50 measures. The study is produced every two to three years.

Next, why is differentiation important? Easy. In such a competitive landscape companies need to distinguish themselves from the group. A french fry is a french fry but McDonalds wants its french fry to be an experience of its own. In the same fashion, a hotel is hotel but Qbic, as cited in a previous post, seeks to differentiate itself from other Amsterdam hotels with its Cubi, its superior bedding and its functionality. When consumers are faced with so many choices the endless options can make it seem as though all the choices are virtually the same. Brand differentiation attempts to help a company and its products or services stick out in the minds of consumers.

What are branded differentiators? Differentiators are features, ingredients, services and programs that create a point of differentiation that is meaningful to consumers and requires active management over time.

Branded Features. A branded feature is typically a graphical or tangible feature. For instance, think about Glad Lock sandwich bags. There are tons of sandwich bags on the market and all are essentially the same. But, a Glad Lock keeps the freshness inside by that branded feature of the "yellow and blue make green" sealing system.

Branded Ingredient. A branded ingredient is an ingredient, component or technology that distinguishes the brand. What I find interesting here is that the consumer doesn't even have to understand and often doesn't understand what the ingredient really does but still finds value in it. For instance, the book gives a good example with Chevron. Gasoline is gasoline but Chevron differentiates itself with the branded ingredient of Techron. What is Techron? I have no idea and I'd presume most of us don't. But many people will buy Chevron gas because of the perceived superiority of its branded Techron ingredient.

Branded Service. A branded service is a service that augments the brand, adds value to the consumer and sets the brand apart from the competition. The book gives another good example with UPS. UPS is a shipping company but it has added several services under the brand UPS Supply Chain Solutions to differentiate itself.

Branded Programs. As you might have imagined, branded programs are programs that attempt to differentiate a brand. This differentiator is of importance to me because so many companies are turning to the web to implement programs of value for consumers. The book cites Harley-Davidson's online Rider Planner program. There are also loyalty programs like United Mileage Plus and Wells Fargo's Business Miles. Sweepstakes are common branded programs.

Next, I wanted to touch on why it's important to brand a differentiator. As the book states, the value of a branded differentiator in many ways goes back to the basic value of a brand. What's the value of a brand? A brand adds credibility, aids memory, helps communication and can provide a competitive advantage.

Lastly, I wanted to mention the Amazon example from the book. I love it because it so perfectly highlights the value of branded differentiators. If you've used Amazon, and I would imagine most of us have, then you know that Amazon has a very powerful tool that recommends books and items that might be of interest to a consumer based upon that consumer's previous purchases and the purchases of like minded consumers. Amazon released the tool but they actually failed to brand it. How big of a missed opportunity was this mistake? If Amazon had branded this tool, they would have created a lasting point of differentiation that would be invaluable. Needless to say, when Amazon released its one page check out process they didn't make the same mistake twice. Amazon branded it the One-Click checkout.

Schwab, Google and Sony

For today's blog we're going to take a quick look at a few items.

I'm actually going to skip over the Charles Schwab example from the book. The example was supposed to highlight how Schwab was a trend driver in the discount broker industry. Maybe they were way back when. But, in my mind and given my age, when I think of trend drivers in the discount broker industry I'm thinking of E*TRADE and maybe an Ameritrade - not Charles Schwab. To me the brand Charles Schwab just sounds like some old, crusty white guy brokerage house. Obviously, Schwab hasn't done their job in connecting with the 20 to 30 something crowd (okay... the 20 to 31 something crowd).

Next on the list of items to discuss, I wanted to address category or subcategory defining labels. We're all familiar with Kleenex (tissues), A1 (steak sauce) and Xerox (copiers). Since these brands define a category and have entered our vernacular, they definitely don't have to worry about being relevant to a category - they are the category. On the other hand, since they define the category there can be serious issues of confinement to that category which can limit options (among other problems... see below).

While on the subject of brands that define a category, I really wanted to comment on the subject of Google and the use of this brand as a verb. I don't know how exactly "google", the verb, entered the American vernacular but it drives me absolutely crazy. You "search". You don't "google". It could potentially be acceptable to say you "googled" when actually searching on Google. But, too often I hear people say they "google" when they're actually using Yahoo, MSN, AOL (yes, AOL is technically a Google distribution parter), etc. Regardless, Google reaps the benefits of defining a category but they are also extremely concerned about protecting their brand (when a brand name becomes too commonly used you can loose several rights to that trademark... do a search and read more about the topic or here is a link to a BBC article I found real easily).

Lastly, the book shifts to differentiation and brand energizers. In the process, it offers a great look at the Sony portfolio. Sony is one of the most, if not the most, recognized brands in the world. It's an amazing brand and for me Sony means top of the line electronics. However, Sony is way more than a consumer electronics company. They are leaders in music, games, movies, theaters and even insurance and banking in Japan. What's interesting about Sony's portfolio of brands is that they've used the portfolio to develop extremely strong yet differentiated subbrands and endorsed brands that actually work to enhance the overall Sony brand. For instance, Playstation, Walkman, VAIO, Cybershot and Discman all serve their own markets yet at the same time act as brand energizers for the Sony brand. When you think of the Playstation or the VAIO, you think of another Sony innovation. Another interesting point is that Sony's portfolio strategy differs drastically from several of their main competitors. Toshiba, Mitsubishi and Canon all rely on a single brand. Obviously, Sony doesn't. They rely on several brands. Additionally, Sony bucks the trend when allocating resources to its portfolio. Whereas IBM allocates over 50% of its resources behind the master brand, Sony chooses to support the master brand by spending budgets and accumulating equity in the subbrands and endorsed brands.

BTW - I stand corrected... in a previous post I complained about Blogger defaulting into the language of the ip address accessed from without offering a way to get back to English. I was wrong. Thankfully, I found the link to get back to English.