Deli distinctiveness and differentiation

"When ideas are cast in black & white absolute terms by great thinkers it makes it hard to make informed decisions unless they really are that cut & dry."

Gavin Marriman, Strategic Brand & Marketing Leader at LVMH

Much ado about D&D these days: Byron Sharp's championing of distinctiveness at the World Federation of Advertisers earlier this month, Mark Ritson's defense of differentiation webinar this week, and Manoli Kulutbanis' Delicious 'Mayo Sandwich' of both. Happy to stand on these broad shoulders to offer you below synthesis of (1) what are distinctiveness and differentiation, (2) what are their benefits?, and (3) when is one or the other more important?

 WTF are distinctiveness and differentiation?

I love using the 3Cs framework (Customer, Company, Competition) to discuss cases, and this is no exception. Both D&D care for the Customer, but they treat the Company and the Competition very differently. Distinctiveness is all about the Company: 'brands that look like themselves'. Potential customers recognize your brand's material right away, and your brand comes to mind when thinking about the category, especially in buying situations. As Manolis puts it "A core marketing goal is to find creative ways that can build a brand’s appeal and its reach to and for as many consumers as possible. This means for different consumers, different consumption occasions...as margin-effectively and margin-sustainably as possible. Heavy, medium, and light buyers. Buyers that care for some mix of attributes and buyers that don’t." As for his favorite mayo, Hellmann’s is: "Easy to Find, Easy to Think-Of, and Easy to Buy!" Byron Sharp calls this 'meaningless distinctiveness' in his How Brands Grow book.

In contrast, Differentiation is about being perceived by potential customers as different from competitors, on attributes that matter to consumers enough to influence purchase decisions. This difference is relative, e.g. Pauwels is relatively more practical than other marketing academics, and he is relatively more scientific than other marketing consultants. We don't own any brand attribute. Here's where early proponents (Reeves, Reis, Trout) went wrong, and how we 'lost the plot of differentiation' by chasing more and more esoteric attributes our brand could 'own', such as the consumers' "love", a specific persona or a specific purpose. Still, "over decades, a dynasty of Unilever marketers and product innovators have toiled to craft a product and brand with attributes and with an identity that obviously means something to me and many others. They have built equity." As a result, for Manoli, Hellmann's is Easy to Satisfy and Easy to Justify. Its value, taste, “almost-natural” ingredient list and war on waste (purpose, baby!) are perceived differentiated attributes that matter. In other words, meaningful differentiation.

Differentiation as a relative concept brings a similar nuance as customer share of wallet brings to the over-focus on customer loyalty in previous decades. Even for a Hellman lover as Manoli, there is no such thing as absolute loyalty, as his Sir Kensington affair demonstrates. Moreover, marketing insisting on 'absolute' differentiation and loyalty, is similar to strategy droning on about finding a 'blue ocean' or a 'sustainable competitive advantage'. There is no such thing, instead you are or become relatively better than the competition for a while. Because the competition will catch up to you, you next need to either run faster than the competition, or to redefine the most important attribute/quality dimension in your market. Strategy professor Richard D'Aveni proposed this in his book 'Hypercompetition', and we elaborated on how to run faster, and how to anticipate, even create industry changes in our article in the Journal of the Academy of Marketing Science, as covered in my blog.

What are the benefits of distinctiveness?

Against the 'Differentiate or Die' narrative, Byron Sharp and Jenni Romaniuk offer a much-needed antidote in promoting Distinctiveness instead. Marketing communication is creative publicity to create and maintain brand salience - not a persuasion attempt to communicate a differentiated advantage. As Andrew Ehrenberg and friends put it in 2 decades ago: "Advertising in a competitive market needs to maintain the brand's broad salience--being a brand the consumer buys or considers buying. This turns on brand awareness, but together with memory associations, familiarity, and brand assurance. Publicity can also help to develop such salience." Elaborating on these ideas, the Ehrenberg-Bass Institute focuses managers on the need for Reach: we want as many potential customers to identify our brand, and make it easy to (1) find and (2) come to mind in a buying situation. These two pillars are called physical and mental availability in How Brands Grow.

In their case for distinctiveness and against differentiation, we recognize the behaviorist foundations of the Ehrenberg-Bass approach. Don't pay attention to what consumers say, but what they do. Survey-measured 'attitudes' follow behavior: because I recently bought/used a brand, I may respond in a survey that I think it's cool. In contrast, differentiation proponents believe in a more cognitive/affective model of our behavior: because I think it's cool, I may buy it. In this world, attitude metrics are informative of customers' later behavior, as we showed across consumer categories. Mark Ritson featured our forthcoming Management and Business Review paper demonstrating that, while behavior often drives attitudes, attitudes such as differentiation also often drive behavior:

Manoli elaborates on this bothism in his love letter to Hellmann's mayo: "my ongoing choice for Hellmann’s is highly influenced by mental triggers that, for me, have made the brand both seemingly differentiated and distinctive in some way".

What are the benefits of differentiation?

First, remember how risky it seemed to raise your prices over the last year? Differentiated brands can charge a higher price premium, and consumers are less sensitive to its price increases. Second, your advertising returns are higher. As an anecdote, observe how much less Apple had to spend than Samsung to obtain the same sales boost. In general, our research showed that, for utilitarian FMCGs, highly differentiated brands can expect about seven times higher advertising responsiveness of affect than less differentiated brands.

Younger brands may especially benefit from differentiation, as shown in our research in the automobile category. For Manoli, it is the initial differentiation (easy to satisfy, easy to justify) that is foundational and necessary to first seed and establish the brand: "How else do you get to that initial and critical ~20% heavy buyer base that “only” accounts for ~50-60% of sales as Ehrenberg-Bass Institute research has uncovered and that has been validated by Jan-Benedict Steenkamp? Surely differentiation, perceived or actual, must also be necessary to replenish a portion of that heavy buyer base?"

In contrast, to scale a brand, distinctiveness is crucial. In the Ketchup category, Sir Kensington stood out with its exquisite taste and differentiated positioning, which intentionally turned Heinz up its head. Premium-priced, it was Easy to Satisfy and Easy to Justify for Manoli and me. Unfortunately, the brand fell short after a while on Easy to Come to Mind and Easy To Find. In Mayo, its retail shelf presence was minuscule, as Manoli illustrates with below picture:

Sir Kensington did not "fail" because it was differentiated, Manoli continues, "It likely just could not get the scaled traction and market penetration that it needed at a price point that was viable for Unilever." Insufficient resources were spent on increasing and maintaining its mental and physical availability.

When is distinctiveness or differentiation more important?

While both distinctiveness and differentiation should be measured and nurtured, a growing body of research demonstrates their importance depends on your brand age and market.

First, Kantar shows that differentiation is key to younger brands, but distinctiveness for older brands, generalizing our research showing the importance of sticking to your positioning. Second, emerging markets see a greater importance of differentiation. As Manoli ponders, distinctiveness may suffice for habitual buying, while differentiation is important for customers in discovery mode, or for consumers who perceive a high risk in getting their purchase wrong. As Manoli discusses my Branding over Wine interview for Branding Mag with Martin Scheire:

'Pauwels discussed his research that uncovered the extent to which differentiation mattered to a) small brands versus larger brands, and b) emerging versus mature markets.

"Differentiation matters most for smaller brands vs. larger brands and then in emerging countries vs. mature markets. If you are a smaller brand and want to challenge the status quo, then differentiation matters a lot”

What really caught my ear, however, was the reasoning behind the extent of differentiation and its relationship with the "amount" of attention that consumers commit with small vs large brands and in emerging vs mature markets.

“Differentiation is harder to achieve in mature markets, likely because people don’t pay that much attention to your brand. We are mostly creatures of habit. We don’t have much time to spend on brands. Time is our scarce resource in life"

The research uncovered that “in emerging markets people do pay more attention to brands”. Attention was "not that scarce in emerging markets.”

“Smaller brands need to differentiate, and larger brands need to focus on salience and/or distinctiveness”

Conclusion

I hope this piece helped you understand that distinctiveness and differentiation are different brand goals, and that BOTH are important for establishing and growing your brand. Mark Ritson called this "Bothism":

"For marketers, the key lesson is that when they build brands they need to divide their attention and their efforts across both concepts. On a single page of paper you need a list of the distinctive brand assets that will deliver distinctiveness. But beneath that list you also need a clear, tight brand position that – if correctly executed – will result in valuable, relevant, relative differentiation."

But how can we achieve distinctiveness and differentiation? Happy to refer to the excellent works of Jenni Romaniuk and Mark Ritson, Byron Sharp and Mary Kyriakidi (Kantar) on the matter! Let me know in the Comments if you want me to summarize their insights for the next Newsletter

As to the need for more research, I fully agree with Gavin Marriman of LVMH, that distinctiveness and differentiation are "interesting theories with supporting evidence even if not yet proven as fact" and love his call for "peer reviewed meta-analysis".