Differentiation is a key characteristic of branding. According to the marketing literature, it is the cardinal value of branding. If differentiation is so important, then we must understand what being different really means. More specifically, we should answer two questions: How different is different enough? And should you be focusing on being different or being distinctive?
Let’s start with the last one and explore the subtleties between ‘different’ and ‘distinctive’ in the context of brand identity.
Distinctiveness vs Differentiation: You say tomato, I say tomato?
At first, distinctiveness and differentiation might sound like the same thing. In reality, however, they are two different concepts. While the former happens on the perception level, the latter takes place at the reflection state.
Distinctiveness is about noticing things that are different or unique from what’s around them. It’s like seeing a red apple in a group of green apples. It’s immediate. Differentiation is when we break down or separate a big thing into smaller parts to understand them better. It’s like taking apart a puzzle to see how each piece fits together. It’s delayed. In simple terms, distinctiveness is about noticing what’s special or different, while differentiation is about understanding the different parts of something.
Let’s get back to marketing. Distinctiveness means that a brand stands out from other brands and gets noticed and remembered. It’s like recognizing a person in a crowd because they have a unique hairstyle or wear bright colours. This could be done by having a catchy logo, a specific product feature, or a memorable advertising campaign.
Conversely, differentiation is about understanding how a brand differs from others in the same category. It is a brand’s unique selling proposition (USP.) Think hybrid cars 20 years ago or electric vehicles now. So which one should you prioritize: Distinctiveness or differentiation?
Distinctiveness is important. So is differentiation.
The whole debate about differentiation vs distinctiveness feels like a false dilemma to me. It presents us with only two mutually exclusive options, forcing us to think in absolutes: black and white, good or bad, differentiation or distinctiveness… When we think like that, we tend to ignore the gray area in the middle and oversimplify complex problems. In this debate, the truth is most likely found in synthesizing two opposing arguments.
Research from the Ehrenberg-Bass Institute shows that differentiation does not play as big of a role in customer decision-making as previously believed, with many customers not perceiving clear differentiation between brands in various sectors.
For instance, their research shows that Pizza Hut and McDonald’s customers don’t perceive any significant brand differentiation, and most customers overlap between the two brands. So, by just looking at those results, we might conclude that distinctiveness is more important than differentiation. That said, the above two brands don’t differentiate, probably because they have similar jobs to be done! Let me explain.
Both Pizza Hut and McDonald’s are fast-food restaurants offering quick, ready-to-eat meals. Convenience is a major part of their value proposition. Also, both brands provide a casual, low-pressure dining atmosphere. Last but not least, they both offer indulgent, comfort food that customers may associate with treating themselves. So, even though one is a burger joint and the other is a pizzeria, the value propositions of the two brands are not that different! Consequently, it makes sense if customers don’t perceive any significant brand differentiation.
Now replace McDonald’s with a steak restaurant chain – like Longhorn Steakhouse; then you will have a completely different picture, for the contexts in which pizza and a steak are typically consumed are very different.
Pizza provides a quick solution, whereas steak dinner requires more time. Pizza offers a casual, comfort-food experience, whereas a steak dinner provides a feeling of luxury and indulgence. Pizza is well-suited to casual, large-group settings, whereas a steak dinner is often seen as more appropriate for special occasions or formal gatherings. You can create as many distinctive brand assets as you like, but you will not be able to make people clump those two brands together.
In the end, differentiation and distinctiveness are not adversaries -instead, they are complementary elements that collectively forge a brand’s identity. Differentiation is essential to carve out a niche in the marketplace, while distinctiveness ensures a brand is noticed and remembered amidst the clamour of competition.
So, as you chart your branding strategy, don’t limit yourself to a false dilemma of differentiation versus distinctiveness. Instead, embrace the fruitful synergy of both, as they hold the key to creating a brand that is not just seen but remembered, analyzed and understood among its competitors. That brings us to our first question: How different (or distinctive) is different enough?
Start with the Competitive Field
To talk about differentiation, first, we need to understand the competition. Each brand operates and competes in a specific industry, sector, or professional domain. That is called a competitive space. I have a problem with that term, for when we hear the word space, we think of void, vacuum, and emptiness. A better term would be a competitive field. Let me explain why.
As Margaret Wheatley explains in her timeless book “Leadership and the New Science,” even though we can’t physically see a field, we can always notice its effects. Let’s take gravity as an example. We can’t see the actual gravitational field, but we can see how it affects objects around us. We can feel it when things fall. We can measure how a star influences the orbit of planets from millions of miles afar. So, there is no such thing as an empty field.
Similarly, brands do not exist in a vacuum. They exist in what’s called the competitive frame of reference. It is the category that your brand is an active member of. It is the set of immediate opponents that you compete against. It is a way to see how you stack up against others doing the same thing.
The tricky thing about the competitive frame of reference is that you cannot pick your own. It already exists in customers’ mind. Think of a competitive frame of reference as a private party. You cannot get in if you do not have an invitation! For example, Kia manufactures reliable and well-designed cars. But it does not fall into the “status” frame of reference because customers wouldn’t grant it permission to enter the luxury category.
Going back to differentiation, a brand must be different first and foremost within its competitive frame of reference. Think about your brand’s top 5-7 competitors – the immediate set of brands that your customers associate you with. You need to be distinctive among those.
So, going back to the example above, if you are Pizza Hut, you should have brand assets that are distinctive from McDonald’s because, in the mind of the customer, the value proposition of both brands is -though not identical- fairly similar. But when it comes to Longhorn Steakhouse, Pizza Hut is better off harping on its differentiation: convenience, cost, the dining experience, and the social context.
Branding is not a game of ‘either-or’
Branding requires a fine balance between distinctiveness and differentiation. While distinctiveness catches the eye at the perception level, differentiation ensures your brand’s meaningful uniqueness in the minds of consumers at the reflection level. Rather than being an ‘either-or’ situation, the most successful brands navigate the balance of these two elements based on their unique competitive landscape.
Remember, differentiation is about meaningful uniqueness that resonates with your customers, while distinctiveness etches an unforgettable imprint in the customer’s mind. By understanding and harnessing the power of both, you can create a compelling brand identity that stands out in a competitive market, ensuring your brand’s relevance and longevity.