Book Highlights: Differentiate or Die

Problem of Commoditization:

• Reliance on promotional pages (deals)
• No refinement in choosing ad agencies
• Mgmt does not understand the mind of the customer

USP (Unique Selling Proposition): Specific, unique and strong!!

Differentiating with: types of customers – Intuitives (early adopters), Thinkers (analytical, logical and ignoring the emotions), Feelers (likes, dislikes, interested in feelings of others), Sensing (facts, details, putting things in context)

Differentiating Commodities:

• Identify
• Personify
• Create a new generic
• Change the name
• Reposition the category

“Where there’s a will there’s a way to differentiate“

1. Quality & Customer Orientation are not always differentiating ideas
   • Quality is a given; not a differentiator [Gillette model of differentiation: Improve, Upgrade and Innovate]
   • Knowing your customer is not a differentiator
   • Customer Orientation does not necessarily mean value for customers and company
   • Watch for undesirable and unexpected outcomes from customer loyalty programs
   • Customer Satisfaction does not mean customer commitment to your brand
   • Operational effectiveness v/s strategic positioning
2. Creativity is not a differentiating idea
   • By getting into the trap of being creative, you miss the point of conveying the actual message. (Clever and funny ads that actually do not say anything about the product itself)
   • Emotion depends on intelligence and reason. Emotion being irrational is a myth
   • Ads must promote the product benefits and product differences and not purely be creative an emotional
   • Present product information as news to customers, then it makes a bigger impact on their minds
3. Price is not a differentiating idea
   • You can start with price, but have to move up the value chain
   • Ways to do it:
     • Do something special
     • Cause confusion among the minds of the consumers as to what value others are providing
     • Shift the argument (eg Total cost of ownership)
   • Price promotions only work in the short term to give a spike in sales
   • short term price promotions can:
     • shift stock/move your stocks
     • achieve sales target for the quarter
     • postpone losing shelf space
     • keep up with competition for the time being
   • Differentiating with high price
     • high quality products can be expensive
     • high quality products offer prestige
4. Breadth of line is a difficult way to differentiate
   • Preference is better than breadth of line. (You should be the preferred product in a category instead of having a presence in all categories)
   • Large breadth of product offerings can also dilute your differentiation
5. Steps to differentiation:
   • Make sense in a context. (provide context to your message. what is the perception people have after listening to your competitor’s messages? What do customers think when they hear about Educomp for example?), (see if the timing is right)
   • Find the differentiating idea (Need not be product related)
   • Have the credentials (Back up your claims)
   • Communicate your difference
6. Differentiation takes place in the minds of the customers
   • Minds are limited
   • Minds hate confusion. Need simplicity
   • Minds are insecure. They will go by what others are doing
   • Minds don’t change
   • Minds can lose focus
7. Being first is a differentiating idea
8. Attribute ownership is a way to differentiate. (Products have attributes)
   • Owning an attribute. (BMW owns driving pleasure. Merc owns luxury, Volvo-safety,Jaguar-styling,toyota-reliability,ferrari-speed))
   • Having an attribute that is the opposite of what your competition has. (Coke was the original cola. Pepsi targeted the younger generation. Coke for the older people, and pepsi for the youngsters)
   • Attribute must be simple and benefit oriented
   • Attributes are not created equal. Some have a stronger impact, value and benefit. Ownership of such an attribute could give you a significant share of the market
   • Use of negative attributes to show your better than the competition. (BMW vs Merc: The ultimate driving machine vs the ultimate sitting machine. McD’s is for kids!!)
9. Leadership is way to differentiate
   • Owning a category shows leadership. Xerox-copiers, Heinz-ketchup
   • If your the leader, dont be afraid to brag and let everyone know. Customers like leaders. [People love underdogs, but buy from overdogs]
   • Different forms of leadership:
     • Sales Leadership
     • Technology
     • Science
   • Leadership is a platform
10. Heritage is a differentiating idea
    • heritage can be a substitute for leadership
    • locational heritage ( Scotch whisky, Italian designer wear, french wine etc)
    • Anti competitor heritage ( Most American vodkas look Russian. Stolichnaya is different. It is Russian.) (Absolut Sweden versus Absolute Russian.)
    • Use characters (Col Sanders)
11. Market specialty is a differentiating idea
    • One stop shop for everything is a bad idea [Gap-casaual clothing, benetton -wool &clothing for youngstrs,victoria secret, banana republic-upmarket casual wear)
    • Announce your specialty
    • Become the expert for that specialty
12. Preference is a differentiating idea
    • Customers like to follow the herd
    • They look for “social proof” before the make their decisions
    • If you can’t get everyone to prefer you, find a smaller group that will
    • If you have a brand ambassador, they need to be a good fit for the company/product [social proof]
13. How a product is made if a differentiating idea
    • Magic ingredient [KFC crispy chicken, Sony Trinitron technology, General Motors NorthStar technology etc]
    • Dramatize the difference [Customers dont need to understand how it works.]
    • Product innovation [Dove is made from moisturizing lotion, DiGiorno pizza is cooked twice without having the problems that occur with reheating ]
    • System innovation. Innovate the system that connects your product and the customer
    • Making it the right way by not cutting costs. Absorb the costs and produce a better product
14. Being the latest can be a differentiating idea
    • When it may not work:
      • do not solve a non-existent problem
      • do not mess with tradition
      • It must be better
15. Hotness can be a differentiating idea
    • If your product generates buzz use that to your advantage. A rapid initial sales growth can be one of them
    • Strategy implementation to explain why your hot through
      • Sales [compare your sales vs competitor sales for any time period favorable to you]
      • Industry ratings [JD Power)
      • Industry experts
    • Publicize the problem your trying to solve
16. Growth can destroy differentiation
    • growth can be distracting
    • line extension problem [Chevrolet was a good family car. They entered all categories and increase their line of breadth. Now no one knows what they stand for]
    • Discern between nice to have and the need to have, when adding features/products to your list of offering
17. Differentiation requires sacrifice
    • Product sacrifice [Eveready made all kinds of batteries. Duracell focused on alkaline batteries to become the leaders]
    • Attribute sacrifice – focus on one kind of product attribute. Volvo focused on safety for all their cars. Dell focused on direct delivery of PCs.
    • Target market sacrifice [Burger king sacrificed the kids meal market to target the older crowd to differentiate from McD’s]
    • BUT, What you advertise, what you sell and what you make money from can be three different things.
    • Sacrifice is only in the minds of the customers. [Fedex overtook the leaders by promoting overnight deliver of small packages. But that doesn’t mean they don’t ship larger or 2-day deliveries]
18. Being different in different places
    • Maybelline is a low end cosmetic range in the US. It is aspirational in the south east asian markets.
    • things to keep in mind if you go into other countries or markets:
      • current idea may be the wrong idea
      • attributes can change when you cross borders [beer is macho in Australia, considered feminine and sophisticated in south east asia)
      • your market leadership elsewhere may not translate
      • your heritage may not be respected
      • your specialty may get blurred [lux is a soap in indonesia, shampoo in china, and everything in Japan)
19. Maintaining your difference
    • Stay contrary (to general thinking or your competitors)
    • be consistent (ad guys, sales guys, customer support guys – all need to speak the same message)
    • make the tough calls (convince investors, stock markets etc that to differentiate you need to sacrifice)
    • consistency in operations(if you promote yourself as a customer friendly company, it should reflect in the operations. sales staff, customer support etc need to friednly)
    • evolve your difference – your differentiator may not remain the same over a long period. It could be copied or become irrelevant.
    • evolving vs tinkering – silly cosmetic changes done because of a trend will not help in maintaining your differentiation
20. You can differentiate anything
    • study the trends
    • shift the battlefield (top down – “bad for you” educational approach will not work. Telling cigarette users that smoking is injurious to health will not stop them or new people from trying it]
    • Strategy is executing your differentiation
    • “Slaughtering tomorrow’s opportunity on the altar of yesterday”
21. Who is in charge of differentiation?
    • The role of the CEO or Chief Marketing Officer is very crucial. To ensure everyone in the organization buys into it, and follows it, and not veer of that path because of distractions