With the rate of start-ups at an all-time high and categories facing greater competition, saturation and disruption than ever before, it’s critical for businesses to understand differentiation strategy. Not only that, but understand how to actively pursue and execute differentiation within all aspects and levels of a brand. For ambitious brands, differentiation becomes as much as a verb as it is something to be identified; an iterative strategy more than a single exercise.
With mounting pressure from growing markets and aggressive visions for growth, more stakeholders play an increasingly essential role in creating brand value. This can be overwhelming for teams and individuals not well-practiced in brand strategy. As a remedy for those seeking guidance, you can use the following as a “Brand Strategy 101” guide for understanding differentiation and shifting your mindset to execute well.
How Differentiation Fits in Your Brand Strategy
Strong brands are strategic brands. By that I mean they consistently differentiate themselves in every aspect of their core strategy, from their brand positioning to their messaging. But to do this, you first have to know what your brand strategy is.
Developing a brand strategy is a multi-step process, and the order in which you move forward is important. There are a number of things to evaluate and decide as you start painting the picture of your brand. Let’s take a quick look at the steps to develop your strategy and where differentiation fits within the framework.
- Purpose and Vision. The first step is to decide who you are, where you want to go and what you want to be known for. Successful brands can tell you exactly why they’re valuable to their target audience.
- Brand Identity. Who are you? This should be both current and aspirational. Assess who your brand is now and how people see you, as well as who you’d like to be in the future.
- Growth Goals. These will move your brand forward. They give you criteria to measure growth as you implement new marketing strategies and allow you to see what works and what doesn’t.
- Category. What category of your industry are functioning in? Do you have an existing service, a modified offer, a new product? Your brand’s category will help you determine the best way to differentiate yourself.
- Positioning. Strong positioning addresses three hurdles:
- Differentiation. Are you different in a way people care about? Remember the balance between differentiation and relevance and try to find a way to stand out without completely leaving the herd.
- Relevance. Keep your customer’s problem front of mind. You have to stay relevant to the solutions they’re seeking to be seen as a viable option.
- Sustainability. Can you own your position for a long period of time or will copycats run you out of business? This is where you need to think about building motes about your business that keep your products and services unique even in the face of new competition.
- Creative. Consistency is key when it comes to the visual and written identity of your brand. Your position and identity are the essence of your brand, but the look and feel, and the words you use, are the outward expression. It’s how people get to know you, so it’s imperative that you communicate that consistently.
- Marketing Tactics. How you market your brand is how you activate your narrative. To be different, you have to do something. So whether it’s through digital marketing or direct mailers, focus your efforts on showing how you’re different from competitors.
Once you’ve worked through all these elements, you’re ready to hone in on your differentiation strategy.
An Increasing Need for Differentiation
We live in a product-saturated market. Competition is fierce across the board and standing out is getting tougher. Which also makes it more important. Without a strategy to break through the noise and make an impact on customers, hitting goals becomes infinitely more challenging.
But not impossible. Brands today have two choices:
- Differentiate — that is, do something uniquely or distinctly enough to stand out from other companies that do similar things.
- Compete — win the category by outdoing competitors with marketing or sales activity.
Without differentiation you’re just another gladiator in the lion pit, competing to the death with hundreds of other businesses who want to survive. Heightened competition means trouble for your bottom line—increased costs (especially for customer acquisitions), smaller profit margins and less room to elevate the perceived value of your product.
This isn’t to say you won’t make it. You can grow a business without differentiating yourself. But why be a gladiator in the scrum when you could be Caesar on the throne?
Lastly, something to consider: a winning differentiation strategy is all about balancing being different with being relevant. These two factors operate on opposing spectrums—the more different you are, the harder it might be to stay relevant and vice versa. You’re aiming for that sweet spot right in the middle.
At the end of the day, what sets you apart should clearly accomplish two things:
- Solve a problem
- Add value
Each should be unique to your brand and address something your competitors aren’t. These two things are what grow businesses effectively and efficiently.
Types of differentiators
As opportunities for brands to lay claim to new frontiers of products and services become leaner by the day, what choices do said brands have to distinguish themselves. The options are greater than you might think.
Once you know your brand vision, identity and goals, you can broaden your perspective and see which areas you can leverage to stand out. Almost any aspect of your brand can be a differentiator, but here are a few common examples of areas where you can stand out.
Scott Galloway teaches that there are two ways to differentiate yourself in this area. You can either increase your perceived value and charge higher prices or decrease costs to lower prices. Think about your brand identity and growth goals to choose which option is right for you.
The materials you use can say a lot about your product and even appeal to a specific audience. For example, clothing brands that source all organic fibers and focus on sustainable farming can use those high-quality materials to set themselves apart from traditional brands.
Apple is a prime example of brand differentiation based on product design. They innovated technology by creating sleek, elegant designs and user-friendly systems that better suited their customers. Just remember, if you want to branch off here, there has to be clear value in your differences.
Ease of Use
Most marketers spend a lot of time figuring out how to reduce friction between their customers and their products. And brands that do it well can use that to their advantage. Especially in technical industries, touting an easy-to-use product or easy-to-access service can be a key differentiator.
Similar to ease of use is customer experience. Some brands set themselves apart from the competition simply by being good at managing their customer relationships. This could mean anything from promptly responding to inquiries to streamlining their shipping and returns processes.
You’re not limited to just one differentiator. The list of options is long and any that are highly relevant to your business could help you carve a space for your brand in the market. That being said, it’s important to remember that effective differentiation is more about quality than quantity.
Take Whole Foods as an example. In 1984, John Mackey wanted to create an organic grocery store with quality products people could feel good about buying. With that identity in mind, he set out to position his brand as the leader in organic health foods. Now people pay premium prices for their organic kale because it’s the place to shop for quality produce.
Another significant way to differentiate yourself is through the user experience. (Think pre-purchase, purchase and post-purchase.) Let’s continue with the Whole Foods example post Amazon buyout. A new service offered at each location is Amazon item returns, no packaging necessary. Now the company not only provides a user-friendly interface, millions of products and two-day shipping, it’s also meeting customers’ needs post-purchase by meeting them where they already are.
How to Set Yourself Apart
Once you’ve figured out your brand strategy, you’ve probably also narrowed down the long list of potential differentiators. So how do you choose the best one?
Most brands working through this problem are small businesses or startups with limited capital and resources, so the priority initiative should be based on a cost-benefit analysis. You want to choose the thing that makes the most sense for your brand and your budget.
For example, if you’re an emerging business in the tech industry, product differentiation will be key. How is your product unique? How does it represent your brand’s purpose? Alternatively, if you’re in a service-dominated industry then you’ll have to find ways for your customer experience to stand out.
The most important consideration when deciding on a differentiator, especially in niche markets, is what aligns with your brand identity, purpose and vision? These three things influence your brand positioning across the board, which is why you determine them first when crafting your brand strategy. Your differentiator is the gateway to highlighting who you are and why you’re valuable.
Examples of Great Brand Differentiation Strategies
There are plenty of big brand names out there that became so popular by setting themselves apart. Companies like Lush, Starbucks, Coca-Cola and Apple all have incredible brand loyalty among their customers because they feel like they’re choosing the absolute best product there is.
But these major brands have been analyzed by every agency and pundit around, and I’m not one to beat a dead horse. Instead, I want to show you some slightly smaller brands that exemplify some of the differentiation methods we’ve talked about so far.
Salesforce was the first SaaS company, selling a cloud-based CRM system. Now that might seem so commonplace you don’t give it a second thought, but in 1999 when the industry was dominated by in-house systems? It was kind of a big deal.
What’s unique about Salesforce is how it created a sustainable business model even after the dot com bubble burst in the early 2000s. By adding services to its platform and continuing to position itself as the tech solution for businesses, it was hard for any competitor to get an edge on the multi-million dollar company, even in its early days.
Today it’s still the top brand name for cloud-based CRM services, with a total company worth topping $191 billion. Now that’s what I call cost benefit.
As a runner, this brand holds some personal interest for me. I watched On Running’s rapid rise to popularity as I crafted an article about Nike’s brand positioning, in wonder at how this ordinary running shoe could suddenly sweep the market.
Then it hit me. “Swiss Performance.” Everything about the shoe, from its design to its features, were the product of “Swiss engineering.” It stands out from domestic competitors because it looks different. So even in a market with countless similar products and price points, it still makes a statement and catches customers’ eyes without ever having to mention how it’s not Nike.
The brilliance of On Running comes from the acknowledgement of their market category. They operate in a well-established market with plenty of existing products, which can make differentiation tough. But playing to their strengths and keeping things simple has given them a competitive edge over brands that have traditionally dominated the industry.
ROKA established itself in the sports eyewear space by solving the most common annoyance among glasses wearers—frames sliding down your nose. And they leverage their messaging perfectly to show this.
Their message started simple: “They don’t slip.” After building awareness of this differentiation, they were able to start transitioning themselves into an aspirational brand. Phrases like “Performance driven” and “Made to move” demonstrate these glasses are made for athletes and can withstand anything you do. Plus, they won’t slide down your sweaty nose.
What Makes You Different?
This is your million-dollar question. Figuring out what differentiates your brand from the competition and how to leverage that is a layered process. At the root is your brand identity and positioning, from which the rest of your differentiation strategy stems. If you do it right, you’ll solve people’s problems and create a perceived value in your product. If you do it wrong (or not at all), you risk fighting in that lion’s pit and hoping your brand survives.
At Lone Fir Creative, we help our clients craft brand strategies that help them stand out while clearly communicating their value. So if you have any more questions about choosing differentiators or how they fit with your overall brand strategy, give us a call! We’d be happy to talk you through it and help you find the best position for your brand.