Differentiation that matters

by Patrick Barwise and Sean Meehan

The concept of marketing basically have two aspects, one is meeting the customer needs

better than the competitors in a profitable way and secondly, increasing the brand distinctiveness

in customers minds. But nowadays marketers has loosed their focus on customer needs and they

are hugely being focused on creating differentiation leading to customer dissatisfaction. This may

be due to the myths on which marketers are focusing on. The uniqueness myth says customers will

buy the product or service if they offer something new and unique. The table stakes myth says

marketers cannot differentiate the basics of a product, benefits and when companies focus on

differentiation on the basis of these basic benefits it simply become table stakes (minimum

requirement) rather than a source of competitive advantage.

The intent behind customers buying the product of a particular brand is because the product

meet their needs better than others. Customers want simpler and better products rather than highly

differentiated products. But in contrast the sometimes a brand having unique features or benefit

turns out to be valued by large number of customers. This simply does not validate the table stakes

myth. However keeping the basic relevant and delivering them reliably forms the basis of

sustainable competitive advantage.

Let's take the example of Toyota, Volvo and Chevrolet, Volvo has strong, clear, unique,

consistent, highly differentiated global brand equity and is indeed a valuable brand – but Toyota

is a much more valuable brand despite being far less clearly differentiated. Toyota's brand value

was illustrated by a McKinsey study comparing the prices of the Toyota Corolla and the Chevrolet

Prizm – identical cars produced on the same assembly line at a jointly owned plant. But Toyota

was outselling Chevrolet by four to one and this wall all due to brand of Toyota. Toyota being the
reliable, economical, easy-to drive cars at reasonable cost with good after sales service has stronger

brand than others i.e. Toyota has been better in simply providing what customer needs better than

others. In service sectors, keeping the basic product and service promises to customers would allow

the company to enjoy big return on its investments ad this will generate huge, positive and well

braded publicity just as in the case of Robert and Retailer B&Q. The moral is Customers don't

want bells and whistles and don't care about trivial differences between brands. What they really

want are quality products, reliable services, and fair value for money. Yet most companies

consistently fail to meet these basic customer needs

Having customer's insight is very important. General Motors has always been good in

market research but very weak at implementing those insights into actions. But in case of Toyota,

it has good brand value as it focus on continuous improvement. This does not mean being simply

better is all about the operational excellence, it's about making improvements as per the customer

needs.

Looking forward marketers need to focus on reducing the factors leading to customer

dissatisfaction and focus on ways to offer products that meet its promises and remains customer

relevant. Simply better" outlines an actionable framework managers can use to: Understand what

customers really value and why they buy the brands they do, Discover basic, unmet needs ripe for

reliable solutions, Channel customer dissatisfaction into performance improvements and create a

learning culture that continuously responds to changing customer needs. While being unique might

be exciting and appealing, it doesn't drive business success. This gives the rise in the need to focus

on what actually matters to customers. Differentiation of brand is relevant but not an end.