They don’t make any sense.”
Generally we’d find several people in the groups that had switched brand at some point in the past four or five years. Why? Coverage was patchy in their new house. Or they got a new work phone with their job and O2 was the network the company used. Or they lost their phone at the weekend, tried a few stores and ended up with Vodafone. Their offers were better that particular day.
The brand personalities were quite different for sure. You’d never mistake O2 for Vodafone. O2 was visually very distinctive. No question about that. Tonally it was somewhat distinctive too. But the actual services were pretty much the same. Neither was the cheapest option in the market. Both had good network coverage in Ireland. Vodafone had a slight advantage here in people’s minds, but not a meaningful one I believed. Both had retail stores across the country. Both had a similar range of phone handsets. Our customers told us how much they liked O2’s customer service. O2 might have had a slight edge on that. But again, only slight.
How frustrating. If my job was to differentiate the brand, I was failing miserably. Never enjoyed bumping into our CEO after a focus group. In fairness to her, she bought into the importance of long-term brand building. And had always supported it.
The assumption I never challenged was whether we needed to differentiate ourselves to win. At least, not until How Brands Grow. The possibility genuinely never crossed my mind that we might not need to differentiate ourselves. There are few ideas in business as ingrained as differentiation. From Michael Porter’s ‘Five Forces framework’ to Jack Trout’s book, Differentiate Or Die.
The rarely-challenged view is that, in order to sell, brands must be differentiated. Consumers must have a reason to buy them. This is a compelling, and intuitive concept. Makes sense. No reason to suspect that it might not be true. Except that some of the marketers best-known for empirical findings are not big fans of it.
Andrew Ehrenberg, Byron Sharp and others have said that the concept lacks empirical evidence.7 Peter Field told me that within his effectiveness research using the IPA database, he too found that “differentiation turns out to be actually a relatively weak driver of success. It is rare to find brands that have functional differentiation that is very significant. So if you pursue the route of seeking out points of difference which you then maximise, and then talk about in your advertising, you inevitably get driven to what are often peripheral or perhaps even irrelevant kind of points of difference.”
So there may be a subtle difference between advancing a theory like Porter’s, which advocates for a business to differentiate itself, and one that recommends talking about how we’re different in our advertising and marketing communications. I don’t think the debate is whether or not it is a solid business strategy. Although executing this over the long term is difficult. The debate tends to be about whether it is an effective advertising one.
Why might it not be effective? Well, it seems that people don’t really believe that one brand’s products are very different from another’s. The experts point to data that shows that we regularly buy a handful of brands. And we switch seamlessly between them. In my own situation, the argument was that if people believed O2 to be a pretty good substitute for Vodafone, then the brands are more similar than they are different. Not differentiated.
The argument is that differentiation does exist. But it happens within, not between, brands. For example, a two-door sports car is different to a five-door family car. However, most competing brands sell both. But brands differentiating from each other is difficult. Mostly because they copy each other. Successful ideas and innovations are quickly imitated.
But differentiation can exist. I saw that first hand too. In the UK and Ireland, O2 had exclusivity to sell the original iPhone for two years before other mobile networks could. The iPhone was very different to every other brand of mobile phone at the time. Clearly the difference was valued. Thus, the price premium. And, for those two years at least, O2 was different – it was the only network that sold the iPhone. This was temporary differentiation of course. Peter Thiel, the co-founder of PayPal, believes in differentiation. Although he points out in his book, Zero to One, that you need genuine difference. Ten times better. Not trivial differentiation.
Does any of this actually matter? Or is it just an academic argument? It does generate some good debate among the academics.8 A debate worth having. But are we just mincing words when we say differentiate versus distinctive?
From a practical perspective, I think it matters. This is about making better marketing decisions. If we have a powerful differentiator that customers will value and desire, great. Let’s shout about it. I’m working with a brand at the moment that I think has, at least for now, something differentiated and valued enough that people will pay more for it. They’re going to advertise their point of difference and see what happens.
But if we don’t have meaningful differentiation, it does seem feasible that we could still win customers without it. Brands that we are familiar with, or that are popular, have done so. Knowing this, we might save ourselves hundreds of hours, headaches, fights and agency fees trying to invent a weak form of differentiation that lacks credibility. All because we believe differentiation is essential. Professor Patrick Barwise told me that this “undue obsession with differentiation based on trivial USPs” is one of the biggest mistakes marketers make.
While the subject of differentiation is important, the bigger lesson I learned was to challenge marketing ‘truths’ and their underlying assumptions.
Fox lesson: Challenge long held marketing truths and beliefs.
6
Serial killer
Of all the tactical mistakes we make, there is one that crops up in many guises. It is the serial killer of good decisions. It is the mistake of assuming causation.
A common example is when we assume our advertising is effective because sales are up. We don’t consider other possible explanations that may have contributed to sales. Such as improved distribution. Or increased media spend. Or a price promotion. Or decreased competitor activity. Or the possibility that the entire market is up. Or the weather.
Granted, this specific example feels like schoolboy-error stuff. But it is quite common. Even now, I have to work hard not to trip over it. Another expert that I got to quiz was Professor Jenni Romaniuk, one of the best-known experts on branding in advertising. She is an Ehrenberg-Bass Institute Professor, a co-author of How Brands Grow (Part 2) and author of the more recent Building Distinctive Brand Assets.
I asked her views about a famous advertising campaign widely deemed to be successful. Within just a few minutes, Jenni discovered a piece of information I had missed. Before the new campaign, the brand had paused advertising for a long period due to a product recall. She explained that, “if this is the case then anything put on air would have lifted the brand”.
Her point was that in this situation, we could not say that increased sales were due to effective advertising. Instead, it was likely the impact of having advertising versus nothing, which is not that helpful for understanding what type of advertising works, or how well it works.
The opposite is also true. If your market share does not increase, folks might jump to the conclusion that your advertising isn’t working. But it is, of course, quite plausible that your market share could erode far quicker without your wonderfully effective ads.
Causation mistakes can turn up in more subtle ways. For example, what would you think if I told you that, in the UK, people prefer Costa Coffee to Starbucks? That’s probably not a fun piece of trivia if you’re the Starbucks marketing team. People in charge will want answers. The question on their minds would be whether or not Starbucks have an underlying brand health problem?
