Why Brand Differentiation Isn’t Branding

Most brand consultants advise you to differentiate yourself from your competition. In many ways, this is bad advice. For one thing, customers really don’t care if you are different. They care whether you meet their needs. This was proposed back in December 1999 in a Journal of Advertising Research article, which found that “brand salience” is more important than differentiation.

Customers Buy Undifferentiated Brands

In a 2012 study of the car market (Journal of Marketing, July, 2012), researchers found that highly differentiated brands are more profitable, but have lower purchase and retention rates. In other words, a distinctive brand like MINI Cooper tends to appeal to a small group, or niche, of buyers with specific tastes. These buyers may outgrow a niche brand for a variety of reasons; for example, the MINI Cooper buyer may shift priorities when starting a family.

When customers lose or can no longer afford their niche affiliations, they are happy to buy products with no perceived differences. This is true of a vast array of household goods, clothing, and other consumables.

In fact, market leaders are almost always me-too brands engage in a fierce war that has little to do with innate differences. The success of McDonalds over Burger King, and Coke over Pepsi, is based more upon gaining an early market start than differentiation. People make subconscious choices based on their level of brand awareness and symbolic associations that have almost nothing to do with reality. Children, for example, were tested with identical food in various branded and unbranded packages – and unilaterally preferred McDonalds.

Brand Differentiation Is Not Sustainable

Product innovation alone can make your brand different, but only temporarily. Inevitably, good ideas will get copied by your competitors. Even patents are difficult to enforce. Companies that come up with really strong innovations have to barrel into the marketplace and grab mindshare as quickly as possible.

The first iPhone was launched in 2007, with Steve Jobs saying, “Every once in a while a revolutionary product comes along that changes everything.” Yet, Android offers most if not all of the same features and apps at a much lower price.

So, why is Apple now worth more than Google and Microsoft combined? Especially when, according to a Forbes article,  only 28% of users who switched to an iPhone did so because it “seemed to be the best phone at the time.”

Customer Experiences Distinguish Brands

Apple did not win against Microsoft/Google through a single product innovation alone. Instead, it has hammered competitors by introducing a stream of mobile devices and desktop/laptops with disruptive features like retina screens.

More important, it has followed a business model in which all devices integrate easily with each other. And Apple maintains control over the hardware as well as the operating system, while Microsoft left that business model behind years ago.

Apple didn’t become the biggest company in the world simply by selling a different product. Instead, it recognized something fundamental about computer users that other companies missed: we want our devices to make our lives easier, not harder. While Windows tripped up users, Apple created a carefully designed aesthetic experience that is enjoyable.

An article by Todd Hixon supports this idea. He concludes, after looking at the traits of Android and iPhone users, that iPhone users are avid tech consumers but not true techies, while Android users tend to work in technical jobs and are “more comfortable with the more open but less polished Android user experience.”

Customers Experience What They Believe

Its reputation for being better, not being different, is really the crux of Apple’s success. This moves beyond brand differentiation into the territory of salience. Think of salience as a murky mix of awareness, perceptions, and symbolic associations nurtured by marketing minds and advertising dollars. Is a Mac really three times better than a cheaper PC, or is something more at work in the mind of the consumer?

Currently, Apple is unchallenged in the U.S., but internationally Android sales outstrip the iPhone. Cheaper phones like the lookalike HLC are eating into Apple’s worldwide sales, and Apple is associated with affluence and status – an image that could around and bite Apple in the ass. And over-reliance on “the next big thing” may already be wearing thin with consumers, who face the hard-edged reality of a less-than-shiny economy.