Differentiation in the sea of sameness 👑

Why differentiated and durable brands are rare

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Last week, I wrote about value innovation and what modern brands can learn from Häagen-Dazs. This is the second part of that analysis.

Brands that enjoy quick growth rarely think about what will happen when this growth slows down. It inevitably does: coveted markets, like luggage and travel accessories and apparel get saturated as new entrants and legacy players set to capture the opportunity.

First-movers, unless they act quickly to build economies of scale and capitalize on their initial investments may find themselves stuck with disappointing IPOs and diminishing market share.

In the economy where supply exceeds demand, the best way toward long-term growth is to avoid competitive strategy altogether. Aspirational economy is not a zero-sum game.

Instead, better is to focus on creating and nurturing brand differentiation in the eyes of the consumer, through creation of buyer value. Buyer value protects a brand’s pricing power, as consumers are willing to pay premium for value they think they cannot get anywhere else. In saturated markets, the goal is to increase a brand’s market not in volume, but in value.

This consumer-centric growth strategy gives brands two advantages: first, it ensures that a brand grows through existing customers instead of pouring all its money in the paid acquisition of new customers. A brand becomes more valuable to the existing customers as the time goes on, through CRM, personalization, subscription, membership, experiential benefits and new products and new use scenarios.

Second, the consumer-centric growth strategy ensures that a brand grows through creating new buyer value and not through imitating competition. New buyer value makes competition irrelevant.

Buyer value is the fastest way to increase returns, after paying the fixed costs of developing e.g. exclusive content, curation, membership, subscription program, collaborations or community management. If it succeeds in creating buyer value, a brand can ride on a lot of word-of-mouth praise (think Brightland), and can spend very little on advertising.

There are two questions in creating buyer value that a brand needs to answer. First is whether a brand is offering its customers radically superior value: is it creating a new market, is it creating a new use scenario, is it redefining what consumers want to pay for. Second is whether a brand is offering its value at a price level accessible to the majority of buyers in its target market.