Submitted by jorn on
Grab your price-insensitive brand and dance it to growth. At every step, difference matters.
The case of differentiation
Back in the 90s, differentiation didn’t need to be defended. Because the absence of differentiation came with the fear of a commoditised product and the horrors of weaker consumer demand.
Fast forward to a decade ago, differentiation was deemed difficult to achieve any lasting success with, dare I even say ‘unnecessary’ for a brand to be successful. The case against differentiation suggested that it doesn’t affect price sensitivity, neither does it lead to brand growth.
The dance of tango
Serendipitously, the time and space considerations for differentiation bear a striking parallel to the dance of tango and its three basic steps.
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Step 1 - The open step (expand to new buyers) |
As the population grows, brands need to find additional shoppers just to maintain the same level of penetration. To put this in context, 1% penetration globally today is almost 1.8 million more households than it was 10 years ago.
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Step 2: The forward step (better margins, always) |
When it comes to evaluating businesses, a brand’s Pricing Power is the single most important factor for investors like Warren Buffet. This is because a brand with a strong Pricing Power is less likely to be swapped for a cheaper alternative, and is more likely to command a price premium and make better margins for its business.
Meaningful Difference drives Pricing Power:
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Step 3: The back cross (sales now) |
When it comes to present sales, i.e., be chosen today, Difference again remains a contributor, albeit accounts for a fifth of a consumer’s purchase decision. Meaningfulness and Salience take the lead, meaning that a meaningfully salient brand, one that meets needs and comes to mind easily at the point of sales is more likely to be chosen presently.
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