About 95% of what executives in competing companies do is pretty much the same all around. This is good management. If you are CEO’ing a wireless communication services provider, you strive to put up an advanced technological infrastructure with a promising future, cool end-user phones, other devices and accessories, a great service system and competitive prices. Well, this is precisely where your competitors put their efforts as well. The 5% (give or take) that you do differently constitutes your strategy. The CEO of Southwest Airlines, the revolutionary domestic American airline, most of the time does exactly what her colleagues do. But her firm offers a ticketless travel and serves meals in the airport during waits, and not on the plane.
Doing well what you are supposed to be doing – is a prerequisite for competing. It is definitely not a strategy. Being better – is a deserving effort, yet it is not a strategy either, especially not in the long run. How, then, are you supposed to compete? Well, you could offer your clients more than what your competition offers, for a higher price, for the same price, for a lower price, or – offer them less value for a lower price. All of these options can give you an edge, but usually not for long.
You could also offer something different than what your competition does. If it is difficult or impossible to imitate, or it is something not likely to be imitated by your competition – then you might just have created for yourself a mini-monopoly of your own. Well, this is surely an accomplishment that should not be underestimated in a competitive market.
By definition, a strategy is a way by which you are planning to obtain your goals. That is why the strategy is, in fact, the way by which you plan to achieve an advantage over your rivals – in the eyes of your consumers.
There are three types of differentiation and only one of them constitutes a strategy (or strategic differentiation). The circumstantial differentiation consists of things like a historical monopoly, or some kind of personal connection between the consumer and someone in the firm, or a convenient store location etc’.
In any case where the consumer must choose between options – the answer is definitely yes. Because the consumer chooses between alternatives on the basis of the differences as he or she perceives. Do not fall into the most common trap of all: the consumer makes choices according to his perception of differences between alternatives, and not on the basis of what he values most in a product of that kind.
Competitive strategy is always a simultaneous answer to two questions. The first one is: in which consumer group do you identify a potential for buying your product? What I mean is that they have in common some factor, enabling you to make them an offer, which will be more attractive to them than the options they already have, or at least a refreshingly new one.
Experience has taught us that the key is to make a specific group of consumers, even a small one, think that you are irreplaceable. They will act as your success engine, even amongst consumers who are not as definite in their attitudes. BMW fans do not believe that Mercedes is a bad car; it’s just that it is not a BMW.
What has all this do with branding? A brand is the consumer’s anticipation for a unique and defined experience or for a certain unique benefit obtainable solely through consuming/owning a specific product/service manufactured/offered by a specific company. Thus, the anticipation of a trip to Paris would be to experience a romantic vacation. The anticipation from Ikea would be “state of the art design at a reasonable price”. It is fair to say that a brand is really a brand only when there exists, among its consumers, such anticipation. If this anticipation is both exclusive and attractive, you might say that it is a strong brand. A familiar name or logo – do not suffice to make a strong brand.
The “third place” the neighborhood place you frequent in between work and home offered by Starbucks – is a brand strategy. It is also the differentiation – the competitive strategy itself! Or more accurately, the brand strategy is the translation of the competitive strategy into a language of promises made to the consumer.
The brand’s role in the realm of marketing has changed dramatically during the past decade. Today, brand building no longer constitutes a mere manipulation of the consumer’s perceptions and desires, but it is a creation of a system that on the one-hand makes promises and arouses anticipations, while on the other hand it delivers and realizes the promises that it makes.