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Evidence concerning the importance of perceived differentiation, J.Romaniuk, B.Sharp & A.Ehrenberg

Evidence concerning the importance of perceived brand differentiation

Jenni Romaniuk, Byron Sharp & Andrew Ehrenberg

Abstract The credibility and vibrancy of any discipline depends on a willingness to question even the most strongly held beliefs. Our challenges the central importance of differentiation to brand strategy. We provide an empirically grounded theoretical argument that differentiation plays a more limited role in brand than the orthodox literature assumes. We then present empirical data, spanning many categories and two countries, showing that there is a low level of perceived differentiation across competing . However, despite this lack of perceived differentiation, are still buying these brands. This leads us to question the importance of perceived and valued differentiation and to instead place distinctiveness at the centre of brand strategy - where a brand builds unique associations that simply make it more easily identifiable. We discuss the very positive implications for and call for research on being distinctive and getting noticed.

Keywords: Brand differentiation, Distinctiveness, perceptions, Perceived differentiation

Brand Differentiation: the marketing tenet models that describe the conditions that create Differentiation is regarded as one of the core principles differentiation (Caves and Williamson, 1985) are of marketing theory and practice. The near universal respectively based on (a) brands offering different exaltation is “thou shalt differentiate” (e.g. Fulmer and features that appeal to different segments in the Goodwin, 1988; Levitt, 1980; MacMillan and McGrath, (Lancaster, 1984; Lancaster, 1979; Rosen, 1974), and/or 1997) - with the clear implication that marketers should (b) transaction costs and information imperfections be judged on how well they differentiate their brands. (Nelson, 1974; Nelson, 1970; Stigler, 1961). Such fundamental tenets deserve rigorous theoretical Differentiation makes the brand an imperfect substitute inspection as well as empirical testing. Science with other brands so buyers of the brand are more loyal, progresses not through consensus and the accumulation and therefore its base is more secure. This of conventional wisdom, but through competitive makes the brand less susceptible to the activity of inquiry, questioning and testing. In this article we present competitor brands; when a competitor lowers price, theoretical and empirical evidence that throws doubt on brands that are more differentiated are thought to lose the central position of differentiation in brand strategy. fewer customers (Caves and Williamson, 1985). Reduced is the potential price paid for this increased loyalty, Theoretical Development as a brand may appeal more to only one type of buyer, or The concept of differentiation can be traced back to all buyers but only in a specific buying situation. Chamberlin and Robinson’s independent 1930s work on The economic theory is analytic rather than empirical. deviations from the classical perfect competition Logically, brands that are less substitutable will compete (Chamberlin, 1971; Chamberlin, 1933; Robinson, 1933). less directly. This does not mean that the normative The economic literature asserts that marketers should try strategy implications are proven. They depend on some to differentiate their brands from others, so that they face important empirical questions concerning differentiation less direct competition. The two current economic in the real world, such as:

42 Australasian Marketing Journal 15 (2), 2007 Evidence concerning the importance of perceived brand differentiation, J.Romaniuk, B.Sharp & A.Ehrenberg

• How differentiated are brands? The multivariate techniques that are routinely employed, such as factor analysis or , are often • Do competitive brands differ in their degree of sensitive to small differences. This allows them to differentiation from one another? highlight small differences, almost regardless of • Is the payoff worth the costs? magnitude, but renders them less useful as quantitative • When does differentiation reduce sales (and by how measures of the degree of differentiation. much)? Collins (2002) criticises these techniques for missing the main patterns in consumer perception data, such as the Differentiation in marketing finding that brands with more users gain more image The marketing literature takes a motivational attribute responses than brands with fewer users, almost perspective. Textbooks talk of a meaningful perceived regardless of the attribute (Barwise and Ehrenberg, 1985; difference that provides buyers with their reason to Bird et al., 1970; Romaniuk and Sharp, 2000). Few purchase and be loyal to the brand (Aaker, 2001; Kotler, studies show knowledge of these 1994). Undifferentiated new entrants are supposed to be facts, nor do they seem to (re)discover them in their own most likely to fail because no customers should be data, which is probably a good example of how motivated to buy them (Davidson, 1976). Established observation is dependent on theory (Chalmers, 1976). brands are exhorted to maintain their point of difference The accepted view is that differentiation is a widespread, in order to stay desirable to their customers. but not always adopted, strategy that is implemented with Breakthroughs in perceived differentiation, achieved varying degrees of success (Porter, 1980). This means through either features (e.g. Apple’s iMac) or that some brands are more differentiated than their image building (e.g. Marlboro man), are seen competitors. However Sharp and Dawes (2001) argue as the pathway to growth. that differentiation, while a pervasive aspect of modern The marketing literature explicitly emphasises that the markets, is largely a market characteristic. Competitive differentiation has to be perceived by customers as brands within a market are similarly differentiated, with different (Ries and Trout, 1986) and must be valued predictable (small) asymmetries between small and large (Carpenter et al., 1994; Kotler et al., 1996; Reeves, brands. Brands are mainly differentiated at individual 1961). This valued difference does not have to be a buying situation level (“this one is here now”; or “this is material product feature. Rather, it may be symbolic, in my size”) rather than at brand level (“this brand is emotional, or even quite trivial (such as in Broniarczyk always different from the others”). Sharp and Dawes and Gershoff, 2003). Folgers “flaked coffee crystals” is advocate location and information models to explain an excellent example of this (Carpenter et al., 1994). why differentiation occurs (such as in Hotelling, 1929; The advertising principle of promoting a ‘unique selling Stigler, 1961), drawing on a substantial body of proposition’ (USP) (Reeves, 1961) is a reflection of this generalised empirical evidence, which we now discuss. theory. Advertising that does not give buyers a reason to Expected empirical evidence for differentiation buy that brand is not thought to be effective. Recently however, others have challenged this orthodoxy arguing If brand-level differentiation exists, whereby a brand that advertising can work effectively without a USP, or appeals to a defined customer base that particularly means of (e.g. Ehrenberg et al., 2002). the differentiated feature, then we might expect many brands to differ in terms of the types of customers The “differentiation or die” type assertions (e.g. Trout they attract. Yet brand user profiles rarely differ greatly and Rivkin, 2000), which are very common, are in demographics or other customer identifying variables potentially empirically testable. Yet the marketing (Kennedy and Ehrenberg, 2001; Kennedy et al., 2000). literature presents them largely as articles of faith, and so Brands of vastly different price and quality do have there have been almost no attempts to verify or falsify different user profiles. Expensive brands tend to be these beliefs. Consequently, we have almost no scientific bought by wealthier people - but within their competitive quantitative knowledge about levels of differentiation set the brands’ user bases look similar. Versace’s buyers between brands[1]. When market researchers and are similar to those of Gucci. Ultimately, competitive academics examine a brand’s differentiation, they brands all appeal to the similar types of customers; some typically analyse brand image data deliberately looking brands just have more buyers than others. for differences in the way perceive brands.

Australasian Marketing Journal 15 (2), 2007 43 Evidence concerning the importance of perceived brand differentiation, J.Romaniuk, B.Sharp & A.Ehrenberg

Differentiation theory suggests we should expect a great evidence does not support the traditional role of deal of market partitioning, where brands share more or differentiation in the marketing literature; neither does it fewer customers than would be expected based on their support a ‘perfect competition’ () model. respective market shares. Yet the widespread fit of the Differentiation undoubtedly exists, but empirically ‘Duplication of Purchase law’, which states brands share grounded theory suggests that it is best thought of as a customers with other brands in line with their relative category-level rather than brand-level phenomenon. shares, shows that partitioning is generally fairly rare and This is consistent with a recent examination of consumer often small (Ehrenberg et al., 2004). We might also perceptual data, which found that brands that are more expect brands that appear close together on a perceptual successful did not have proportionally more unique map to share customers more than brands that are associations than less successful brands. Further, the positioned further apart, but this is not the case. Instead evidence was that customers with higher preferences for it appears that image positions are largely independent of a brand did not hold more unique associations than those brand buying patterns (Sharp et al., 2003; Sharp and with lower preferences. In contrast, the level of brand Sharp, 1997). uniqueness, as designated by the proportion of Thirdly, we might expect to see different price associations that customers held for one brand only, and elasticities, as customers of more differentiated brands the number of brands in the category are negatively would be less price sensitive. However, price elasticities correlated (Romaniuk and Gaillard, 2007). seem to vary more with the context of the price change In summary, differentiation theory is much like the (depth and direction) rather than being a brand-specific classical economics perfect competition model in that it property, with different elasticities for different brands describes an abstract ‘ideal’ world. Marketing textbooks, for the same price change (Scriven and Ehrenberg, much like classical economic texts of the past, treat this 2004). This further suggests that brands within a idealised model as if it were an adequate representation category have similar levels of differentiation. of the real world. This model underpins a series of Finally, there is the strong empirically grounded support widely held beliefs, which can be broadly summarised as for the widespread fit of the NBD-Dirichlet model of the following: purchase incidence and brand choice. The NBD- • A brand must be perceived as different in order to Dirichlet model (Goodhardt et al., 1984) effectively win market share (i.e. customers must have a reason assumes that brands compete as undifferentiated choice to start buying the brand) options of varying popularity. Both brand segmentation (brands selling to different types of buyers) and • A brand must be perceived as different in order to partitioning (exceptions to the Duplication of Purchase maintain market share. That is, customers must have law) violate the theoretical assumptions of the model. Yet a reason to keep preferring the brand in the face of the NBD-Dirichlet model successfully predicts a wide competition from other brands and new entrants. variety of brand performance metrics across many • Some brands are much more differentiated than different product categories and countries, as well as others, meaning that their customer base is more across time (Ehrenberg et al., 2004). loyal and less sensitive to actions of competitors. This Every category has brands that differ in price and quality, may result in greater profitability. However, the referred to as ‘vertical differentiation’ by economists. highly differentiated brand may suffer from Sometimes there are brands that are vastly more constraints on market share because it is only a select expensive and this shows up in differences in user bases, group of people, or only in a specific situation that it and departures from Duplication of Purchase law and is preferred. Dirichlet benchmarks (Ehrenberg et al., 2000). That There is a need for research to empirically test these evidence of this nature is not often seen in categories also fundamental tenets of marketing. Here we focus on suggests weak levels of differentiation. It should be testing one important aspect of differentiation, the extent noted that within these expensive/luxury sub-categories to which buyers perceive the brands they use to be the brands compete as if there is little differentiation differentiated from other brands in the market. If (Colombo et al., 2000). differentiation is a key reason why buyers buy the brands This substantial body of theoretical and empirical they do, then we would expect a high proportion of a brand’s buyers to say that it is different. We would also

44 Australasian Marketing Journal 15 (2), 2007 Evidence concerning the importance of perceived brand differentiation, J.Romaniuk, B.Sharp & A.Ehrenberg

expect non-buyers to see it as different – this difference of the survey, there were questions about the brands being why they do not buy. We might also reasonably currently used by respondents. We used these questions expect to see variation in the degree to which brands are to identify the customer base for each brand. perceived as different, with some brands better at Two methods of data collection were used. The first was providing a meaningful ‘reason to buy’ than others a free choice, pick-any, approach where respondents (perhaps growing brands or highly profitable ones, or were read out the attribute and asked which, from a list those serving a specialist niche). of brands, they consider to be associated with that Research method attribute. The second was five-point rating scales, employed in a subset of three markets. These are the To examine consumer perceptions of differentiation, we most commonly employed methods in academic and draw on data that asks consumers directly how different . or unique they perceive the brand to be. We compared the responses from the customer bases of different brands in For the remainder, Young & Rubicam kindly provided us the same market. Over a variety of markets and survey with historic data from their Brand Asset Valuator methods, we experimented with several alternative direct survey. Here we report on ten product categories using measures of perceived differentiation. They all produced Brand Asset Valuator (BAV) data collected in 1999 in the the same patterns across our measures of different and UK[4]. There were some important differences in the unique used in this study. questioning and data collection method for the Australian and UK data, yet the results were consistent. Our measure is therefore a generic direct measure of perceived differentiation. This means that we did not have • The BAV data was collected by self-completion to infer differentiation levels indirectly from measures of questionnaire exclusively using the pick-any perceived functional or symbolic attributes, brand approach. Brands from different product categories personality, or perceptions of who uses the brand. Indirect were interspersed and respondents were instructed to measures are the traditional way of inferring fill in the booklet one brand at a time. Respondents differentiation, e.g. distance from other brands on a were not asked to compare the brand in question with perceptual map[2]. As a quantitative measure of other brands directly (Coke with Pepsi or Dr Pepper). differentiation, this suffers from several problems. First, Instead, they were asked only whether the listed indirect measures of differentiation are dependent on the brand, alone, is different, unique and so on for each of particular attributes that are measured. Their choice for the many attributes contained in the BAV inclusion in the survey is subjective and some reasons for questionnaire. perceiving a brand as being different may be idiosyncratic • In contrast, the Australian data was collected via or personal (e.g. “the brand my grandfather introduced telephone with instruction to answer for each me to”) and therefore unlikely to be included in a survey. attribute, across all brands. So respondents were Second, there is the difficulty when interpreting the given a list of brands and asked which of those contribution of attributes to meaningful differentiation. brands was different and/or unique (or asked to rate For example, if more Coca- users associate the brand its degree of being different and unique). as being American than Pepsi users, does that mean that Coca-cola is more differentiated? Even when indirect A table outlining the key characteristics ( measures imply differences in differentiation levels frame, screening criteria, sample size, geographical between brands, they give little sense of the absolute level spread and measures) is contained in Appendix 1. of differentiation. We chose our direct measure of Results differentiation to avoid these problems[3]. First, we examined the overall results for the attributes The seven Australian markets were Skincare, Spirits, different and unique using the pick-any approach. To Cars, Beer, Fast Food, Banking and Supermarkets. All allow for the possibility that respondents felt the two data were collected by telephone, using trained market attributes duplicated each other, and therefore only research interviewers. For each study, the attributes of answered once, we calculated the proportion that stated different and unique were interspersed randomly with the brand had either attribute. Only current brand users other attributes relating to the category, so the intent of were included in analyses. the research was not obvious to respondents. At the end

Australasian Marketing Journal 15 (2), 2007 45 Evidence concerning the importance of perceived brand differentiation, J.Romaniuk, B.Sharp & A.Ehrenberg

Table 1: Brand user perceptions of differentiation in the Soft drinks (UK) and Banking (Australia) categories

Table 1 illustrates the proportion of each brand’s To check whether the result was simply an artefact of the customer base that gave either response (different or measure, in three of these categories we employed a five- unique) for Soft drinks (UK) and Banking (Australia). In point , ranging from not at all descriptive to both categories, only about one in 10 current customers extremely descriptive. A different set of respondents perceive the brand to be different or unique, and about were recruited, and interviewed via telephone by 15-20% state it is either. professional interviewers. As shown in Table 3, few brands scored higher than the neutral midpoint of three. All 17 markets we tested (see Table 2) follow a similar None had a mean higher than four, a score that would pattern, with averages of 11% for different, 10% for indicate that the majority thought this quality was unique and 17% for either. somewhat descriptive of the brand. Therefore our finding It could be that these responses reflect respondent that consumers did not see their brands as highly apathy, however there are three indicators that this is not differentiated is consistent across both pick-any or a the case. The first is that there were exceptional brands scale measures. This extends previous research that within markets. These were brands with obvious shows that perceptual surveys employing either rating functional differences, such as Aldi supermarket, which scales, rankings or pick-any all produce similar findings does not stock national brands (scored 67% for different (Barnard and Ehrenberg, 1990; Driesener and from its current customers) while in Fast food, sandwich- Romaniuk, 2006). only brand Subway achieved 50% for unique from its Of course, while being perceived as different may be a current customers when put in a competitive set with reason to buy, it can also be a reason not to buy McDonalds, Dominos and KFC. So respondents could (something rarely acknowledged in marketing’s indicate when something was perceived as more differentiation literature). This, however, is not evident in differentiated. Few brands however, were perceived as our results, with users twice as likely to associate brands such. The second indication that respondents were with the differentiation attributes than non-users (see properly answering the questionnaire is that three times Table 4). This result suggests that the attributes different more people named at least one brand, than named any and unique are following the normal evaluative patterns one brand. This shows that while many customers did seen for positive associations (Barwise and Ehrenberg, consider at least one brand to have these qualities, the 1985; Hoek et al., 2000). Consumers know very little particular brand varied across customers. A further about brands they do not buy. indicator of data quality is that the results show expected differences between categories. For example, soft drinks Discussion: Perceptions of differentiation had higher differentiation scores than water. Further, Our aim was to examine the extent to which consumers spirits and skincare, two categories deliberately chosen considered the brands they buy as differentiated from by the researchers as highly “image driven” and other brands in the market. Effectively, we were supported by vast amounts of brand advertising investigating whether buyers needed to perceive a expenditure, both showed amongst the highest levels of reason-to-prefer in order to buy a brand. We found that differentiation (although still low).

46 Australasian Marketing Journal 15 (2), 2007 Evidence concerning the importance of perceived brand differentiation, J.Romaniuk, B.Sharp & A.Ehrenberg

Table 2: Results across 17 categories in Australia and the UK

the majority of buyers do not explicitly state that they considered Coca-cola to be unique or different, 76% perceive their brand to be differentiated from other considered at least one of the soft drink brands to be brands. Therefore it is questionable whether perceptions different or unique. This indicates that the responses for of brand differentiation are significant drivers of buyer each brand are not from the same people saying multiple behaviour. brands are different or unique but rather are from different respondents choosing specific brands (usually There were some systematic deviations from this general one or two). Thus, the low scores for the perceived pattern, where certain brands consistently obtained differentiation attributes appear to be due to respondents higher response levels. These were small, higher priced being very selective about which brands they consider to brands, which is consistent with the notion that more have these qualities, rather than rejecting the attributes in differentiated brands will tend to be smaller. There were general. also some deviations linked to obvious functional differences, rather than image differentiation. Implications for marketing theory and practice Our low scores could be because buyers felt such As previously discussed, the marketing theory on brand attributes did not apply to any brand, and that brands are differentiation takes a motivational perspective. . Alternatively, a dominant segment could Differentiation is claimed as necessary for buyers to have that feel all the brands are the same. However, neither of a reason to buy the brand. Other theoreticians have these explanations have evidence to support them. We argued that there is sufficient situation-level found that while any one brand’s score was low, up to six differentiation in for choice to take place times more respondents associated at least one brand in (and preferences exist) without buyers perceiving brand- that category as unique or different. That is, while 19% level differentiation (Sharp and Dawes, 2001). Our

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Table 3: Rating scale results (mean score, current brand users only)

Table 4: User and non-user average responses for perceived differentiation

empirical results support this latter view, with the finding knowledge. An Apple Macintosh is a that most buyers of a brand do not see it as different or (PC), with a graphical user interface and a mouse and unique. Yet, these buyers still buy it. keyboard. It runs software (e.g. Office), sends email, stores files, prints and so on – like any PC. It is Table 5, showing expanded data from the Computers therefore understandable that many Apple users might category (in Table 2), illustrates this point. Apple is often not see the brand as particularly different or unique. They presented as a poster child for differentiation. While bought it to fulfil the requirements of being a computer, Apple’s level of perceived differentiation is higher than just as did the buyers of any other computer brand. other computer brands, most of Apple users (77%) did not perceive their brand to be different or unique. This The marketing literature instructs marketers to strive seems surprising given that Apple computers tend to towards achieving valued differences between brands. look different and have a different operating system[5]. Yet, even marketers of highly successful brands appear to However, most computer users have little technical have failed. It is certainly not a case of “differentiate or die”, else most of the brands we buy would be gone.

48 Australasian Marketing Journal 15 (2), 2007 Evidence concerning the importance of perceived brand differentiation, J.Romaniuk, B.Sharp & A.Ehrenberg

Our analysis was largely confined to successful, be given much attention. This view is counter to many established, larger brands. However, within these were models of information processing, where buyers are brands that are far more successful than others. In thought to weigh up brands on the merits of their relative addition, some were presumably growing and others attributes (Alpert, 1971; Fishbein and Ajzen, 1975; declining, some very profitable and others not. Yet there Green et al., 1981). This implies that buyers are was very little difference in terms of the degree of knowledgeable about differences between brands. perceived differentiation. This casts doubt on a causal However, we find empirically that buyers seem to know link between perceived differentiation and brand something about the brands they use, and very little performance. It does not totally negate the possibility, as about the ones they do not use. a shift in perceived differentiation may lead to a shift in The main implication of this research for marketing market share. However, our results suggest that either the practice is that marketers do not need to convince buyers gain is temporary and differentiation perceptions return that the brand is different in order to get them to buy. to normal, or other brands quickly match any perceived This should take a considerable weight off marketer’s differentiation gains to return all brands to a new status shoulders as our data shows that such a task is probably quo. near impossible. Instead marketers need to focus on The literature has for decades achieving the things that do make customers buy. focused on customer perceptions of brands as the main Recently, it has been suggested that awareness and reason why one brand is chosen over others. This salience play a greater role than conventional emphasis seems misplaced. If buyers of a brand do not differentiation theory would suggest (Ehrenberg et al., think their brand is different or unique, then presumably 1997; Romaniuk and Sharp, 2004). Our result provides this is not the reason why they buy it. We need to look empirical support for this theory. This means that all elsewhere for explanations of why they buy this brand brands are ‘differentiated’ (they do not compete as and not others. perfect substitutes) in that for each buyer there are It seems counterintuitive that buyers do not often notice brands that they know well and other brands they think that the brands they use are explicitly somehow different very little about. For each buyer, there are also many from other brands, particularly given that some of the brands never or seldom considered for purchase. brands are functionally different (e.g. McDonalds versus However, this is not brand differentiation in the sense KFC). However, brand choice is a relatively trivial task that buyers perceive some brands as being meaningfully compared with deciding whether to buy or not from the different from others. product category. So buyers seldom spend much time Our research also highlights the dangers of relying solely comparing brands in the category, and as such, on techniques that focus on identifying differences differentiation (which is relative to other brands) may not between brands (e.g. perceptual mapping). Most

Table 5: Computer brand users’ perceived differentiation (UK)

Australasian Marketing Journal 15 (2), 2007 49 Evidence concerning the importance of perceived brand differentiation, J.Romaniuk, B.Sharp & A.Ehrenberg

multivariate statistical techniques are very prone to making the brand easier to locate. The stronger/fresher outliers. Our analysis was deliberately simple and these distinctive qualities, and the more links in memory, transparent and we were able to highlight differences the easier it is for the consumer to identify the brand. between brands. However, more importantly, we were able to clearly see the similarities, which multivariate Benefits of a distinctive brand analysis may obscure. Building distinctive brand qualities benefits both the marketer and the consumer. The brand avoids losing Distinctiveness: An alternative perspective custom due to its potential customers being unable to Paradoxically, the reduced emphasis on meaningful find it. Further, are more effective if the differentiation makes branding even more important. If customer can correctly identify the brand. Having an brands are not considered to be truly different, then the easily identifiable brand also reduces risk in message incentive for the buyer to search for a particularly brand strategy. It lets a brand communicate a message or value amongst a sea of look-a-likes is low. To ensure that proposition that is highly relevant to consumers, but not consumers keep buying a particular brand, it needs to unique (as advocated by Barwise and Meehan, 2004), as stand out so that buyers can easily, and without distinctive elements reduce the likelihood of the confusion, identify it. The focus on meaningful advertisement being attributed to the wrong brand. This perceived differentiation in the marketing literature has means marketers can concentrate on refreshing and arguably led to the neglect of this more traditional aspect reminding consumers of core messages, rather than of branding practice. constantly searching for new unique points of difference that risk focusing on areas of little value to the consumer The fundamental purpose of branding is to identify the (Keller et al., 2002). source of the product/. This is the reason that branding, as an activity, first originated. This requires Distinctive qualities benefit the consumer because they qualities that distinguish one brand from other reduce cognitive effort by aiding search and information competitors. One obvious characteristic is the brand processing. Much has been written about cluttered brand itself, which is by law, unique. Distinctive qualities and advertising environments, as well as the overload of are the other elements of the brand identity that can information due to the greater number of choices substitute for the brand name. They help the consumer to available. Distinctiveness reduces the need to think, scour notice, recognize and recall the brand, in buying and search – thus making life simpler for consumers. This situations and/or when the brand is advertising, as they is a very different consumer benefit to that offered by provide additional stimuli for processing. These elements differentiation with intrinsic value (e.g. I value service, can include: therefore I seek a brand that will give fabulous service). Consumers do not buy Commonwealth Bank because • Colours - such as the Coca-Cola red; they value the colour yellow, but seeing yellow allows • - such as the McDonald’s arches; people to easily identify that this branch/ • – such as Nike’s ‘just do it’ advertisement/piece of direct mail/sponsorship is by Commonwealth Bank (Gaillard et al., 2005). • Symbols/characters - such as Mickey Mouse’s ears, the St.George Dragon; Distinctive qualities also represent a considerable competitive advantage to brands. Unlike “meaningful” • Celebrities – such as Tiger Woods for Nike; and differentiation, these qualities can be trademarked and • Advertising styles – such as the Mastercard legally protected (Johnson, 1997). There is also a natural “priceless” campaign. disincentive for competitors to use the same elements in advertising, as their advertising is then likely to be A distinctive element can be anything that communicates misattributed. the brand name at the most basic level. It can be used in packaging, advertising, in-store displays, and What constitutes a distinctive brand quality? sponsorships –any activity where the marketer wants the There are two criteria that are important to consider consumer to identify the brand. This might be to create, when identifying the distinctive elements. These are refresh or reinforce consumer memory structures in uniqueness and prevalence. The purpose of building order to build consumer based (Aaker, strong distinctive qualities is to increase the number of 1996; Keller, 2003), or to facilitate actual purchase by

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stimuli that can act as identification triggers for the strong links to an element (such as a particular colour) is brand. It is therefore important that the distinctive not that people may like, for example blue more than element be uniquely linked to the brand. If the quality yellow, so a brand should choose blue over yellow. also elicits competitor brands from consumers, it fails to Rather, if a brand consistently uses blue in its packaging act as a brand name substitute. The second criterion for and communications, and is the only brand that uses considering an element to be a distinctive quality is that blue, consumers will come to quickly and easily identify it is prevalent. This means that the majority of customers that the colour blue represents the brand. This will mean link the brand to the element. A distinctive element that that blue can replace the brand in some circumstances, or is unique, but unknown, cannot act as a substitute for the extend the branding quality of any communications brand name, as most who are exposed to it will not think beyond simply mentioning or showing the brand name. of the brand name. An emphasis on brand distinctiveness, rather than Building distinctive qualities differentiation, requires a new direction in brand research. It calls for research that identifies distinctive The way to build strong distinctive elements is through qualities from a consumer perspective, so marketers can consistency in how the brand is communicated to understand what cues consumers use to identify brands. consumers across all media and over time. The This will also contribute to understanding relative importance of consistency has been emphasised by many effectiveness to help identify whether there are certain branding commentators, and particularly the proponents distinctive elements that are more valuable than others. of integrated (Belch and Most of the research to date has focussed on testing Belch, 2001). However, this is often about potential elements individually. However, in order to message/ rather than the visual, verbal or equip marketers with the knowledge about which style of branding elements. Consistency in brand identity distinctive elements to choose to develop, a research is something that many brand strategies currently lack, approach that tests the relative effectiveness of different particularly across campaigns. When creating a new possibilities is needed (e.g. colour versus logos versus campaign, most of the attention from marketers is on characters versus music). Some of this research is aspects that are new and fresh. We would argue that it is starting to emerge, with eye-tracking tests to see which equally important to make sure the branding elements advertising or in-store characteristics attract attention are similar and consistent, such that someone who did (e.g. Pieters et al., 2002). The research so far is however see the previous campaign would recognise that this limited in its visual focus; we would like to see more comes from the same brand. It is only when there is comparisons across different sensory distinctive discipline in this consistency that we can build elements. distinctive brand assets. Finally, there is a need for research that tests the extent to It also takes time to build up distinctive elements. For which distinctive elements can replace the brand name in example, the Nike Swoosh was first introduced in the advertisements. This may be a potential way of 1970s, and was initially shown along with the brand maintaining strong branding, without compromising the name, prior to being used as a solo brand identifier. The creative quality of the communications. strong recognition that the Swoosh has today is because of the consistent investment over many decades. Conclusions A new research focus This iconoclastic article challenges the high importance placed on perceived differentiation. We have presented While there has been considerable literature on the theoretical argument and considerable empirical different elements that could represent distinctive evidence that perceived differentiation is not necessary qualities, a great deal of this research may be for a buyer to buy a brand, or for that brand to be misdirected. It has tried to establish the value of potential successful. This empirical evidence draws from decades distinctive qualities to consumers, from a differentiation- of research into buying behaviour, brand segmentation, style perspective. For example, research into the colours and elasticities, as well as our own research into associated with brands often focuses on what the colours consumer perceptions. Our own findings across 17 mean to consumers, or has tried to identify the best markets show that unless there is an outstanding colour for a brand (e.g., Bellizzi et al., 1983; Grimes and functional (especially price and/or location) difference, Doole, 1998). We argue that the real value of building up

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consumers do not see the brand they buy as differentiated Barwise,http://en.wikipedia.org/wiki/Brand_asset_valuator T.P., Ehrenberg, A.S.C., 1985. Consumer from other brands. Yet these brands are bought, and many Beliefs4. We andgratefully Brand thank Usage. Jim Journal Williams of and the Young Market & Rubicam for providing data from their Brand As- are successful and profitable. This suggests that much of Researchset Valuator Society (see27 (2), http://www.yrbav.com/ 81-93. and http:// our current brand strategy and research agenda, both www.brandassetvaluator.com.au/). This article Belch, G.E., Belch, M.A., 2001. Advertising and academically and in industry, is misdirected. does not seek to report the views of either Y&R or :Jim Williams. An integrated marketing communications We are not concluding that differentiation does not exist, perspective5. In 1999 (5th when ed.). this Irwin/McGraw-Hill, survey took place Apple Boston. comput- but that it is weaker and less important than is generally ers generally ran MacOS 9 and did not yet have the Bellizzi, J.A., Crowley, A.E., Hasty, R.W., 1983. The assumed. Brands within a category do not vary markedly easy ability to run Windows. Other brands of com- Effectsputer of Color generally in Store ran . Windows Journal 95. Inof 1999Retailing Apple 59 in their degree of differentiation, perceived or otherwise. (1) 21-45.was marketing coloured iMacs while competitors’ While Pizza Hut, McDonald’s and KFC are quite computers were beige or sometimes black. different (pizza, burgers, and fried chicken respectively) Bird, M., Channon, C., Ehrenberg, A.S.C., 1970. Brand Image and Brand Usage. Journal of Marketing Research they essentially compete as fast food brands (Sharp, References 2006). 7 (August), 307-314. Aaker, D.A., 2001. Strategic Market Management (Sixth The discovery that differentiation plays a lesser role than Broniarczyk,ed.). John Wiley S.M., & Gershoff,Sons, New A.D., York. 2003. The Reciprocal conventionally assumed leads us to advocate an EffectsAaker, D.A.,of Brand 1996. Equity Building and Trivial Strong Attributes. Brands. Free Journal Press, of alternative strategy, which is to build up distinctive MarketingNew York. Research 40 (May), 161-175. qualities. These qualities increase the visibility of the Carpenter,Alpert, M.I., G.S., 1971. Glazer,Identifi cation R., Nakamoto of Determinant K., Attri- 1994. brand in its competitive environment. This makes it Meaningfulbutes: A Comparison brands from of meaninglessMethods. Journal differentiation: of Marketing the Research 8 (May), 184-191. easier for consumers to notice, recognize, recall and, dependence on irrelevant attributes. Journal of importantly, buy the brand. An emphasis on MarketingBarnard, N.R., Research Ehrenberg, 31 (August), A.S.C., 339-350. 1990. Robust Mea- distinctiveness means less trying to find unique selling sures of Consumer Brand Beliefs. Journal of Marketing propositions and more trying to find unique identifying Caves,Research R.E., 27 (November), Williamson 477-484. P.J., 1985. What is Product characteristics. In themselves, distinctive qualities do not Differentiation,Barwise, P., Meehan, Really S., 2004. ?. JournalSimply Better: of IndustrialWinning motivate customers to buy brands. The role they play is Economicsand keeping 34 customers (2), 113-132. by delivering what matters most. Harvard School Press, Boston. through helping the customer to notice and identify the Chalmers, A.F., 1976. What Is This Thing Called brand, in competitive settings, at different stages of the Science?Barwise, T.P., (2nd Ehrenberg, ed.). University A.S.C., of1985. Queensland Consumer Press, Be- buying and consuming process. However, there is still liefs and Brand Usage. Journal of the Market Research Brisbane.Society 27 (2), 81-93. much to learn about the different types of distinctive qualities and how they each perform roles ranging from Chamberlin,Belch, G.E., Belch, E.H., M.A., 1971. 2001. Product Advertising Heterogeneity and Promo- and tion: An integrated marketing communications perspec- identification in advertising across different media, to Public Policy. In: Firm, G.C., Archibald, E., The Theory tive (5th ed.). Irwin/McGraw-Hill, Boston. on-shelf identification. We hope this research stimulates of the Firm. Penguin Books, . people to direct research effort to this aspect of branding. Bellizzi, J.A., Crowley, A.E., Hasty, R.W., 1983. The Ef- Chamberlin,fects of Color E.H., in Store 1933. Design. The TheoryJournal ofof MonopolisticRetailing 59 Competition (1st ed.). Harvard University Press, References (1) 21-45. Cambridge. Footnotes: Bird, M., Channon, C., Ehrenberg, A.S.C., 1970. Brand Aaker, D.A., 2001. Strategic Market Management (Sixth 1. There are commercial market research studies (e.g. Collins,Image and M., Brand 2002. Usage. Analyzing Journal of Brand Marketing Image Research Data. ed.). John Wiley & Sons, New York. 7 (August), 307-314. brand equity or health monitors) that suggest there Marketing Research 14 (2), 33-36. are considerable differences in levels of differentia- Aaker, D.A., 1996. Building Strong Brands. Free Press, Broniarczyk, S.M., Gershoff, A.D., 2003. The Recipro- tion between competing brands. However, these are Colombo, R., Ehrenberg, A.S.C., Sabavala, D., 2000. Newproprietary York. studies and so it is often not clear how cal Effects of Brand Equity and Trivial Attributes. Jour- this result was produced. Collins’ (2002) criticism Diversitynal of Marketing in Analyzing Research Brand-Switching 40 (May), 161-175. Tables: The Car Alpert, M.I., 1971. Identification of Determinant (see above) probably largely applies. Challenge.Carpenter, G.S.,Canadian Glazer, Journal R., Nakamoto of Marketing K., 1994.Research Mean- 19, 2.Attributes: The key Apurpose Comparison of perceptual of Methods. maps is to Journal gain in- of 23-36.ingful brands from meaningless differentiation: the de- Marketingsight intoResearch how 8 the (May), market 184-191. perceives the brand, pendence on irrelevant attributes. Journal of Marketing which is extremely useful in constructing distinc- Davidson,Research 31 H.J., (August), 1976. Why 339-350. Most New Consumer Brands Barnard,tive advertising N.R., Ehrenberg, that looks A.S.C.,like your 1990.brand. RobustIt is a Fail. Harvard Business Review (March-April), 117-122. Measuresstretch ofof the Consumer technique Brand to use Beliefs.maps to understand Journal of Caves, R.E., Williamson P.J., 1985. What is Product Dif- Driesener,ferentiation, C., Really Romaniuk, ?. Journal J., 2006. of Industrial Comparing Economics methods Marketingwhat motivatesResearch people27 (November), to buy, or477-484. to quantify per- ceived differentiation. of34 brand(2), 113-132. image measurement. International Journal of 3.Barwise, We thank P., Meehan, Y&R for S., introducing 2004. Simply the directBetter: measure- Winning MarketChalmers, Research A.F., 1976. 48 (6), What 681-698. Is This Thing Called Sci- and keepingment of perceivedcustomers differentiationby delivering whatto us, matters as they most. em- ence? (2nd ed.). University of Queensland Press, Bris- ploy this approach in their BAV methodology. See Ehrenberg, A.S.C., Barnard, N.R., Sharp B., 2000. Harvard Business School Press, Boston. bane.

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Pieters, R., Warlop, L., Wedel, M., 2002. Breaking through the clutter: Benefi ts of advertisement originality Biographies and familiarity for brand attention and memory. Man- Professor Byron Sharp is Director of the Ehrenberg- agement Science 48 (6), 765-781. Bass Institute at the University of South Australia. The Porter, M.E., 1980. Competitive Strategy: Techniques Institute's fundamental research is sponsored by for Analysing Industries. The Free Press, New York. corporations around the globe including Coca-cola, Mars, Turner Broadcasting, Network Ten, Kraft, The Reeves, R., 1961. Reality in advertising. Knopf, Alfred A Inc., New York. Nielsen Company and . Dr Sharp's research interest is the development and application of Ries, A., Trout, J., 1986. Positioning: The Battle For generalised laws of marketing. He is on the editorial Your Mind. McGraw-Hill Inc., New York. board of five journals including the Australasian Robinson, J., 1933. Economics of imperfect competi- Marketing Journal. see www.MarketingScience.info tion. Macmillain & Co, London. Dr Jenni Romaniuk is leader of the Brand Equity Romaniuk, J., Gaillard, E., 2007. The Relationship be- Research Group in the Ehrenberg-Bass Institute at the tween Unique Brand Associations, Brand Usage and Brand Performance: Analysis across eight categories. University of South Australia. She has published in Journal of Marketing Management 23 (3), 267-284. journals such as Journal of Advertising Research, European Journal of Marketing, International Journal of Romaniuk, J., Sharp, B., 2000. Using Known Patterns in Image Data to Determine Brand Positioning. Interna- Market Research, and the Journal of Marketing tional Journal of Market Research 42 (2, Spring/Sum- Management. With Byron Sharp she was recently mer), 219-230. awarded an Australian Research Council grant to Romaniuk, J., Sharp, B., 2004. Conceptualising and examine the effect of TV promotions and word of mouth Measuring Brand Salience. Marketing Theory 4 (4), on the ratings success of TV programs. 327-342. Professor Andrew Ehrenberg is now retired after a Rosen, S., 1974. Hedonic Prices and Implicit Markets: career that generated some of the greatest discoveries of in Pure Competition. Journal of marketing science. His 1959 discovery that brand Political Economy 82 (1, Jan/Feb), 34-55. purchase rates followed a predictable pattern (the Scriven, J., Ehrenberg, A., 2004. Consistent Consumer Negative Binomial ) lead to the development Responses to Price Changes. Australasian Marketing with Gerald Goodhardt and Chris Chatfield of the Journal 12 (3), 21-39. famous NBD-Dirichlet model of brand choice. Andrew's Sharp, A., Sharp, B., Redford, N., 2003. Positioning & work on buyer behaviour, , advertising and Partitioning- A replication & extension. In: ANZMAC pricing has been published in journals such as Nature, conference proceedings, University of South Australia, Journal of Marketing, Journal of Marketing Research, Australia. International Journal of Research in Marketing. See Sharp, B., 2006. How brands compete. In: Report 40 for www.AndrewEhrenberg.com Corporate Members. Ehrenberg-Bass Institute for Mar- Correspondence Address keting Science, Adelaide. Dr Jenni Romaniuk, Senior Research Fellow, Ehrenberg-Bass Sharp, B., Dawes, J.G., 2001. What is Differentiation Institute, University of South Australia. PO Box 2471. and How Does it Work?. Journal of Marketing Manage- ment 17, 739-759. Adelaide, SA 5000. Telephone: (08) 8302 0706 Email: [email protected]; Professor Byron Sharp, Sharp, B., Sharp, A., 1997. Positioning & Partitioning. Director, Ehrenberg-Bass Institute, University of South In: 26th European Marketing Academy Conference, Ar- Australia. PO Box 2471, Adelaide, SA 5000. Telephone: (08) nott, D., Bridgewater, S., (Eds.), Vol. 3, The University of Warwick, UK. 8302 0715. Email: Byron.Sharp@ MarketingScience.info; Professor Andrew Ehrenberg (Retired). Email: Stigler, G.J., 1961. The Economics of Information. The Andrew.Ehrenberg @MarketingScience.info Journal of Political Economy 69 (June), 213-225.

Trout, J., Rivkin, S., 2000. Differentiate or Die - Sur- vival in Our Era of Killer Competition. John Wiley & Sons, Inc., New York.

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