Vol. 22, No. 9 (3 parts) Part 2, September 2000 www.summary.com ©2000 Soundview Executive Book Summaries* Order # 22-22 FILE: MARKETING ® Survival in Our Era of Killer Competition DIFFERENTIATE OR DIE THE SUMMARY IN BRIEF What factors allow a company or product to stand out in an increasingly competitive (and global) marketplace? That’s a question Jack Trout has been answering for 30 years as a consultant to Fortune 500 companies. It is By Jack Trout a question that he (with co-author Steve Rivkin) uses in Differentiate or Die with Steve Rivkin to help readers create solid strategies to get above the crowds of competi- tors and generate the business required to stay there. Among the points covered in this summary are: CONTENTS G The Tyranny of Choice. With nearly one million branded products available in the marketplace today, consumers have more choices than they The Tyranny of Choice know how to handle. Companies must thus give customers the tools they Page 2 need in purchasing decisions, to draw them to their products. Losing and Reinventing the G Losing and Reinventing the U.S.P. In order to reinvent the idea of a U.S.P. unique selling proposition (or U.S.P.) and differentiate their products from Page 2, 3 competitors’, companies must move away from differentiation based solely What Differentiation Is Not on product, and engage consumers in ways that truly reach them. Page 3, 4, 5 G What Differentiation Is Not. Some differentiation strategies look The Four Steps to appealing, but require more effort than is really necessary in order to make Differentiation the case for a product or company over others. Page 5, 6 G The Four Steps to Differentiation. Trout lays out the basics of his Nine Successful differentiation strategy in four essential steps. Differentiation Strategies G Eight Successful Differentiation Strategies. Differentiating your Page 6, 7 business actually has very little to do with creativity or imagination and everything to do with pursuing a logical approach to engaging customers. Growth and Sacrifice in Trout lays out eight points of strategy that have proven to beget success. Differentiation G Growth and Sacrifice in Differentiation. Growth can kill differentia- Page 8 tion by tempting companies to thin out their product lines in search of mass Being Different in Different acceptance. Trout details why you should avoid the distractions growth poses. Places: Five Rules for the G Being Different in Different Places. What differentiation strategy Road will work abroad? This section presents some key considerations. Page 8 Your efforts to stand out in the marketplace begin with Who’s in Charge Here? the next page ... Page 8 Published by Soundview Executive Book Summaries, 10 LaCrue Avenue, Concordville, Pennsylvania 19331 USA *All rights reserved. Reproduction in whole or part is prohibited. DIFFERENTIATE OR DIE by Jack Trout with Steve Rivkin — THE COMPLETE SUMMARY The Tyranny of Choice Differentiating products today is more challenging The Explosion of Choice than at any other time in history. When our earliest Item Early 1970s Late 1990s ancestors wondered, “What’s for dinner?” the answer was clear: It was whatever the neighborhood could run Vehicle model: 140 260 down, kill and bring back to the cave. Red meat? White Frito-Lay chip varieties: 10 78 meat? There was only one choice; it was a simpler time. These days, the average supermarket stocks 40,000 OTC pain relievers: 17 141 brand items — or standard stocking units (SKUs) — an Levi’s jeans styles: 41 70 explosion of choice in just about every product catego- ry. That number is a mere fraction of the estimated one Software titles: 0 250,000 million SKUs available in America. The most interest- ing thing, though, is that the average family gets 80 to Web Sites: 0 4,757,894 85 percent of its needs from only 150 SKUs, which means there’s a good chance the other 39,850 items in tors and never establish your “differentness,” you will the store will be ignored. always be weak. What drives choice is the law of division, which It’s an unforgiving world out there, and we haven’t states that a category starts off as a single entity then seen anything yet. I breaks up into other segments. Computers, for instance, once were their own category; over time, however, this category segmented into mainframes, microcomputers, Losing and Reinventing PCs, laptops, notebooks and so forth. Television pro- the U.S.P. gramming once meant network television program- In his 1960 book Reality in Advertising, Rosser ming; now it, too, is broken into segments — network, Reeves defined the concept of the unique selling propo- independent, cable, satellite, public, and now computer- sition (U.S.P.): based “streaming” video. G Each advertisement must make a proposition to the The explosion of choice has led to an entire industry consumer. Not just words, not just product “puffery,” dedicated to helping people with their choices, whether not just show-window advertising. Each advertisement it be a guide to New York City restaurants or advice on must say to each reader, “Buy this product, and you which of 8,000 mutual funds to buy. The World Wide Web has expanded this industry past long-accepted will get this specific benefit.” structures and strictures, doling out advice on command G The proposition must be one that the competition and fulfilling needs — any need — instantly. either cannot or does not offer. It must be unique — With so much competition, markets today are driven either a uniqueness of the brand or a claim not other- by choice; customers have so many choices that com- (continued on page 3) panies who don’t address every whim of the market- place will lose business and will not survive. Those that The authors: Jack Trout, president of the prestigious marketing firm of Trout & Partners, was the first to popu- don’t stand out will get lost in the pack. Indeed, compa- larize the idea of “positioning” products and ideas in the nies must address differentiation in three key ways: minds of consumers. Steve Rivkin is co-author with G If you ignore your uniqueness and try to be every- Trout of The New Positioning and The Power of thing for everybody, you quickly undermine what Simplicity, and heads his own communications firm. makes you different. Copyright © 2000 by Jack Trout. Summarized by per- G mission of the publisher, John Wiley & Sons, 605 Third If you ignore changes in the market, your differ- Avenue, New York, NY 10158. 230 pages. $24.95. ence can become less important. 0-471-35764-2. G If you stay in the shadow of your larger competi- To subscribe: Send your name and address to the address listed below or call us at 1-800-521-1227. (Outside the U.S. and Canada, 1-610-558-9495.) To subscribe to the audio edition: Soundview now offers summaries in audio format. Call or write for details. To buy multiple copies of this summary: Soundview offers discounts for quantity purchases of its summaries. Call or write for details. Published by Soundview Executive Book Summaries (ISSN 0747-2196), 10 LaCrue Avenue, Concordville, PA 19331 USA, a division of Concentrated Knowledge Corporation. Publisher, George Y. Clement. Publications Director, Maureen L. Solon. Editor-in-Chief, Christopher G. Murray. Published monthly. Subscription, $89.50 per year in the United States and Canada; and, by airmail, $95 in Mexico, $139 to all other countries. Periodicals postage paid at Concordville, PA and additional offices. POSTMASTER: Send address changes to Soundview, 10 LaCrue Avenue, Concordville, PA 19331. Copyright © 2000 by Soundview Executive Book Summaries. Soundview Executive Book Summaries® 2 Differentiate or Die — SUMMARY Losing and Reinventing the U.S.P. nies today to hang onto a U.S.P. or product difference or (continued from page 2) benefit, as the Reeves model suggests. There are three explanations for what has happened: wise made in that particular field of advertising. G A torrent of new products has washed over con- G The proposition must be so strong that it can move sumers, each with conflicting claims and the smallest the mass millions. points of difference (“Now! Tartar control with the great When Reeves wrote of being different, the world was taste of fresh mint gel!”) an easier place. Global competition did not exist; in G The number one response amongst competitors is fact, real competition barely existed. Today, many com- “me-tooism.” Technology enables competitors to tear panies have sales figures that dwarf the gross national apart and reconstruct knock-off products before compa- product of some countries — the top 500 global compa- nies even have the chance to establish their differences. nies represent 70 percent of the world’s trade. And the G The speed of technology has enabled companies to big keep getting bigger. Mergers and acquisitions are reinvent themselves as quickly and as often as they the rule of the day and competitors are tougher and desire, making it difficult to differentiate on product dif- smarter than ever before. ferences alone. Intel, for example, increases data storage According to Reeves, in order to differentiate yourself and performance each year, at astounding rates. from competitors, you must offer an option that the That said, it’s not impossible to differentiate based on competition cannot or does not. To do so successfully, product, just difficult. Gillette, for instance, reinvents you should recognize how customers make decisions shaving every few years: with two-bladed razors (Trac based on differentiation. Psychologists have come up II), adjustable two-bladed razors (Atra), shock- with four functions that help people make these deci- absorbent razors (Sensor), and now with three-bladed sions — intuition, thinking, feeling and sensing: razors (Mach 3).