Millennium Marketing Research®

Tom Schori DBA Millennium Marketing Research®, 808 Ironwood, Normal IL 61761, 309-532-8466

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The importance of establishing, promoting, differentiation.

By Thomas R. Schori, Ph.D., and Michael L. Garee, Principals,  Millennium Marketing Research, 808 E. Ironwood, Normal, IL 61761-5239. Tel. 309-532-8466 -

Any business, large or small, new or established, sooner or later realizes the steep price to be paid for not meaningfully differentiating itself (or its products/services) from competitors in the same business or industry. In the case of new businesses, that price can be¾and usually is¾a quick demise of the business. For established businesses, the price normally is relegation to being a perpetual "one of the herd" company, which, of course, also leads to the ultimate demise of the company.

Despite this truism, the absence of meaningful differentiation among companies (or their products/services) in the same business or industry is indeed staggering. And, this is true to a certain extent even among many consumer product companies, and particularly so among the all-pervasive businesses in the burgeoning service sector.

Look at the banking industry, for instance. Don’t most banks in most communities pretty much "look" alike and offer the same "products" and services? Or, consider the insurance industry. Is one automobile insurance policy, or one home owner insurance policy genuinely that different from those offered by every other agent or company in a community? Or, how about the real estate industry? Is there really any difference among the brokers in a given community? Don’t they pretty much do the same things, i.e., assist in the buying and selling of real property, for essentially the same fees?

Based on such observations, it seems quite safe to assume that most companies in the service industries have pretty much allowed themselves to be reduced, essentially, to becoming mere purveyors of "cookie-cutter" "commodities," certainly a situation most companies shouldn’t relish. Still, very few companies appear to be predisposed to doing much about it, or if they are, they don’t seem to know quite how to go about doing it! We believe there are ample opportunities for any company or industry to identify, and then to aggressively and effectively promote, meaningful points of differentiation.

Let’s reconsider the banking industry. To be sure, most banks offer the same "products" and services as all other banks. That’s simply the nature of the business. And, yes, they are a regulated industry, so they don’t have as much "lee-way" to try new marketing tactics or strategies as, say, consumer product companies. Nonetheless, from a marketing standpoint, these "excuses" are just that, excuses, and ring rather hollow upon further analysis.

It’s important to keep in mind that, regardless of the product/service or industry, consumers tend to view a business entity¾any business entity¾as far more than simply an agglomeration of products or services. Indeed, whether or not they even realize it, or can effectively enunciate it, consumers base their perceptions of a business¾again, any business¾on a whole set of characteristics. What do these characteristics consist of? Such a simple thing as the company’s name, for example. Referring back to our bank example, wouldn’t one reasonably expect that consumers would have far different perceptions about a bank named "First National Bank and Trust Company" than they would have about one named, say, "People’s National Bank"? One clearly suggests stodginess, while the other is significantly more "customer-friendly" sounding.

But there certainly is far more to identifying and promoting effective differentiation than just the name of a business. There are your company’s systems, processes and procedures. That is, how easy does your company make it for people to do business with you? How about the attitude of your employees. Are they friendly? Courteous? Aloof? Knowledgeable? Helpful? Are your company’s costs in line with competition? Do you offer any special type of payment plans? Is there adequate diversity of products/services?

Obviously, all characteristics of a product or service aren’t equally important to consumers, so it is necessary to determine, normally, through some type of survey instrument, which ones are the most important to them. The next step, then, would be to determine the beliefs consumers have about a company’s products and services, based upon those characteristics, as well as the beliefs they have about alternative brands and their ideal brand in the product or service category. Once these determinations are made, even slight modifications in key characteristics can result in a company’s ability to leverage brand equity to attain maximum market share. In other words, they will be in a position to differentiate themselves, in a meaningful fashion, from competitors.

Back to our banking example once again. Suppose that research revealed that the three characteristics most important to consumers when selecting a bank were the following: a private area to discuss a loan; also offers mortgage loans; and has employees that actually take the time to get to know customers by name. If that bank indeed wanted to differentiate itself from other banks in the community, obviously, it would make every effort to ensure that these three things were widely known to be characteristic of the bank. That is, it would take whatever steps necessary¾redesign of the banking facility, employee training programs, etc.¾to "operationalize" the research findings.

Regardless of which approach a company or business ultimately uses to identify, and then to aggressively promote, a key point (or points) of differentiation, the fact remains that until they do take some approach, the best they can hope for is to remain "one of the herd." Certainly, they should not expect to attain and remain at the pinnacle of their industry.