The Best Kept Secret
of Successful Differentiation
by Dan Herman
From time to time the marketing world is taken aback by huge, quick,
unpredictable and seemingly inexplicable successes. These hits are products or services,
entertainment locales or vacation spots, shopping malls or specialty stores that enjoy puzzling
immediate popularity. There are incognitos that become hot celebrities, there are events,
festivals or concerts that capture the masses, real estate development projects that evoke huge
demand, or styles that become trendy. In nearly all cases, there are also new brands that are
immediately adopted by the target population. For example,
Harry Potter or
Apple's iPod and the Blogs, the Hamptons in Long Island New York, Toyota's Scion brand, the
Crest electric toothbrush and many more examples.
A successful differentiation is not imitated by your competitors, even though
it brings you unmistakable success with consumers. It seems impossible? Not quite so. I am about
to reveal to you the unexpectedly simple and wonderful secret of successful differentiation: you
must think beyond the core benefits of your product category. Think: Off-Core Differentiation.
are the benefits that the consumer already expects to receive from a product like yours. This is
the list of “what’s important to the consumer” in your product or service category. “Core
Benefits” are more than the essential product benefits. The core benefits of today’s cellular
phones include much more than the possibility of conducting a conversation while you’re in
motion. Everything that the consumer has already come to expect from the product is included in
the core benefits. These are the benefits that all of your competitors offer, because they
compose the essence of the product and it is impossible to compete in the market without them.
That is precisely
the reason why if you really invest your efforts and are truly brilliant and make a major
break-through in improving core benefits - do you know what will happen? They’ll imitate you as
fast as possible. That’s what will happen. You must understand: in that case, your competitors
can’t allow themselves not to imitate you. You’d do exactly the same thing.
have learned this the hard way. Volvo, for example, created its brand around a central core
benefit: safety. They did everything humanly possible! They invested limitlessly! And they
succeeded! They especially succeeded in convincing their competitors that it is very important
to invest in safety. Today, no one will tell you (except for a few out-of-date marketers) that
safety is Volvo’s differentiation.
In order to
create a differentiation that won’t be imitated, you have to think beyond the core benefits that
are (already or even just in potential) considered important in your market. Think about “what’s
important to the consumer” in other product or service categories that you can be the first (or
better yet: the only) one to supply in yours. It works time after time. The companies that have
succeeded in maintaining their differentiation over the years and weren’t imitated even though
they were making tremendous profits are those that innovated in qualities beyond the core
benefits of their market. The farther you look, the more successful you can
What are they
Let's look at
some examples of off-core differentiation.
Swatch decided to
treat the watch face and band as a design area. What does this have to do with the core benefit
of a watch? Exactly! So no one has imitated them. Not really.
Grey Goose vodka
is the only vodka produced in France. This differentiation is so way-out of the core benefits of
the vodka industry! No vodka connoisseur in his right mind would imitate that.
What about The
Body Shop? There’s no place for another cosmetics chain that actively fights against animal
experiments, for the environment and for the needy wherever they are. No one even thinks about
The mob and the
off-core differentiation can become eventually a core benefit. This happened to Nokia. It
happens when the differentiation is not really off-core but is actually based on a deep insight
into the direction that the market is going and of consumers’ future needs. Nokia took the
global market with a seemingly off-core strategy. While Motorola was busy developing better and
better mobile phones, Nokia predicted that mobile phones were going to be a popular product.
When people will start carrying their cellphone around with them as they go about their everyday
life, it will become an apparel item, a fashion statement. And thus the idea that helped turn
Nokia into the world leader was born – the idea of the exchangeable panels that let you match
the phone to your clothes. It didn't seem like a core benefit of the category back then. Totally
not connected to what a mobile phone is supposed to do.
But when the
technology of most mobile phone manufacturers became similar, they began to compete over design.
Samsung, Sony Ericsson and yes, even Motorola, started to beat Nokia, using its own weapon. As I
am writing, Nokia’s share of the market is still double that of Motorola’s (do you realize what
a lead Nokia was able to open?). But Nokia has lost its differentiation.
You may say that
only a few companies have become leaders by means of an off-core differentiation. Let’s not
argue what is “many” and what is “a few”. By the way, most companies never become leaders, nor
need they become. However, if you are in a competitive market and trying to make a living, an
off-core strategy is the best chance you have to give a group of consumers a good reason to
devotedly prefer you and even create a private monopoly for you.
I’m not trying to
argue that differentiation within the core benefits is a bad idea, if you can do it. It opens a
window of opportunity for you, until they start to imitate you. For a man like Michael Dell,
that was enough to become a billionaire. Dell changed the way in which personal computers are
sold. Michael Dell understood that from the moment that personal computers became standardized
(thanks to the IBM clones on the one hand and to the foresight of Microsoft in the 1980’s, on
the other hand) – people would buy them over the phone and later, over the internet. Dell also
understood that since personal computer components are standardized anyway, you can put them
together to suit each user’s needs. That wasn’t an Off-Core Differentiation. Dell simply saw
where the trends are leading to. Today, everyone sells computers this way, but the period of
time in which he had this shining differentiation made him one of the richest people on the
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