When it comes building a strong brand that matters to consumers, differentiation is a key in separating your offerings from competitors. But what if you don’t have any competitors? Does brand differentiation matter then?
Last Friday, I received a phone call from a guy who had been referred to us by a client. He was an entrepreneur who had recently started a new business and was looking for someone that could consult him on building a solid brand right out of the gate. He told me a little bit about his company and then asked me to explain our process for working with clients.
I started by taking him through the steps we lead clients through, helping them discover, define and execute a brand strategy. Everything was great until I started explaining differentiation and how we would help him reveal what makes his brand unique and sets it apart from competitor brands. This is where things got interesting. He quickly told me that he doesn’t have any competitors and that we can just skip that part.
I wasn’t expecting this at all. He did have a point. Without any competition his brand is unique by default.
Unique Value
But this logic misses the point completely. Even if without direct competition, searching for the unique value that your brand offers is a healthy exercise. If you know what unique value you provide consumers, you can form a foundation to build your brand on. For example, CEO Tony Hsieh realized Zappos unique value for extraordinary customer service and made it a core component of what the company believes and how they make business decisions.
Stake Your Claim
In today’s crowded marketplace, a company without a single competitor is rare. How many brands can you think of right now that don’t have any competition? Probably not more than one. If you can even think of one. That leads me to another point: A brand with no competitors won’t stay that way for long if there is any money at all to be made in the industry. That’s why it is crucial for brands that are paving the way for a new industry or category to start carving out what differentiates their brand from the start. Stake your claim and become the leader in the category before competitors arrive and crash the party.
Marty Neumeier, in his book Zag calls this the “power law that governs brand leadership,” which he reduces to a simple formula:
In this equation being a first mover matters a lot, but popularity is equally important. And a brand has to find it’s unique value to consumers in order to be popular.
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So you tell me, does brand differentiation matter when you have no competitors?
1. How much time would elapse between the launch of the company till it finds its first competitor ?
2. Is it necessary that the competition would always be direct ? It could well be that there is some indirect competition.
It would be interesting take your clients views in the light of these two questions.
Another point that came to mind, is the issue about differentiation or is it about identity?
Would like your views…
Chris, Interesting post. Brand differentiation absolutely matters. If he can’t speak to those points that truly add value to his customer early on in the process, then he’ll never be able to do so. Once competitors start emerging, as they always do, his brand might begin to lag and perception will be that he is now the follower because you can bet the new companies will be thinking of new and different ways to set themselves apart from the “first mover”.
Syamant,
Thanks for these questions. They really help put the issue in perspective.
We didn’t talk too much about timing before direct competition would enter the market, but that is a valid question. We did discuss indirect competition, which I noted could be anything that someone would choose instead of his brand. It could be something in a different category or industry all together.
To your question about this being an issue of identity versus differentiation, I think it’s both. It’s about focusing on the building blocks that will differentiate the brand from competitors even before competitors have arrived. It’s also about identity, because both are interconnected. In thinking about differentiating the brand, you would come to conclusions that would impact identity.
Kristen,
Thanks for your thoughts. Your exactly right. In this situation my client has the advantage of being a first mover, unless he fails to act and differentiate by defining unique value now. Competition is inevitable, whether that is direct or indirect competition or not, I think, is beside the point.
Agreed. Thanks for the inputs.
I am working with marketing in Denmark and is searching for inspiration in the digital world. Thanks for inspiration
I honestly don’t think there’s such a thing as a business with zero competition when taken from a broad view.
Coca-Cola is a “classic” example (pun intended).
I read once that back when Coke decided to divest a lot of their business interests and focus more on selling syrup, someone made the statement as to how their only major competitor was Pepsi. The CEO said “Nonsense, our drink is competing with everything single other drink out there. Coffee, Tea, you name it. They’re either drinking Coke, or they’re drinking something else.”
I paraphrased that quite horribly. but basically, any product/service you sell has a TON of indirect competition.
If I’m selling used cars, I’m also competing with all the bike shops out there since people could either drive the cars we sell or ride a bike.
This brand may not have any direct competitors, but you can be sure that he has many indirect ones. How long would it be until these indirect competitors take notice of his brand and try to enter that space as well? It’s so important that a brand is built with a firm foundation from the beginning. Even if no one ever directly enters that market at least he has a strong base to go from, a clear message to market, and a specific niche to go after.
Great post – I always enjoy your insights, Chris.
My thoughts were similar to Bill Perry’s and the example of Coke’s compeition is perfect.
I remember a similar case study from B-school about Hallmark Cards, although the memory is dim by now. The general idea though was that Hallmark’s biggest “competition” was a decline in the tradition of acknowledging special events with mailed greeting cards.
Hallmark’s indirect competition at the time was email (which was just getting started). Today, it more likely includes Facebook and other social networks.
Bottom line is that differentiation absolutely matters, imho.
A good question – to which the answer must be yes.
But what’s that Marty Neumeier diagram trying to do? It’s not a formula and it’s not a Venn diagram – it’s a statement of the bleeding obvious trumped up as something clever!
If you know your mission and you values and have based your company on something real, brand value will be obvious to you…