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 / Second Quarter 2002 / Issue 27(originally published by Booz & Company)


Marketing: Are You Really a Realist?

In practice, competitive brands are mostly very similar. Michael Porter’s “sustainable competitive advantage” suffers from two disadvantages: Competitive advantages seldom exist; and if they do, they are rarely sustainable.

Almost any difference between brands that makes a difference in sales gets copied very quickly. “The trends in our technology lead to competing products being more and more the same,” the famed advertising guru James Webb Young said 80 years ago. But Young had the wrong causal explanation — the mimicking was due to competition, as it is now, and not to the latest technology of the early 1920s. Competition consists of not letting your competitors be effectively different or better, thus preventing them from getting or staying ahead.

The lastingly better mousetrap is a purely romantic idea. Even early-mover advantages are not guaranteed: Realistically, the competition will soon have a better mousetrap (e.g., three air bags), at least briefly. They’ll also learn from the innovator’s mistakes, and try harder anyway.

Luckily, competitive brands don’t have to appear different to the consumer in order for one of them to be chosen. People don’t differentiate in that way among most brands. It has been shown repeatedly that users of brand A feel about brand A much as users of brand B feel about brand B.

The consumer could choose any reasonable brand by simply tossing a penny. Brands, being competitive, are more or less substitutable. The experienced consumer knows this. If A were truly much better than B — whether it be sweeter, cheaper, or whatever — at about the same price, there would hardly be a choice problem, or at least not for long. In most societies, nearly everyone would go for the better product.

But rather than tossing pennies to choose among look-alikes, the experienced consumer keeps some personal control by developing convenient choice habits (“loyalty”). Vast amounts of evidence show that consumers choose mostly from their repertoires of habitual brands, tempered by the needs or mood of the particular moment.

In a year, say, customers of brand A in a product category typically buy its competitive brands B, C, D, etc. in total more often than they buy brand A itself. It follows that if the consumer wants the product — he or she is nearly out of gas, or coffee, or condoms, or needs a hotel room for the night — then he or she has no great difficulty in choosing a familiar and more or less look-alike brand.

There are, of course, minor differences between brands. Pepsi is slightly sweeter than Coke. One brand of muesli has more raisins than another. Model X has a clumsy seat belt. But nobody has specifically claimed that these small differences are mostly the reason we first pick a particular brand. We don’t count the raisins or run a side-by-side sweetness test before making a purchase. Normally we therefore don’t even know (or care) much about such differences before we first try the other brand. A focus-group subject once famously said, as recounted by Jeremy Bullmore, the former chairman of J. Walter Thompson (London), “I know all these brands are the same. I just have to decide which is best.”

It’s not that serious product differentiation is at all difficult to achieve. There is in fact much of it around (e.g., large versus small package sizes; tomato versus tamarind flavors; two-, three-, four-, and five-door car models; a guaranteed money-back investment bond versus a fixed-interest bond). Most competitive brands, however, do not sport any uniquely effective product attribute — if they did, it would be copied.

The realist view of branding is that nearly identical goods are made distinctive by being branded just with a name, logo, some distinctive packaging, advertising, and memory associations. For the most part, they do not function differently. Nor do their customers feel very different about them, as we’ve noted.

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