Day of the clones

Tom is a brand manager. His approach is thoroughly professional. He's searching the world for best practice, and is bringing it to his brand. He's also benchmarking his brand against competitors, making it look as good as they do. And he's optimising his communication plans, ensuring they're best-in-class.

'Seeking best practice', 'benchmarking' and 'best-in-class' sound important. But they all mean Tom is copying his competitors. And because his competitors are professionals too, they are copying Tom back. In today's world, everyone is searching for the same best practice. Everyone benchmarks against each other. And everyone optimises their communications plans. Everyone is copying each other. And so their brands are becoming clones.

There's a further problem. Today we live in a world of (theoretically) perfect information. Everyone has exactly the same Google sitting on their desktop. All brands have access to high quality market research. All brands have high quality competitive intelligence. Faced with exactly the same information, it's difficult for marketers not to make exactly the same decisions. Easy access to information is turning brands into clones too.

Things have got worse, not better, as the world has moved online. In 2004, Tom tried e-commerce. In 2005, he developed a Flash-based website. In 2006, he launched an organic search strategy. In 2007, he explored paid search. In 2008, he dipped into social networking. But so did every other brand manager in the world. Digital is making brands look like clones as well.

Management pressure for marketing to behave professionally can encourage brands to become clones as well. Tom's CEO encourages him to follow industry norms, and not to deliver 'surprises'. His finance director encourages him to adopt the same level of marketing budget as others within the industry. The rest of the board encourage Tom to work like their departments do, in slow predictable movements, not in radical leaps. So company managements are also encouraging brands to become clones.

The clone problem is so bad that, today, entire industries are following exactly the same marketing strategies:

• In 2007, every telecoms company in the world launched a multiple-play package of fixed line, broadband and mobile.

• In 2008, they all launched a mobile broadband USB dongle.

• And a new package of services with a free web notebook bundled in.

• And, throughout this period, all offered a complex package of minutes and texts that none of their customers understood.

It's the same with banks. Today, all offer exactly the same Visa cards. And the same ATM functions. And the same loans leaflets. In industry after industry, brands are becoming clones.

WHAT'S THE EVIDENCE FOR THIS?

Differentiation levels are falling for brands in certain categories all over the world, as has been shown on on Y&R's global BrandAsset Valuator tool, which is the only global study that actually measures differentiation. In many categories differentiation levels have collapsed over the past ten years. The clone effect is both quantitative and real (see box).

PROBLEMS WITH CLONES

Measurement is difficult but it's worth it. Established brands with low differentiation in the Clone Zone face serious problems.

• Clone brands struggle to attract customers. We've found that all the brands with rapidly growing user bases lie outside the Clone Zone. Brands within the Clone Zone typically have static or declining user bases.

• Clone brands have all failed in the past. We have studied the movement of brands around the PowerGrid for 15 years (see Figure 1). We have never seen a new brand start in the bottom left-hand corner of the PowerGrid and then move directly into the Clone Zone. Brands in the Clone Zone were therefore generally highly differentiated at some point in the past, and then lost it.

• Cloning can happen fast. We've found that the differentiation levels of many brands collapse two years after their launch – the clone tendency can start early. Once a brand has fallen into the Clone Zone, it struggles to attract new users. This is why marketers often say that they pick up all the users they will ever pick up in the first two years after launch.

• Entire industries can become clones. Differentiation can decay fast as a market becomes less sexy. Mobile service provider brands did well in the 1990s as the mobile phones became the coolest accessory for young people everywhere.

Ten years later, mobile service providers are struggling to maintain differentiation, as their marketing promises become little more than low, low prices.

• Clone brands cannot range-extend. Range-extending a brand is an important part of marketing. Therefore, we've looked at brands that have successfully extended their ranges and meanings into new areas, as well as brands that have struggled to do so. The brands that have successfully extended into empires, like Nike, which extended from sports shoes into an entire sports-driven lifestyle, and Apple, which extended from computers into music players and phones, all lie towards the top of the PowerGrid.

• Clone brands struggle with me-toos. Marketers of clone brands spend their lives fighting off private-label and other types of me-too brands. Highly differentiated brands do not need to do this. Apple's iPod team does not worry about new entrants to the MP3 market.

• Clone brands have the lowest margins. Financial analysts have looked at the financial performance of brands at differing positions on the PowerGrid. Brands in other parts of the PowerGrid have margins up to three times higher than brands in the Clone Zone. Clone brands therefore do not just perform badly in image terms. They also make less money.

THE PROCESS OF ACHIEVING DIFFERENTIATION

When a successful brand is launched, the first thing to rise is its level of differentiation. After that, other attributes like 'stylish', 'caring' and 'up to date' may rise, as it develops a brand image. Some attributes, like 'trust', can take a decade or more to grow. If differentiation doesn't rise, a positive brand image struggles to appear. Differentiation is therefore the most important attribute in marketing.

Once a brand has differentiation, it then needs to persuade consumers that its difference is relevant to their needs. It can succeed with a low level of any attribute apart from differentiation and relevance. But if a brand is not differentiated, it does not leave the starting gate.

Differentiation is the thing that produces awareness. Awareness doesn't produce differentiation: there are plenty of high-awareness brands with low differentiation. Differentiation is therefore more important than awareness too.

Differentiation is the thing that makes a brand grow. A brand that acquires high levels of differentiation and relevance tends then to grow rapidly in terms of esteem and knowledge, and move towards the 'iconic' brands like Coke, Ikea and Nike in the top right of the PowerGrid.

All the big brand successes of this decade have grown along this path. Conversely, a market where differentiation levels have collapsed most consistently across the world since 1993, has been mobile telecoms.

If you're a smart marketer, differentiation can rocket even before you've launched your brand. Spanish clothes brand Zara was one of the most differentiated brands in Sweden – before it opened its first store.

With Starbucks and iPod, their differentiation level just keeps building over time.

The trick is not just to launch something different. It is to keep it different as time goes on.

But differentiation is counterintuitive. The way differentiation works is not obvious. High levels of differentiation disrupt other brands that lie outside conventional perceptions of a brand's marketplace. Starbucks is a coffee shop, Nescafé is packaged coffee. But when Starbucks' level of differentiation went up, that of Nescafé and other packaged coffees went down.

Differentiation involves taking the road less travelled. If you're a yoghurt manufacturer, would you promote your yoghurt as being good at speeding digestive transit, rather than talking about yummy chunks of fruit? All your focus groups would say no. But Activia did it in 2000. Nine years on, Activia is the most successful dairy brand in the world.

Note to marketers who have a close relationship with R&D scientists: differentiation is in the eye of the beholder. Coke and Pepsi taste pretty similar. They come in similar cans. But both are highly differentiated brands.

When a top brand stumbles, the first thing about it to decline is its level of differentiation. It is an early warning sign of trouble for the brand. As your market gets mature, a distinctive philosophy can keep you differentiated.

Nike's compelling 'Just Do It' philosophy has kept it differentiated for 20 years.

Measuring differentiation answers the age-old question of whether one should line-extend one's brands. Highly differentiated brands like Coca-Cola extend with impunity. Weakly differentiated brands end up meaning nothing.

HOW TO BUILD DIFFERENTIATION

Knowing about differentiation is good. But what really helps is knowing how to grow it.

Unfortunately, many big packaged goods companies have forgotten. Instead of building their own highly differentiated brands, they have started buying them in from other companies. The world's biggest marketers have outsourced the most important part of marketing.

So how do you grow it? Here are some of the things we have learned about how to grow differentiation:

• Talk to non-users: when Nintendo invented the Wii, they did so by talking to people who didn't use video gaming consoles, and asked them why they didn't. Girls told them that unlike their brothers, they didn't get off on killing things. Nintendo gave them Cooking Mama, Wii Fit and Nintendogs.

• Get a vision: the Body Shop moved away from other 'natural' toiletry retailers when it announced it was against animal testing.

• Keep developing your offer: a brand that continually reinvents itself keeps its differentiation up. The iPod developed the capability to carry more songs. Then photos. Then podcasts. Then videos. Then it introduced a touch interface, WiFi, and then music and application stores. Not all digitally based brands do this – most banks haven't added any more facilities to their ATMs since the 1980s.

• Give your brand a sense of dynamism: coffee shop chain Tchibo keeps differentiation up by offering a rapidly changing set of offers for household appliances, foods and garden equipment. The rapidly changing offer keeps the brand fresh.

• Use the power of scarcity: if you find yourself a nice dress in Zara, buy it now. Because once an item sells out in Zara, it doesn't restock it.

• Getting differentiation up can sometimes mean rethinking your business model. In 2008, Prince realised that with CD sales in freefall, he was not about to make great sales of his new album. So in the UK, he gave the album away on the front of the Daily Mail. His subsequent concert tour sold out.

• Go for the jugular. Dr Kawashima's Brain Training for the Nintendo DS has been a huge hit amongst fifty-something adults because it is upfront about how weak their mental faculties are. 'You have the brain of an 80 year-old' screams Dr Kawashima at his terrified users.

• Don't worry about value for money. The Red Bull can is smaller than a typical soda can. That's what makes people think Red Bull is special. Baileys was just the leader in the cream liqueur market until Diageo started pushing the price up way above the competition. Girls in bars then realised that if they ordered a Baileys they'd look expensive, and if they asked for anything else they'd look like a cheap date. Today Baileys is in a class of its own.

WHY IT MATTERS NOW

Marketers need to understand differentiation above all today. The analogue media we have used for decades are being replaced by digital media. And the scary thing about digital media is how brutal the feedback is. In the analogue era, you could boast about the word of mouth your campaign was generating, safe in the knowledge that word of mouth was unmeasurable, and therefore you could not be contradicted. You could also produce the world's most boring advertising campaign, and still reassure your shareholders that you had achieved 100 million impacts.

In the digital era, you can produce a really brilliant website and still get no clicks. And you can measure online word of mouth precisely with tools like VML's SEER (vml.com/seer). In the digital era, monitoring tools like dashboards let you watch people click on your ad, or interact, or respond as it happens. The success or failure of your campaign is revealed quantitatively, decisively and instantly. Digital exposes failure because in the digital era, everything is measurable.

Undifferentiated brands stand out by their failure to achieve anything. So the buck stops with marketing.

HOW BRANDASSET VALUATOR WORKS

BrandAsset Valuator (BAV) has taught us that brands have four main pillars: differentiation, relevance, esteem and knowledge. Differentiation reflects the uniqueness of a brand's meaning and its point of difference against competitors. Relevance indicates how appropriate consumers perceive the brand to be. Relevance is linked to market penetration.

Esteem measures consumers' quality perceptions of, and respect for, the brand. Finally, knowledge indicates how familiar consumers are with a brand. All brands are measured using these four pillars, normalised on a 0% to 100% scale. To look at brands visually, we combine differentiation and relevance into a single (leading) measure on a vertical axis, and plot it against a single (lagging) measure made by combining esteem and knowledge on the horizontal axis.

The resulting diagram is called a PowerGrid (see box). Brands with low levels of differentiation and relevance, but high levels of esteem and knowledge, fall in to the Clone Zone.

Differentiation is an absolute measure – it is measured against all other brands, not just those within a specific market. You can't measure differentiation within a market. That's because differentiated brands change the very nature of the market they are in. By combining differentiation with relevance on the PowerGrid, we downplay the occasional, fleeting and ultimately unimportant appearance of brands that gain high initial differentiation, but which then fail to generate relevance.

BrandAsset Valuator has measured over 38,000 brands among 500,000 consumers in 48 countries since 1993.

THE EYE OF THE BEHOLDER

As with all things in marketing, differentiation is in the eye of the beholder. So a mobile phone network can create an ingenious set of new pricing plans, but fail to raise its level of differentiation because so few of its customers understand pricing plans – its current one included.

On the other hand, when Japanese brands first penetrated America in the 1960s, they didn't technically do anything different – they just manufactured things with significantly more reliability at a significantly lower price.

But because all other brands at the time were made in America, and Japanese brands came from 'those wonderful people who brought you Pearl Harbor', the first Japanese brands were perceived as different, controversial and therefore highly differentiated.

• It's not who you are.

• It's not what you do.

• It's what you are seen to be and to do that matters.

ABOUT THE AUTHOR

Simon Silvester is EVP Head of Planning, Young & Rubicam EMEA.

[email protected]

Figure 1: The powergrid