As technology has made it easier to produce, distribute and deliver goods and services, people have access to greater and easier options than ever before. But as the marketplace becomes more crowded, the ability to differentiate through product quality, service or innovation is getting more and more difficult.
To stand out in today’s market, brands will need to find new ways to build affinity with customers and avoid falling into the trap of “lowest-price” competition. In fact, customer perception of your product or service might be the last frontier of differentiation.
Everything is a Commodity
Over the past 40 years, there have been incredible upgrades in the technology we use and consume every day. From VCRs to personal computers to iPhones, the leaps in technology have been huge. With every major upgrade, these products presented themselves as the next necessary step in improving people’s lives.
As a result, nearly everyone paid for those upgrades because of the massive material benefits they offer: now we’re more interconnected, have more access to information and can participate in the modern world.
But for the past decade or so, technology hasn’t changed in the same way. Of course, computers and smartphones are getting new features all the time, but there hasn’t been that world-changing technological shift that everyone “has to buy” to stay relevant.
Think about every smartphone commercial you’ve seen for the past five years: they’ll show off the newest high-res camera, or the “dynamic” sound design. Products and services are only competing by introducing incremental upgrades rather than offering a new way of life— simply because that next big shift hasn’t happened yet.
So, in a world where there are more and more companies every day offering what seems like nearly identical products and services, how does a company begin to distinguish themselves from others? The answer lies in your brand.
Perceptions over Prices
In an environment where everything is a commodity and it’s getting harder and harder to see the difference in companies’ products and services, branding is the only reliable way to differentiate. You have to tell the unique story that explains why what you do is important and valuable, not just what it is that you’re selling.
These days, people have nearly limitless access to options that are increasingly similar. It’s no longer enough to let everyone know how amazing your product is—it’s about letting the person who believes your product is amazing know you exist.
That means you have to find the specific audience that cares about your story and the way you deliver your product. The perception of your brand is everything: how it makes people feel and the lifestyle it offers is much more important than minute product variations or features.
It’s easy to get caught in the trap of the “lowest price” differentiation. But successful brands are able to move the conversation beyond material costs and instead focus on what their brand represents. Switching from Apple products to Android, for example, could be more cost-effective materially, but overcoming the “stickiness” of the social attachment to Apple’s brand could be even costlier for some people.
The buyer has so much discretion in today’s market that they can pick and choose the brands that truly speak to them. According to Harvard Business Review, the focus of today’s market has shifted from “loyalty” to “relevance:” It’s not just about offering the best deals; it’s about using our digitized data-centric world to meet consumers where they are and offer personalized solutions when they need them.
Delivering on a Promise
Once you find the people that believe in your brand’s promise, the next step is to deliver on that promise consistently. Whether someone buys from Stitch Fix or Dillard’s, the real difference is going to be the kind of lifestyle that each brand provides. If one or the other doesn’t end up providing the kind of lifestyle that the customer wants and expects, then they may choose another brand in the future.
This requires consistent research to figure out how people think and feel about your brand. Your job is not to control your brand itself, but to manage the perception of it. When customers have a positive experience and perception of your brand, they’ll be able to help multiply your business growth.
Conversely, when companies don’t live up to their promise, it erodes a customer’s perception of the brand and harms its ability to stand out in a commoditized market. Wells Fargo, for example, damaged its long-standing brand equity after its account-opening scandal and had to work to regain customer trust. Betraying that brand promise dissuades customers from becoming advocates of your brand, limiting your potential for long-term growth.
Therefore, branding is not a “one and done” effort. It requires constant maintenance of buyer perceptions and a significant amount of self-evaluation to ensure that your brand is practicing what it preaches.
Your internal brand plays an important role in this process too: your team should believe in the brand’s mission in order to help realize it. If your team has a different perception of the brand than your customers do, take some time to figure out where some of the discrepancies may lie to understand the gaps. In some cases, it leads to opportunity and an adjustment in strategy. In others, it leads to insights that build relationships and fuel growth.
No matter how amazing your product is, what matters in today’s market is how people feel about your brand. Invest in your brand’s perceived value to make sure that it rises above the price differentiation trap and succeeds in a commoditized world.