You are on page 1of 33

Introduction: Blackberry in the corporate environment has earned the nickname CrackBerry in reference to Crack Cocaine as users feel

they cannot live without it. The blackberry since then has been nick named differently in different parts of the world. The most commonly used name is BB for BlackBerry. History: Research In Motion (RIM) a telecommunication and wireless device manufacturing Canadian company that started its operations in 1984 and then later on went on to launch the revolutionary product, the BlackBerry Smartphone in 1996. But if you look at the picture on the right you will not be able to recognize the instrument. It was the original BlackBerry that looked liked a pager and also functioned like one. Except that it was different from the rest of the pagers which supported a two-way exchange of e-mails. Since then BlackBerry continued to launch a series of devices running on CDMA, GSM and iDEN networks. Initially making a head way by concentrating on its e-mail feature it then brought in a bundle of exclusive features such as mobile telephone ,push e-mail , portable media player, Wi-Fi, Web browsing, etc. But it didnt just stop with this. It went on to create a complete revolution in the mobile telephone devices. It introduced the BlackBerry Enterprise Server which enabled the blackberry to have enhanced e-mail usage over WAP access and higher network security. Today the BlackBerry Internet Service is supported in 91 countries and provides its customers with value additions like creating their personal intranet and also the famous BBM (BlackBerry Messaging). Segmentation: Blackberrys world-wide success in the smart-phone category may seem like a premier example of brand planning. It is a story about Blackberrys ability to shift when necessary to meet the markets changing needs. A key element for RIMs success in building the Blackberry brand was being able to respond quickly to opportunities. Initially customers didnt agree for the branding of RIM. Kalbflieisch, VP of RIM said, For two years we fought the battle to brand RIM, But then we got smart and realized customers see right through that. He said it is classic example of how a customer brands you. Our most powerful brand tool is that a product does what it is supposed to do. People got passionate about what it does. They wanted to associate their device, what they hold in their hand, with the brand name. The key to the BlackBerry Brand is it does what it promises. BlackBerry is not afraid to let the customers own the brand. It teaches us:

1- Emotional Selling Matters. That became the essence of the brand. The brand became a symbol of the user. Emotion selling was the key. That is important to remember in B2B. Emotional selling should not be overlooked. The message to sales managers was: What does it say about your organization if you dont have one? What image does it give you? The marketing strategy was based on a status appeal. 2- Leverage the Channel. Blackberry was also careful to play the channel card well. They sold the devices through the larger carriers, AT&T, TMobile, Verizon, and let the carriers do the marketing. Carriers had the budgets, so Blackberry leveraged that. Blackberry put the brand almost entirely in the carriers hands for 5-6 years. 3- Unify the Message Blackberry invested in the channel to provide sales training. They realized it was essential to teach retailers how to sell the product and carry out the brand message. 4- Shifting Brand Strategy Blackberrys shifting brand strategy reflected the change that happens in many technology and device companies who start off selling features, and then become aware of the brands heart and soul as the brand gains credibility. In the beginning, Blackberry marketed its features. Then the message shifted to become about Business Success. That campaign merged into one about Life Success. The value promise of BlackBerry became that its a tool to let you live your life. 5- Global Strategy Shifted Again As the device went global, Blackberry again learned and adapted to its market. In the UK, the message that was similar to the US message about gaining status by having a Blackberry worked well. However, is some European countries, the status image didnt resonate. The message became about taking control of time. In Asia, and Latin American the message was about efficient use of time. By featuring TV celebrities in ads talking about what their Blackberries meant to them, Blackberry sent the message that it was selling success. Unlike other smart phones - iPhone 8 or 9 or Nokia - whose services are handled by local wireless operators, BlackBerry doesn't send emails over the internet. BlackBerry messages are first encrypted and securely stored on the smart phone and then sent out in encrypted manner through its own highly secure Network Operation Centre or server. Because of its secure encryption technology, BlackBerry has been a hit with global corporates, financial institutions and governments Targeting: Traditionally, Blackberry phones have been targeted to business professionals only. They were not priced or developed for the every day cellular user. The Blackberry is still primarily targeted to the business professional. The phone comes preloaded with the mobile trial version of Microsoft Office and now gives the ability to edit documents directly on your cell phone. The blackberry also targets the business professional with wireless connectivity ability

on the go for faster paced Internet connections when the user needs it most.

Blackberry has also made a push with the younger generation capturing style and function. The phone includes an auto focus 3.2 megapixel camera that doubles as a camcorder in an effort to capture the social crowd. Along with a camera, Blackberry has also preloaded a series of games and applications such as Facebook that is targeted directly to the young and social group. RIM has also launched a new software store called Blackberry App World with hundreds of applications that target people of every sort. Positioning: Positioning is the process by which brands create an identity in the minds of its target market. The word that comes to your mind when we say Blackberry is E-mail, corporate phone, business made easier, etc. Well thats how Blackberry had positioned itself in the minds of its consumers. Today with the change in the markets and change in the buying behavior of the clients and also with the change in the technology or change in the technology, consumers expectations from the products change. Consumers who were associated with blackberry with the factor of its e-mail services it provided demand more for the product. With competitors filling in the gaps of the consumers blackberry had to cope up with the changes and Re-position itself. This type of re-positing is called De-positioning. Blackberry primarily positioned itself as a corporate phone with state of the art features completing supporting a business process. But today it has re-positioned itself as a phone for all, especially the younger generation by providing touch screens, Facebook applications, high definition cameras, music player, higher memory, Wi-Fi, etc. This change in the product features was mainly brought in to tap on the loosing market share to its competitors such as Nokia, Sony Ericson, I-Phone, HTC, Windows Android, etc. Current Market: The shift in thinking from What does Blackberry do? to What does Blackberry do for me was a powerful introspection on the Brand for the Blackberry. Blackberry believed in Dont sell Products, sell the Brand. This great e-mail user experience got RIM to where it is today. It needs to focus on key experiences of its consumers. But email alone is clearly not enough anymore because there are new domains for Smartphone utility out there which must be exploited to attract new legions to

BlackBerry especially with its competitors like Apples I-Phone, Samsung Mobile, HTC, Sony Ericsson soon catching up and eating its market share especially in the Smartphone segment.RIM must build and perfect other experiences - not just enable them, but integrate them so seamlessly with the device, network capabilities and the existing tools and processes in use, that the added convenience and saved time generate unique value. Protect Your Enterprise Base by Innovating There Too - With Innovation that Appeals to the End User. The key is to innovate again. Go deeper into horizontal enterprise processes - and make sure what you create matters to the end-user, not just the IT guy or the CFO. Cause it's the grassroots who are now facilitating the advance of competitors into your turf. From the experience of BlackBerry we can take home that its not just enough to be the best and innovative, but to remain the best and continue to innovate is a Challenge. For this brands need to constantly be in touch with their customers and track their competitors.

COMPETETION INFORMATION

Android

open platform http://source.android.com can compile custom firmwares - good for hackers and other good framework, extended on each new firmware supports multitasking nice IDE - Eclipse, NetBeans development SDK is free easy to debug, can send logs to developers programming language is Java but bridges from other languages exist (C# .net - Mono, etc) Java is a high level language that appeared in 1995. Android supports Java 1.5 and translates the byte code to its own custom Dalvik byte code optimized for mobile devices. for the hardcore programmers, Android offers the possibility of programming in C using the native dev kit NDK can run script languages like LUA, Perl, Python, etc

can install third party applications from sdcard, random sites - not locked to a specific market applications can hook and override everything - email interface, SMS sending, custom keyboards, etc supports widgets can publish applications on the Android market instantly - initial one time registration fee is 25E user has access to the sdcard and can use it as a USB disk no Adobe Flash support yet. Probably will be available in Q2 of this year.

iPhone

closed platform no multitasking except for some Apple applications. multitasking is probably going to be introduced in the next vertion of the iPhone, the iPhone 4 development kit costs ~90E programming language is Objective C - but bridges exist from Java, C#, etc Objective C appeared in 1986 next version of iPhone is supposed to only allow Objective C code, this means the bridges are out and you mustprogram in Objective C if you want to create an iPhone application applications are not allowed to duplicate the iPhone functionality - ie no custom email interface, etc does not support widgets - unless the phone is jail broken user does not have access to the sdcard - user can only do synchronization via internet or LAN third party applications can only be installed from the Apple store. For testing the applications, developers can use Ad Hoc publishing publishing on the store is a very lengthy and tiresome process. Apple has many and bizarre rules. Many applications were rejected for strange reasons. no Adobe Flash support

Nokia

opened Symbian and says the future will be QT and WRT - they will cut support to any other environment including J2ME QT is a framework that adds a layer of abstraction over gui, network, gps, etc. QT is cross platform and cross programming language - C++, C#, Java, etc. the licenses are GPL and LGPL. QT runs on Maemo, MeeGo, BlackBerry, Symbian, Android, iPhone, Windows Mobile, desktop PC, consumer electronics, car entertainment, etc WRT - web runtime - a cool feature that allows users to write applications in HTML, JS and CS. You build the app like a normal web page, and you interact with the phone platform/hardware using the WRT bridge. No need to learn any other technology. Just HTML, JS and CS. Very important: JS can call native code, but also the other way around. It seems you can call WRT JS with native code. supports widgets supports Adobe Flash Lite

BlackBerry

as it is now, the programming environment is Java native and J2ME - not worth mentioning since they will probably be extinct pretty soon no Adobe Flash support yet. Probably will be available in Q2 of this year. we expect a new OS so we will just have to sit patiently and see what's going to happen

Windows Mobile 6.x

native C, C# with PInvoke - not worth mentioning since MS released WM7 and broke compatibility with 6.5

Windows Mobile 7

closed platform MS breaks compatibility with WM 6.x - this is very bad programming environment is Silverlight and XNA no native programming ie no hooking and overriding keyboard, etc - they removed PInvoke nice IDE - Visual Studio 2010 does not support multitasking for third party applications third party applications can only be installed from the MS marketplace no Adobe Flash support

PROBLEM How can RIM develop Blackberry to overtake its competitors in terms of sales and market shares? KEY FINDINGS ce and data transmission. This led to an explosive demand.

ASSUMPTIONS capital and resources necessary to pursue new technologies and innovations. This is important because research and development requires large amounts of investments. is that existing RIM customers will continue to be loyal to the Blackberry brand regardless of new marketing strategies and products. This assumption is made so that market shares can only grow.

SWOT ANALYSIS Strengths High customer loyalty to the Blackberry line creates a long lasting business relationship. The term crackberry is used to describe users addiction to the device. To date, there are approximately 28.5 Blackberry subscribers worldwide1. The RIM brand is well established globally and this allows for a larger market for future product launches. According to RIMs 2008 report, 92% of RIMs revenue comes from outside of Canada. Blackberry has built a strong platform for future product innovation. They have a trusted name. Weaknesses The majority of Blackberries are manufactured in Canada where labour costs are much higher than developing countries. These costs are reflected in the relatively high prices of Blackberrys. RIM is narrow in terms of its product lines. It is largely dependent on the success of Blackberrys as their major product. They lack another product that can bring in consistent revenue. The emailing client is not completely stable. There have been instances where it experiences outages that require time to fix and that could offset existing customers2. Opportunities New emergence of popular social networking sites, such as Facebook and Twitter, create a need for a device with easy access to the internet. Site software could be developed for easier integration of mobile device and website. GPS technology is gaining increasing acceptance worldwide. This could be a good function that Blackberry could invest in. This would appeal to an audience with this specific need, increasing Blackberrys market3. Nokia, who currently owns the most global market share of Smartphones, has recently been losing shares as new companies are emerging with similar or improved handsets. Blackberry could potentially occupy more market share if they position themselves to be the replacement product. Managing Logistics Our first objective with BlackBerry was giving our people online, immediate access to their calendars and email, says Todd Thomsen, ERP Manager. Our project managers were carrying laptops and doing everything locally. On some construction sites, there is nowhere to plug in for dial up, so they were having a lot of trouble accessing information. BlackBerry push-based technology means that, wherever there is a signal, The Stellar Groups project managers can stay in touch with architects, subcontractors and clients to ensure that projects run smoothly. The solution offers wireless synchronization, which requires no cradling at the desktop, so anyone carrying the BlackBerry handheld is assured of being up-to-date at all times. Staying on top of appointments is a key consideration. Each project manager has an administrative assistant that posts appointments into their calendars. Updates happen frequently. Having a wireless calendar option means they can better manage their schedules nothing slips through

the cracks, says Thomsen. The introduction of BlackBerry has not reduced the number of laptops the company has project managers still use them at their desks. But Thomsen points out that when they travel, almost 90% of them leave their laptops behind and prefer to communicate by BlackBerry alone. Not only an issue of traveling lighter, he says BlackBerry has offered a reliable way to send email and access important company data.

Threats One of Blackberries major competitor, Apple, reached a non-exclusive deal with China Unicom, the 2nd largest carrier in China, to distribute the IPhone4. This is in direct competition of market shares within China. There is an increasing popularity in touchscreen capabilities. In 2008, approximately 15.8% of mobile phones have touchscreens and it is projected to increase to 39% in 2015 5. Only the Blackberry Storm from of the Blackberry line has touchscreen capabilities. Netbooks are becoming inexpensive and often cheaper than certain Blackberrys6. Netbooks serve as lightweight laptops that serve the same functionality of Blackberrys and also possess the ability to do more as an overall device. In the past 2 months, Nokia has launched 3 new Smartphones that targets the same market as Blackberry. They have released the Nokia X6 featuring 32GB of internal memory, and the Nokia X3 with emphasis on it doubling as a proficient musical device7. Nokia has also showcased the 7705 Twist, with a full QWERTY keypad8. Different companies are constantly releasing new innovative phones with features that a Blackberry lacks. For an example, Samsung is launching the Blue Earth Phone which is solarpowered. This would definitely be appealing to the eco-friendly market segments.

Literature Review

Brand Differentiation:
To become differentiated, a company must identify the features of its brand that extend beyond antes. These features are what make a brand truly unique and distinctive compared to competitive offerings. Look for what sets the brand apart. The absence of differentiation leads to price competition and low margins.

Although differentiation is critical, it is not a complete solution. Differentiated features must also be relevant to customers, or the brand still loses. The most successful brands emphasize features that are both important to customers and quite differentiated from those of competitors. These types of features are called drivers. Drivers can actually drive customer choice, causing a customer to select one brand over another. Brands are differentiated by their Positioning

Unique Selling Proposition (USP) Important Meaningful Benefit Sustainable

Differentiation is regarded as one of the core principles of marketing theory and practice. The near universal exaltation is thou shalt differentiate (e.g. Fulmer and Goodwin, 1988; Levitt, 1980; MacMillan and McGrath, 1997) - with the clear implication that marketers should be judged on how well they differentiate their brands. Such fundamental tenets deserve rigorous theoretical inspection as well as empirical testing. Science progresses not through consensus and the accumulation of

conventional wisdom, but through competitive inquiry, questioning and testing. In this article we present theoretical and empirical evidence that throws doubt on the central position of differentiation in brand strategy.

The concept of differentiation can be traced back to Chamberlin and Robinsons independent 1930s work on deviations from the classical perfect competition model (Chamberlin, 1971; Chamberlin, 1933; Robinson, 1933). The economic literature asserts that marketers should try to differentiate their brands from others, so that they face less direct competition. The two current economic models that describe the conditions that create differentiation (Caves and Williamson, 1985) are respectively based on (a) brands offering different features that appeal to different segments in the market (Lancaster, 1984; Lancaster, 1979; Rosen, 1974), and/or (b) transaction costs and information imperfections (Nelson, 1974; Nelson, 1970; Stigler, 1961).

Differentiation makes the brand an imperfect substitute with other brands so buyers of the brand are more loyal, and therefore its customer base is more secure. This makes the brand less susceptible to the activity of competitor brands; when a competitor lowers price, brands that are more differentiated are thought to lose fewer customers (Caves and Williamson, 1985). Reduced sales is the potential price paid for this increased loyalty, as a brand may appeal more to only one type of buyer, or all buyers but only in a specific buying situation. The economic theory is analytic rather than empirical. Logically, brands that are less substitutable will compete less directly. This does not mean that the normative strategy implications are proven.

They depend on some important empirical questions concerning differentiation in the real world, such as:

How differentiated are brands? Do competitive brands differ in their degree of differentiation from one another? Is the payoff worth the costs? When does differentiation reduce sales (and by how much)?

Differentiation in marketing
The marketing literature takes a motivational perspective. Textbooks talk of a meaningful perceived difference that provides buyers with their reason to purchase and be loyal to the brand (Aaker, 2001; Kotler, 1994). Undifferentiated new entrants are supposed to be most likely to fail because no customers should be motivated to buy them (Davidson, 1976). Established brands are exhorted to maintain their point of difference in order to stay desirable to their customers. Breakthroughs in perceived differentiation, achieved through either product features (e.g. Apples iMac) or image building advertising (e.g. Marlboro man), are seen as the pathway to growth.

The marketing literature explicitly emphasises that the differentiation has to be perceived by customers as different (Ries and Trout, 1986) and must be valued (Carpenter et al., 1994; Kotler et al., 1996; Reeves, 1961). This valued difference does not have to be a material product feature. Rather, it may be symbolic, emotional, or even quite trivial (such as in Broniarczyk and Gershoff, 2003). Folgers flaked coffee crystals is an excellent example of this (Carpenter et al., 1994). The advertising principle of promoting a unique selling proposition (USP) (Reeves, 1961) is a reflection of this theory. Advertising that does not give buyers a reason to buy that brand is not thought to be effective. Recently however, others have challenged this orthodoxy arguing that advertising can work effectively without a USP, or means of persuasion (e.g. Ehrenberg et al., 2002).

The differentiation or die type assertions (e.g. Trout and Rivkin, 2000), which are very common, are potentially empirically testable. Yet the marketing literature presents them largely as articles of faith, and so there have been almost no attempts to verify or falsify these beliefs. Consequently, we have almost no scientific quantitative knowledge about levels of differentiation between brands. When market researchers and academics examine a brands differentiation, they typically analyse brand image data deliberately looking for differences in the way consumers perceive brands. The multivariate techniques that are routinely employed, such as factor analysis or perceptual mapping, are often sensitive to small differences. This allows them to highlight small differences, almost regardless of magnitude, but renders them less useful as quantitative measures of the degree of differentiation.

Collins (2002) criticises these techniques for missing the main patterns in consumer perception data, such as the finding that brands with more users gain more image attribute responses than brands with fewer users, almost regardless of the attribute (Barwise and Ehrenberg, 1985; Bird et al., 1970; Romaniuk and Sharp, 2000). Few marketing research studies show knowledge of these facts, nor do they seem to rediscover them in their own data, which is probably a good example of how observation is dependent on theory (Chalmers, 1976). The accepted view is that differentiation is a widespread, but not always adopted, strategy that is implemented with varying degrees of success (Porter, 1980). This means that some brands are more differentiated than their competitors. However Sharp and Dawes (2001) argue that differentiation, while a pervasive aspect of modern markets, is largely a market characteristic. Competitive brands within a market are similarly differentiated, with predictable (small) asymmetries between small and large brands. Brands are mainly differentiated at individual buying situation level (this one is here now; or this is in my size) rather than at brand level (this brand is always different from the others). Sharp and Dawes advocate location and information models to explain why differentiation occurs (such as in Hotelling,

1929; Stigler, 1961), drawing on a substantial body of generalised empirical evidence, which we now discuss.

Achieving Brand Differentiation


If properly designed, brands should promise relevant differentiated benefits to their target customers. Carefully choosing the most powerful benefits will not only result in brand preference, but brand insistence. That is, the brand will be perceived to be the only viable solution for the customers need. Put another way, the customer will not pursue substitutes if the brand is not available. The brand establishes a consideration set of one.

The optimal benefits for a brand to claim are those that are: very important to the target customers, supported by organizational strengths, not being addressed by the competition. Ideally, the brand tries to own only one or two key benefits, as that is all a customer will remember. The benefits should be understandable, believable, unique and compelling. A brands promise can be stated as follows: Only [brand] delivers [unique differentiating benefit] to [target customer].

Following are the most common sources of brand differentiation [unique differentiating benefits]:

The brand stands for something important to the customer Its values align with the customers values It reinforces the customers self image or how the customer aspires to be perceived It can serve as a badge or other form of self-expression It possesses admirable qualities It provides unique or superior customer service It delivers a unique product purchase or usage experience It is entertaining It delivers superior performance It is venerated, has heritage (continuity, trustworthy leader, since ) It is the technology leader It has noble aims/values It tells an engaging story about itself Its founder has unique, admirable qualities It was first -- a pioneer -- in its market It is the most popular brand with the most customers or the largest market share It is the category innovator It is perceived to possess positive momentum It is the next big thing, using next generation technology It is the most convenient or easy to find and use It focuses on a particular customer segment and has become an expert in meeting that
segments needs

It comes from a country or region that is known for its excellence in the brands product
category

It is the leading expert/specialist in a particular area It is the choice of experts It delivers the best overall value for the price Its products are crafted with great care by hand Its products are completely natural/organic with no artificial additives Its products have a unique, unrivalled styling/packaging It is quintessential it defines its category

The brand promise should be reinforced with proof points to substantiate its claim, that is, to make it believable. The following are the most common types of proof points or reasons to believe:

Expert endorsements Top ratings by independent authorities Industry analyst reports Third party certifications Blue chip customer list What 9 out of 10 experts prefer/use Customer testimonials

Leadership in any of the following:

Number of customers Number of locations Number of transactions Overall sales Market share

Side by side tests with competitive brands

Looks/feels/performs differently Before and after comparisons Year of founding (since) Patented technology Secret/magic ingredients Superior ingredients Ingredient brands Unique process Extensive publicity Unconditional, money-back guarantee

We are often reminded that we are marketing at a time when competing products perform largely at parity levels, and when almost any product improvement can be matched by a competitor. That was not the case some 50 years ago, when packaged goods companies were demonstrating how brands were built, and showing the world how profitable businesses could be established and sustained. Brands were differentiated based on product performance (whiter, cleaner, softer,

"lemon-fresh"). Product development was a cornerstone of corporate activity, and continual product improvement was an acknowledged (and well-funded) objective for any brand marketer.

However, while companies still invest heavily in research and development, and still seek a product performance edge wherever it can be found, it is a marketing maxim that differences in performance now are often minimal at best. It's not merely that many colas taste the same, or that many competing pizzas are indistinguishable. Checking accounts are alike. Cellular phone services seem interchangeable. Cars look alike, and -- if syndicated customer ratings are to be believed -- they perform and satisfy customers to increasingly similar degrees as well. There is, thus, a critical marketing dilemma that confronts brand managers in this age when products and brands seem interchangeable. How can differentiation -- which is the sine qua non of branding -- be achieved? How can a brand be made to stand apart from its competitors so that it will be chosen, and chosen again? Lacking meaningful product performance differences, marketers have turned to other familiar marketing tools as a means to establish unique associations with their brands, and to create a unique position relative to competition.

Location, location, location


Retailers, grocers and bankers, along with gasoline and hospitality marketers, have traditionally emphasized another marketing resource: the "bricks and mortar" solution. Here, brand selection is reinforced by proximity, availability, and ease of access. In other words, products that are conveniently available will -- all other things being equal -- be chosen most often. Bricks and mortar is, of course, an expensive solution to the differentiation dilemma. In addition, there are important threats to this marketing solution, posed by various direct marketing alternatives. What could be

more convenient than a store on the corner? Possibilities include a catalog on the table, an 800number and, more recently, a web site. These alternatives all serve to make physical location advantages rather moot.

The price is right


What other tools are available? Pricing has been another marketing tool often used to establish differentiation. The obvious challenge, however, is how to "own" a real (or perceived) long-term price advantage. Short-term offers, deals, and price promotions can provide a brand an apparent price advantage and the appearance of differentiation. However, as the acknowledged goal of brand marketing is to build customer loyalty (i.e., not just trial, but repeat business), a short-term advantage or a temporary point of differentiation is simply not sufficient. Sustainable differentiation is required. If the sustainable differentiation is to be based on price, and is to be owned over time, the marketer must occupy the "low-cost provider" position. There can be only one of these in a category. It is an enviable position, no doubt, but only for one competitor -- and, given similar production and distribution costs, it simply isn't a reasonable goal for most of the marketers competing today.

Say it with advertising


Where else can marketers turn? The most commonly pursued marketing solution lies in the area of brand communications -- advertising and promotions. At a time when products perform in similar ways, when availability differences are often minimal, and when price differentiation may be only temporary, brand differentiation must be achieved through brand communication -- or so the theory goes. After all, there are four Ps in marketing -- and, if you cannot differentiate your offerings on Product, Place or Price, the astute marketer turns to Promotions. Powerful advertising messages, creatively carving a sustainable and unique position in the minds of a receptive audience. That's the ticket!

In a recent major research and development effort, Gallup surveyed more than 1,600 consumers in each of three service categories that are often cited as examples of product performance parity: checking accounts, long distance telephone service, and domestic airline travel. Brands in each of these categories have attempted to create product performance differentiation, using strategies ranging from fiber optics to on-time arrival statistics. Many of the competing brands have employed location (branch banking, supermarket banking and ATMs), pricing (10 cents a minute, no fees), or heavy advertising spending in an attempt to attract and retain customers.

The customer perspective


To shed light on the impact of these various differentiation tools, Gallup talked to customers in each of these three categories. We obtained information about their current purchasing habits, their brand consideration sets, and their intended brand behaviors (purchase/choice for the next possible use occasion). We asked about a variety of factors that could influence customer decisions to repeat or to switch, and we looked at their perceptions of the leading competitors. These decision-driving factors included ratings of Product, of Price (value), of Place (locational convenience), and of Promotions (advertising). Added to this list (the "four Ps" of marketing) was a fifth P: People.

Why "People?" Because Gallup has found that the key to an enduring customer relationship may well be the "customer facing employees" who provide the products and services, and who represent the brand to customers. It is the people, in many service-related categories, who are challenged to fulfill the brand promise, and who bridge the gap between brand promise, and brand delivery.

Expected empirical evidence for differentiation


If brand-level differentiation exists, whereby a brand appeals to a defined customer base that particularly value the differentiated feature, then we might expect many brands to differ in terms of the types of customers they attract. Yet brand user profiles rarely differ greatly in demographics or other customer identifying variables (Kennedy and Ehrenberg, 2001; Kennedy et al., 2000). Brands of vastly different price and quality do have different user profiles. Expensive brands tend to be bought by wealthier people - but within their competitive set the brands user bases look similar. Versaces buyers are similar to those of Gucci. Ultimately, competitive brands all appeal to the similar types of customers; some brands just have more buyers than others.

Differentiation theory suggests we should expect a great deal of market partitioning, where brands share more or fewer customers than would be expected based on their respective market shares. Yet the widespread fit of the Duplication of Purchase law, which states brands share customers with other brands in line with their relative shares, shows that partitioning is generally fairly rare and often small (Ehrenberg et al., 2004). We might also expect brands that appear close together on a perceptual map to share customers more than brands that are positioned further apart, but this is not the case. Instead it appears that image positions are largely independent of brand buying patterns (Sharp et al., 2003; Sharp and Sharp, 1997).

Thirdly, we might expect to see different price elasticities, as customers of more differentiated brands would be less price sensitive. However, price elasticities seem to vary more with the context of the price change (depth and direction) rather than being a brand-specific property, with different elasticities for different brands for the same price change (Scriven and Ehrenberg, 2004). This further suggests that brands within a category have similar levels of differentiation.

Finally, there is the strong empirically grounded support for the widespread fit of the NBD-Dirichlet model of purchase incidence and brand choice. The NBDDirichlet model (Goodhardt et al., 1984) effectively assumes that brands compete as undifferentiated choice options of varying popularity. Both brand segmentation (brands selling to different types of buyers) and partitioning (exceptions to the Duplication of Purchase law) violate the theoretical assumptions of the model. Yet the NBDDirichlet model successfully predicts a wide variety of brand performance metrics across many different product categories and countries, as well as across time (Ehrenberg et al., 2004).

Every category has brands that differ in price and quality, referred to as vertical differentiation by economists. Sometimes there are brands that are vastly more expensive and this shows up in

differences in user bases, and departures from Duplication of Purchase law and Dirichlet benchmarks (Ehrenberg et al., 2000). That evidence of this nature is not often seen in categories also suggests weak levels of differentiation. It should be noted that within these expensive/luxury subcategories the brands compete as if there is little differentiation (Colombo et al., 2000).

This substantial body of theoretical and empirical evidence does not support the traditional role of differentiation in the marketing literature; neither does it support a perfect competition (commodity) model. Differentiation undoubtedly exists, but empirically grounded theory suggests that it is best thought of as a category-level rather than brand-level phenomenon. This is consistent with a recent examination of consumer perceptual data, which found that brands that are more successful did not have proportionally more unique associations than less successful brands. Further, the evidence was that customers with higher preferences for a brand did not hold more unique associations than those with lower preferences. In contrast, the level of brand uniqueness, as designated by the proportion of associations that customers held for one brand only, and the number of brands in the category are negatively correlated (Romaniuk and Gaillard, 2007). In summary, differentiation theory is much like the classical economics perfect competition model in that it describes an abstract ideal world. Marketing textbooks, much like classical economic texts of the past, treat this idealised model as if it were an adequate representation of the real world. This model underpins a series of widely held beliefs, which can be broadly summarised as the following:

A brand must be perceived as different in order to win market share (i.e. customers must have a
reason to start buying the brand)

A brand must be perceived as different in order to maintain market share. That is, customers
must have a reason to keep preferring the brand in the face of competition from other brands and new entrants.

Some brands are much more differentiated than others, meaning that their customer base is
more loyal and less sensitive to actions of competitors. This may result in greater profitability. However, the highly differentiated brand may suffer from constraints on market share because it is only a select group of people, or only in a specific situation that it is preferred. There is a need for research to empirically test these fundamental tenets of marketing.

Distinctiveness: An alternative perspective


Paradoxically, the reduced emphasis on meaningful differentiation makes branding even more important. If brands are not considered to be truly different, then the incentive for the buyer to search for a particularly brand amongst a sea of look-a-likes is low. To ensure that consumers keep buying a particular brand, it needs to stand out so that buyers can easily, and without confusion, identify it. The focus on meaningful perceived differentiation in the marketing literature has arguably led to the neglect of this more traditional aspect of branding practice.

The fundamental purpose of branding is to identify the source of the product/service. This is the reason that branding, as an activity, first originated. This requires qualities that distinguish one brand from other competitors. One obvious characteristic is the brand name itself, which is by law, unique. Distinctive qualities are the other elements of the brand identity that can substitute for the brand name. They help the consumer to notice, recognize and recall the brand, in buying situations and/or when the brand is advertising, as they provide additional stimuli for processing. These elements can include:

Colours - such as the Coca-Cola red; Logos - such as the McDonalds arches; Taglines such as Nikes just do it

Symbols/characters - such as Mickey Mouses ears, the St.George Dragon; Celebrities such as Tiger Woods for Nike; and Advertising styles such as the Mastercard priceless campaign.

A distinctive element can be anything that communicates the brand name at the most basic level. It can be used in packaging, advertising, in-store displays, and sponsorships any activity where the marketer wants the consumer to identify the brand. This might be to create, refresh or reinforce consumer memory structures in order to build consumer based brand equity (Aaker, 1996; Keller, 2003), or to facilitate actual purchase by making the brand easier to locate. The stronger/fresher these distinctive qualities, and the more links in memory, the easier it is for the consumer to identify the brand.

3 Keys to Successful Brand Development: Segmentation, Differentiation & Positioning

Differentiation: how to compete


Your challenge is to determine not just how youre going to play the game, but also how youre going to win. In other words, how to differentiate your Brand and create an important and meaningful point of difference. Start by identifying the Tangible Differences between your Brand and the competition; i.e., the conscious, rational benefits you can focus on. For example:

Service (Nordstrom); Price (Costco);

Selection (Toys R Us); Performance (Nike); Contemporary home fashion (IKEA); Great Price (Payless Shoes).

Now move on to the Intangible Benefits - those emotional, sub-conscious benefits you want your Brand to own. This includes things like status (Tiffany) or badge value (Virgin). It is these intangible benefits that are becoming the most important leverage for Brand dominance.

Brand must be perceived to be unique.


To create a substantial differential advantage in your Brand, you must first create a point of difference in the way customers perceive your Brand - one that is so successfully unique in the minds of your customers that no other brand can substitute for it. Uniqueness does not in itself necessarily motivate traffic, sales or repeat visits. Nevertheless, it must be perceived as being unique, before any other values can be attached to it.

Brand must be important to core customers.


Many retailers assume that the most important benefit is Price. This is true for some customers, but for many others, Price is only the beginning and for most, it is an unsustainable competitive advantage. Competitive prices are the greens fee that allows you to play in the game; but to win, you need much more, e.g. product mix, service, look, and marketing, all important options you need to re-examine to help determine where you want to dominate.

Brands point of difference must be delivered and sustained with style and substance.

Together, these three factors will help you to achieve a compelling, competitive advantage that delivers a superior customer benefit and can only be challenged by the competition over a long period of time and at great cost. Some Options for Brand Differentiation:

Lowest prices Full-service Biggest selection Newest, hottest, with it, in Best overall total experience Status Most convenient, easiest Badge value Quick service Best overall value

Benefits of a distinctive brand


Building distinctive brand qualities benefits both the marketer and the consumer. The brand avoids losing custom due to its potential customers being unable to find it. Further, communications are more effective if the customer can correctly identify the brand. Having an easily identifiable brand also reduces risk in message strategy. It lets a brand communicate a message or value proposition that is highly relevant to consumers, but not unique (as advocated by Barwise and Meehan, 2004), as distinctive elements reduce the likelihood of the advertisement being attributed to the wrong brand. This means marketers can concentrate on refreshing and reminding consumers of core messages, rather than constantly searching for new unique points of difference that risk focusing on areas of little value to the consumer (Keller et al., 2002).

Distinctive qualities benefit the consumer because they reduce cognitive effort by aiding search and information processing. Much has been written about cluttered brand and advertising environments, as well as the overload of information due to the greater number of choices available. Distinctiveness reduces the need to think, scour and search thus making life simpler for

consumers. This is a very different consumer benefit to that offered by differentiation with intrinsic value (e.g. I value service, therefore I seek a brand that will give fabulous service). Consumers do not buy Commonwealth Bank because they value the colour yellow, but seeing yellow allows people to easily identify that this branch/ advertisement/piece of direct mail/sponsorship is by Commonwealth Bank (Gaillard et al., 2005).

Distinctive qualities also represent a considerable competitive advantage to brands. Unlike meaningful differentiation, these qualities can be trademarked and legally protected (Johnson, 1997). There is also a natural disincentive for competitors to use the same elements in advertising, as their advertising is then likely to be misattributed.

What constitutes a distinctive brand quality?


There are two criteria that are important to consider when identifying the distinctive elements. These are uniqueness and prevalence. The purpose of building strong distinctive qualities is to increase the number of stimuli that can act as identification triggers for the brand. It is therefore important that the distinctive element be uniquely linked to the brand. If the quality also elicits competitor brands from consumers, it fails to act as a brand name substitute. The second criterion for considering an element to be a distinctive quality is that it is prevalent. This means that the majority of customers link the brand to the element. A distinctive element that is unique, but unknown, cannot act as a substitute for the brand name, as most who are exposed to it will not think of the brand name.

Building distinctive qualities


The way to build strong distinctive elements is through consistency in how the brand is communicated to consumers across all media and over time. The importance of consistency has been emphasised by many branding commentators, and particularly the proponents of integrated marketing communications (Belch and Belch, 2001). However, this is often about

message/positioning rather than the visual, verbal or style of branding elements. Consistency in brand identity is something that many brand strategies currently lack, particularly across campaigns. When creating a new campaign, most of the attention from marketers is on aspects that are new and fresh. We would argue that it is equally important to make sure the branding elements are similar and consistent, such that someone who did see the previous campaign would recognise that this comes from the same brand. It is only when there is discipline in this consistency that we can build distinctive brand assets.

It also takes time to build up distinctive elements. For example, the Nike Swoosh was first introduced in the 1970s, and was initially shown along with the brand name, prior to being used as a solo brand identifier. The strong recognition that the Swoosh has today is because of the consistent investment over many decades.

While there has been considerable literature on the different elements that could represent distinctive qualities, a great deal of this research may be misdirected. It has tried to establish the value of potential distinctive qualities to consumers, from a differentiation style perspective. For example, research into the colours associated with brands often focuses on what the colours mean to consumers, or has tried to identify the best colour for a brand (e.g., Bellizzi et al., 1983; Grimes and Doole, 1998). We argue that the real value of building up strong links to an element (such as a particular colour) is not that people may like, for example blue more than yellow, so a brand should choose blue over yellow. Rather, if a brand consistently uses blue in its packaging and communications, and is the only brand that uses blue, consumers will come to quickly and easily identify that the colour blue represents the brand. This will mean that blue can replace the brand in some circumstances, or extend the branding quality of any communications beyond simply mentioning or showing the brand name.

An emphasis on brand distinctiveness, rather than differentiation, requires a new direction in brand research. It calls for research that identifies distinctive qualities from a consumer perspective, so marketers can understand what cues consumers use to identify brands. This will also contribute to understanding relative effectiveness to help identify whether there are certain distinctive elements that are more valuable than others.

Most of the research to date has focussed on testing potential elements individually. However, in order to equip marketers with the knowledge about which distinctive elements to choose to develop, a research approach that tests the relative effectiveness of different possibilities is needed (e.g. colour versus logos versus characters versus music). Some of this research is starting to emerge, with eye-tracking tests to see which advertising or in-store characteristics attract attention (e.g. Pieters et al., 2002). The research so far is however limited in its visual focus; we would like to see more comparisons across different sensory distinctive elements.

Finally, there is a need for research that tests the extent to which distinctive elements can replace the brand name in advertisements. This may be a potential way of maintaining strong branding, without compromising the creative quality of the communications.