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The Differentiation Challenge

By Jean-Claude Saade

Abstract

On any given morning, if we open a newspaper in Dubai, Beirut or any other city in the region it will be full of advertisements, messages and offers. At 10:00 am, let us try to remember the ads we have seen a couple of hours ago. We might remember something, only sometimes, but most of the time we cannot. We are facing the terrifying lack of differentiation that is inundating the market. Is the lack of differentiation an Agency challenge or a Client challenge?

 

Category Challenges

Booming markets and business sectors bring new combinations of Opportunities and Challenges. Opportunities that did not exist before and challenges that nobody has been prepared to deal with so far. This is practically fair, and it is up to the best organizations and companies in the market to find innovative and creative ways to deal with the challenges so they can grab the biggest share of the opportunities.

If we consider buoyant business categories, they can drive the whole market and affect many industries. A good example could be the influx of new business conglomerates and the real estate boom in the GCC markets. There are a number of factors that favored this phenomenon; but the whole thing happened in a relatively short period of time which makes us wonder whether marketing and advertising services have adapted enough to the new market dynamics in order to keep playing their role in the business chain?

The answer is Yes and No.

Yes. The marketing services industry, at a macro level has somehow adapted to the market changes and to the new emerging needs. This was manifested by the introduction of new services, opening of new specialized consultancies, changing certain ways of doing business and accepting new facts and ideas. But this does not seem to be enough.

No. Individual agencies have definitely welcomed the growing number of “New Business”. However, we have not seen serious efforts to innovate and created new services, tools and new ways of doing business that are more adapted to today’s market. Some of them are still following exactly the same process and approach they have used for FMCG, airlines, banks and automotive for the past decades.

The amount of new business coming from the emerging categories like real estate kept advertising agencies very happy; even when they had to share these new clients with specialized brand and marketing consultants that clients started to bring to the table.

As we said before, new opportunities come with new challenges hand-in-hand. New categories are attracting new businesses and new accounts are coming towards advertising agencies; but also new challenges are arising. Challenges that will lead to long term success if these businesses will manage to differentiate themselves and build strong brands with the help of their marketing and communication partners.

 

Client Challenges

A client’s direct challenge is practically in its own area of competence. If a company is in the tourism business for instance, its main challenge will be to offer the most innovative and memorable touristic and recreational experience packaged for different targets and different budgets. This could be through new destinations, new locations, better offerings and a better customer service at all times. If another company is in the real estate business, it needs to always offer a higher value to all stakeholders. From investors to end-users, what are the best offerings for them, what makes their lives better, their investments bigger and keep them all satisfied in the long run.

Across categories and businesses, companies need to always measure their offering versus two main dimensions: Relevance and Differentiation.

Scoring high on both these dimensions is not an easy task for any company. Trying to be very relevant to a certain group of customers might lead the companies in a certain category to end up offering pretty much the same things and loose on the Differentiation front. At the same time, companies that seek Differentiation at any price might loose their relevance. It is a matter of balance and strong marketing sense.

Sometimes, we can add to this serious two dimensional dilemma, a third dimension of Time. In the case of booming new categories, new companies will rush in, but it will be very difficult to build their credentials and connect with customers considering the relatively short period before the market takes another trend. Few companies will succeed but the majority will not make it.

For a real estate developer, if not building an iconic and memorable world wonder, the best bet for relevance is to build projects that answer customers’ needs and aspirations. At the same time, it needs to be different from the hundreds of other developers that are attracted by exactly the same reasons and are reading in the same marketing books and market studies.

Good quality, nice design, on-time, delivery, good facility management, customer-focused, etc. This is all good but somehow expected and required. This is what we usually call in the industry jargon, the “hygiene factors” – Things that you have to offer if you want to be in a certain category; some kind of “qualifiers” and not “Differentiators”.

A good mix of “hygiene factors” would reinforce Relevance and makes the company a good player in its category. Still we need to differentiate the company and its offering to gain a solid competitive edge. Good luck with Differentiation.

 

 

Agency Challenges

While companies are building their Relevance and competing in their respective categories, they usually expect some help with “differentiation” from the experts. These are the marketing and communication people.

These experts have practically built their reputation on their ability to get their clients the biggest share of attention, share of time, share of love and share of pocket. They know how to link product relevance to a life-bettering personal experience using “insights” and highlighting differentiating factors by looking at things in a fresh and surprising way that customers have never thought of before. Sometimes, they also get more involved and raise the bar for their clients to improve their performance in order to be able to occupy the high ground. 

Companies would focus on designing the best cars; the best 5 stars hospitality services, the best communities and innovative real estate developments that are well rooted in consumer knowledge. In parallel, the company’s communication partners will take all this and build a meaningful brand story and an irresistible promise. Differentiation will be then achieved based on mix of rational and emotional elements that make a relevant product so different in the eyes of customers. The story will not end here, but this should be the beginning of a long term relationship with the brand. This long term connection with customers is the best “insurance policy” that the company can buy facing any market downturn.

It is a complex and serious process on which depends the future of the company and the business. Therefore, it needs all the efforts that company can invest internally and from its marketing and communication partners. This is where an advertising agency can make a big difference and help its clients with the “challenge of differentiation”.

From the times of most sought after, agency created, USP (Unique Selling Proposition) to the current times new USP (Unique Selling Personality), being “Unique” is constantly a big challenge and Differentiation can make or break a business. This is even more important in booming markets where hundreds of businesses will have a short time to differentiate or die.

 

Two Predictions & One Advice

Prediction #1: 9 out of 10 companies in a booming category will disappear in the post-boom era.

Prediction #2: The businesses that will survive and continue will be those who managed to turn into brands before the market dust will settle. 

The Advice: Businesses should find their place in the minds and in the lives of customers and turn into brands that will create value to all stakeholders in the long run.

If we take for example the real estate market in the GCC that is still stimulating a lots of debate and interest and apply the above; 10 out of 100 companies will have more chances to turn into brands; the rest will still do business for now but most probably exit the market with the downturn. The real challenge is to be on that short list and continue to be part of people’s life for many years to come.

 

Final Word

Building the brand should remain the central objective of the organization and its core strategy facing market turbulence. In every market or category we will have a handful of players that will reach the “Brand” status in terms of clear value, purpose, personality, connection with customers and a relevant and differentiated offering. This is where the long term value resides.

In this process, marketing and communication agencies can help their clients keeping the focus on the real challenge. They need to advise them on the best ways to differentiate, build their brands and make them part of people’s life experience otherwise it is better saving those hefty marketing budgets for the bad times.

October 4, 2008

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Questions and comments could be sent to Jean-Claude Saade at jc.saade@Gmail.com

 

  

 

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