Escaping the Competitive Herd

I liked this book. It’s written in a very casual tone, which makes it a quick read. Reminds me a lot of Seth Godin. I wouldn’t say there is anything super original in here, but it covers the topic of differentiation quite definitively.

30 Second Summary

Competition can be bad for differentiation. Competition can cause companies to copy one another and chase the same goals. This book also includes some good insights about markets (mature or new), segmentation, and consumer insights.

Key Concepts in the Book

Marketers inadvertently herd toward the same things in a given market due to competitive forces. This is not good for differentiation.

When one product adds a features, other competing products rush to copy it.

When a market invents a metric, companies all herd/flock to maximize it (often reducing differentiation).

True differentiation requires one to buck these trends. Differentiation is rarely “well-rounded” and is often polarizing.

“…think about differentiation is not as the offspring of competition, but as escape from competition altogether.”

Who Should Read This Book and Why

Marketers especially, but also useful for R&D folks interested in Strategy and Marketing

You will get a better understanding of how products can support your brand strategy and market position, which should enable you to build better products.

So far I only have a collection of quotes and notes. Will break out into a series of posts at some point!

“When a category has reached the point when it’s possible to make fun of the people who still believe in the differences across products, it has reached the point of what I refer to as heterogeneous homogeneity: the differences are there, but they are lost in a sea of sameness. Note that the mockery quotient of a category is directly correlated to the amount of meaningless differentiation in it.” P9

“The central premise in part 1 of this book is that so in many consumer categories, differentiation has become hard to come by because we have fallen into a pulse of competition that in and of itself has become an impediment to its emergence.” P13 Competition is causing a lack of real differentiation.

“The minute we choose to measure something, we are essentially choosing to aspire to it. A metric, in other words, creates a pointer in a particular direction. And once the pointer is created, it is only a matter of time before competitors herd in the direction of that pointer.” P29

“…a competitive metric, any competitive metric, tends to bring out the herd in us.” P31

“Indeed the problem with asking consumers what they want is that not only will they ask for things they’re not getting, but their request will usually be driven by what they see being offered by the competition.” P34 Volvos becoming like Audis, Jeeps becoming like everything else…and the desire of seeing yourself short of competition in once category and trying to balance out your offering. Eventually, everything looks the same. This is how looking at yourself relative to the competition can lead to impulses to make your product more homogeneous in the market (P37).

“The truth of the matter is, true differentiation – sustainable differentiation – is rarely a function of well-roundedness; it is typically a function of lopsidedness.” P37 “…conformity is most likely to manifest among groups of competitors that are already the most similar to begin with.” P41 And what’s worst, this herd-like behavior is often caused by activities that marketers would consider “best practices” (P43)…things like market surveys, competitor analysis, SWOT analysis, vigilance, responsiveness, and lack of complacency. (P43)

“Augmentation by addition.” TO the extent that a product (or a ‘value proposition”) can be thought of as a set of benefits, product marketers will habitually look to improve it by bolstering those benefits.” P53

“Augmentation by multiplication.” Add more SKUs. Divide the market further. Make more versions of Coke. (P54)

“Hedonic Treadmill.” The ability of most people to assimilate new situations into the norm. Lottery winners go back to being just as happy as they were before. New features become expected. “the human predisposition to feel entitles to today what we used to feel thankful for yesterday.” P59

“Product augmentation is but an expensive route to commoditization…” P61  … “a growing profusion of alternatives, a shrinking proportion of which are meaningful.” P63…and business is reduced to “the artful packaging of meaningless distinctions as true differentiation.” P66 … “This, in fact, is a telltale sign that a category has achieved hyper-maturity: overall growth in the category has slowed to a trickle even as the competitive hyper-activity in the category has become more frenzied than ever.” P70

Brand loyalty seems to be decreasing in the world, especially in crowded markets (P80-81)

Segmenting the market of consumers in hyper-competitive markets: (P87-88)

  1. Connoisseurs
    • Have affection for the category and are discriminating, but there isn’t necessarily a brand preference.
  2. Opportunists
    • Brand-agnostic category experts…but they participate without joy in the category
  3. Pragmatists
    • Non-differentiators; no longer interested in what’s new and different; skeptical
  4. Reluctants
    • Dread participating in the market; driven by having no choice; frustrated
  5. Brand loyalists
    • Still exhibit stubborn passion for a brand

Good summary of the book to this point on P93:

  1. Companies begin to herd in competitive markets
  2. Herding and commoditization by augmentation of additional features or additional skus
  3. Market begins to be described by meaningless differentiating features
  4. Those marketers inside of the industry begin to lose the forest for the trees – “they have become gifted at accentuating non-essential distinctions; they have become skilled at cloaking sameness as differentiation.” P93 … “it was a bit of a shock to discover that they [Voss water marketers] earnestly believe their water tastes better than that of their competitors.” P94

“What most businesses think about managing our expectations, they tend to think of those expectations as running along a vertical axis, which means that they can either exceed our expectations by delighting us (a good thing), or they can fail to meet those expectations by disappointing us (a bad thing). What they forget is that there is another axis that runs orthogonal to the vertical one – it is the axis that comes into play when a business offers us something that fails to meet our expectations but resounds in an entirely unanticipated way.” P8…[When companies do this] they aren’t better or worse, but they are differentiated…and they can cultivate a different relationship with their customers. P99… “think about differentiation is not as the offspring of competition, but as escape from competition altogether.” P99

Reverse-positioned Brands

  1. This is a brand like google, who has a completely blank home page, which is completely reversed compared to competitors AOL and Yahoo.
  2. Defy augmentation trends
  3. Reverse positioned brands “say no where others say yes. And they do so openly. Without apology.” P110
  4. Refuses to get onto the augmentation treadmill
  5. “…Streamlines the value proposition, as opposed to further inflating it.” P114
  6. “In a saturated world, there can be a fresh appreciation for the elimination of benefits, as long as that elimination is thoughtfully executed.” P119
  7. “Which is not to say that these reverse brands are for everyone; well-defined brands almost never are.” P122
  8. “…what we want tomorrow is probably going to be informed by what we have too much of today.” P124

Breakaway Brands

  1. Reframe consumption habits. Ignore categories and boundaries. Challenge product definition.
  2. “By presenting us with an alternative frame of reference, they encourage us to let go of the consumption posture we’re inclined to bring to a product and embrace entirely new terms of engagement instead.” P137
  3. “They are suggesting that we replace one mental archetype with another.” P139
  4. …”brands invite us to approach their products through the lens of alternative definition.” P140
  5. Cirque du Soleil asks you to rethink what a circus is; The Simpsons asks you to rethink what a cartoon is; Swatch asks you to reconsider a watch as a fashion accessory; Sony makes a robot pet.
  6. “…the word “differentiation” refers to a meaning shift that is attained by “adding concepts to the original concepts.” It is a fundamentally delicate process, because it requires holding on to enough of the original to allow for a meaningful comparison, and yet adding enough of the new to constitute a legitimate difference In this regard, differentiation can be thought to operate along a continuum – it is possible to differentiate a little or differentiate a lot, depending on how much of a stretch you are willing to undertake. A breakaway brand is one that makes the most of the stretch.” P142
  7. “But breakaway brands push us out of our rhythm of consumption, not by creating new rhythms, but by invoking rhythms that we wouldn’t have thought to apply in that particular context.” P146

Hostile Brands

  1. “They refuse to play the game of persuasion in its old-school form. They say the things that other brands won’t say, the things that risk chasing us away.” P163
  2. A type of reverse psychology (P163) “Defy conventional axioms of customer attraction.” P185
  3. Harley Davidson; Mini cooper; Red Bull
  4. “…traction requires friction, so what hostile brands do is give us chafe.” P163
  5. “take it or leave it” brands P165
  6. Statement brands; identity markers
  7. Promote subcultures; commonalities found by being part of a passionate minority
  8. “In a marketing environment saturated with overblown promises and cloudless false reality, nothing dents.” P178
  9. “These brands penetrate.” P178

Competition will breed conformity. “A race can only be run if everyone is facing the same direction.” P184 … “Our competitive competence is killing us.” P211 … “Competitive myopia” is forcing us to mirror our competition. P212

“Idea brands don’t try to compete…they are more interested in separation than comparison.” P185

“…how utterly charismatic difference can be.” P188, speaking of Apple.

“…these brands deviate in ways that reverberate, in ways that speak to us, somehow.” P199

Speaking to the lack of definitive axioms found, “…the more involved I became in my research, the less definitive I found myself feeling, about everything.” P207 … “…it’s not that truth is elusive, it’s that it is liquid.” P208

“…that it is important for us to begin looking at ourselves the way that consumers do. When consumers look at the brands within a particular category, more often than not, all they see is a competitive blur.” P213

“ideas…are extremely fragile at birth…because in their infancy, these unfamiliar ideas are often indistinguishable from crazy, stupid ideas. This is why so many of them die a premature death.” P216

You must think creatively. You must use your intuition along with the market data. You cannot just look at data. You can’t just rely on market research. About consumers, “…we cannot expect them to be able to tell us how it might be possible for us to surprise them.” P220

Looking to the future, what will differentiated brands look like?

“They will offer something that is hard to buy….scarcity always whets demand.” P228

“They will reflect a commitment to a big idea.” P229

“They will be intensely human. Which is to say that they will have been conceived by individuals who are acutely sensitive to the complexities of the human spirit.” P230

“Differentiation is not a tactic. It is a way of thinking. It is a mindset, a mindset that comes from listening and observing and absorbing and respecting. Most of all, it is a commitment. A commitment to engage with people in a manner that reveals to them that, yes, we get it.” P231-232