A Shift in Branding Perspectives
A groundbreaking paper by Byron Sharp, John Dawes, and Kirsten Victory is stirring debate in the marketing world. Their research scrutinizes the long-held belief in differentiation strategies, advocated by Philip Kotler’s ‘Segmentation, Targeting and Positioning’ (STP) model, suggesting that brands might benefit more from focusing on distinctiveness.
Key Arguments Against STP
The paper outlines several compelling points against the STP model:
- Duplication of Purchase Law: Data reveals an unexpected overlap in customer bases among competing brands, undermining the idea of unique market segments.
- Uniform Customer Profiles: Contrary to STP’s differentiated targeting, competing brands show similar user profiles.
- Lack of Perceived Differentiation: Even loyal customers don’t see their preferred brands as markedly different from competitors.
- Comparable Satisfaction Ratings: Customer satisfaction scores are alike across competing brands, questioning the STP’s link between satisfaction and brand loyalty.
- Predictable Loyalty Patterns: The ‘Double Jeopardy Law’ indicates that larger brands have marginally higher loyalty, but not proportionate to their market share, challenging STP’s assumptions.
Analysis of Data and Case Studies
The paper’s strength lies in its use of extensive academic studies and new data from various markets. However, its reliance on the UK Retail Banking sector as a primary example draws some critique. This sector, particularly with challenger banks like Monzo, demonstrates successful differentiation strategies through unique user experiences and customer engagement, somewhat contradicting the paper’s arguments.
Implications for Brand Strategy
The Case for Distinctiveness
Despite the criticisms, the paper strongly supports the idea that brands should prioritize distinctiveness. This approach is exemplified by brands like Yorkshire Tea and Old Spice, which focus singularly on being distinctive.
A Balanced Approach: ‘Bothism’
However, the study doesn’t entirely dismiss the concept of ‘bothism’ – the idea that brands can benefit from both distinctiveness and differentiation. Brands like Tesla and Amazon Web Services exemplify success through differentiation in significant purchase decisions while also utilizing distinctive branding elements.
Conclusion and Recommendations The paper is seen as a crucial contribution to the branding literature, advancing the debate on effective brand strategies. While it advocates for distinctiveness, it also suggests that opportunities for meaningful differentiation should not be overlooked, especially in innovative or high-involvement categories like SaaS, Fintech, or Automotive.
