Monday, June 18, 2007

The Same, Yet Better

Sometimes I feel sorry for the American automakers. In their advertising, they always seem to find a need to tell the audience something to the effect that, “We are just like Honda and Toyota, only better.”

Of course, a statement like than brings up a number of questions:

1) The more you keep telling me that Toyota and Honda are the ideal benchmark for comparison, the more you are convincing me that they are the gold standard. Aren’t you then implying that the foreign car is the one I should really be desiring instead of the American car?

2) If you are just like them, how can you be better than them?

3) If Honda and Toyota are the ones you are trying to imitate, how can a copy become better than the original? At best, shouldn’t you only be able to achieve parity? And if you are trying to catch up with them, won’t you always be a step behind?

4) If you are better than them, then why do you have to sell your cars at a discount to a Honda or Toyota?

Apparently, I’m not the only one who has trouble with this logic, since Toyota just keeps getting stronger.

It’s sort of like a child on the playground saying, “I’m just as tall as the tall kids, only taller.” First, if you were really that tall, wouldn’t you be one of the “tall kids”? Second, if you are just like them, then how can you be taller?

The point of most strategies is to find a way to gain market share. For your product or service to gain market share, someone else’s product has to lose market share. As a result, strategies tend to target the place where the most market share lies—with the market leader.

That is why American automobile brands tend to target Toyota and Honda—because that is where the market share is. The problem is not that others have the market share you want. The problem is in how you go after that share.

It is safe to assume that the market leaders got there for a reason. Therefore, many believe that if they can take that reason away from the leaders and attach that same reason to their brand, then they will become the leader. Hence the strategy of “I’m just like the leader, only better.”

The problem, as we have seen, is that it is difficult to win with that type of logic. Saying that “I’m just like the leader, only better” is not very convincing. That type of logic points the consumer to your competitor as the standard for what is good. Instead, it is better to discount the standard set by the leader by setting a different standard for what is good, and claim that for yourself.

The principle here is the principle of comparison. To win market share, one must convince the customer that, when compared to the competition, you are superior in some meaningful way. As we have seen, it is difficult to create a sense of superiority for yourself if you use as your benchmark the factor which made the current leader successful. All you are doing is playing into their strength.

Over the years, I have learned two important facts:



These are explained below.

1) Before you can convince someone that you are superior to the competition, you must first convince them you are different from the competition.
Claiming to be the same, but better is a hard sell, because it is impossible to be viewed as better if you are perceived as merely the same. This is especially true if another brand has already achieved ownership to that attribute in the minds of the customer.

To be better, one needs to be different. There is a specific order here. First you have to prove you are not the same—that you are different. Then, and only then, can you prove that the thing which makes you different is the thing that makes you better. This can be very convincing.

This is how Dawn won the dishwashing liquid war. Before Dawn, the standard upon which one rated a dishwashing liquid was on how clean it made the dishes. Dawn came to market by ignoring this. First, it claimed to have unique superiority in fighting grease. Since nobody else was making that claim, and since Dawn was pretty good at fighting grease, it won that argument. Then, Dawn tried to prove that grease fighting is the most important attribute for choosing a dishwashing liquid. It won enough people with that argument to win the entire dishwashing war.

2) The best way to convince someone you are different is to emphasize a different set of attributes.
It is hard to prove a difference to the competition if you are picking on the competition’s strength. First, there is less room to create a differential, since they are already good at it. Second, the consumers will always give the leader the benefit of the doubt on the attributes which gave them the leadership position.

Therefore, if you want to prove you are different, it is better to pick a new, unclaimed territory. Dawn did that with grease fighting.

Going back to the automobile industry, Chrysler was an also-ran in the truck business. Looking at the leaders (Ford and Chevy), Chrysler saw that they were trying to win with a rational appeal. They were emphasizing rational facts, like how much weight you could put in the truck bed, how much it could tow, how long they last, etc. Rather than try to compete in this rational space, Chrysler went for something entirely different—an emotional appeal.

Chrysler designed its trucks to look sexy in a testosterone sort of way. They were made to look like the big rigs—the semis. They even put an engine in them built by the company that makes semi engines. They made you feel like you were driving something special—that you were a big man on the road like a semi driver. The commercials emphasized the bragging rights to having a manly machine rather than to any rational features. This strategic approach boosted their market share more than anything else they had ever done in the truck space.

In the retail space, I remember when Wal-Mart was just starting to expand out of their southern US base. As they were moving east to the Carolinas, they were going to meet up with the local chain, called Rose’s. Rose’s decided that Wal-Mart was a leader based on certain things, so before Wal-Mart got to the Carolinas, Roses had converted its stores to look as much like a Wal-Mart as possible. They painted their stores with the same color scheme, put up signs that looked like Wal-Mart, displayed merchandise like Wal-Mart, and so on.

Unfortunately, when Wal-Mart came to town, people saw that one thing Rose’s could not copy was how low Wal-Mart’s prices were. Since it imitated everything else, Rose’s was seen as having no distinctive advantage—it was just a higher priced version of Wal-Mart. Rose’s soon disappeared as a company.

By contrast, Shopko tried a distinctively different tactic. While Wal-Mart was winning the battle of low everyday prices, Shopko decided to win the battle of having the best advertising deals—a high/low approach to pricing. It provided a distinct alternative in the marketplace. Shopko is still in existence today, more than 20 years after Wal-Mart entered their territory.

Before you can convince someone you are superior, you must first convince them you are different. Difference is easier to obtain if you emphasize attributes other than the ones already claimed by the leader.

Just because you want to gain market share does not mean it all has to come from the leader. Sometimes just creating clarity around something different will allow you to gain a disproportionate share of the people who don’t like the leader and are just looking for a rationale to pick someone else. And that could be enough market share to become very successful.

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