There’s so much noise out there in the competitive market. And it’s only natural for customers to notice and be attracted to products that have differentiated themselves. They are drawn to the unique features that set those products apart from their competitors. Successful consumer brand builders have deliberately developed a product differentiation strategy that makes their products stand out and say, “Hey look, over here, I’m different!” Or more precisely, “Here I am! Just what you’ve been looking for!”
Retail Market Realities
Any discussion of product differentiation has to start with a sober respect for the harsh realities of the retail market. Brand builders must not only develop a product differentiation strategy. But they must do so in a very restricted and competitive environment. Not only are there thousands of other products vying for your customers’ attention. But it is all happening in an extremely limited space, with poor lighting, and 4 feet away from your customer! Your strategy for product differentiation must first take all this into consideration.
Also, it doesn’t matter how many cool features you’ve incorporated into your package, signage, or message if your product is out of stock. So another harsh reality to respect is merchandising and distribution management. What good does it do if you have successfully differentiated your product but it’s not available?
This is probably the biggest factor that brand builders overlook in their quest for product differentiation. No, distribution management and merchandising are not glorious, creative, or even fun. Nobody’s ever going to say, “Hey, great job of keeping your products in stock!” But your customers are going to notice when you are out of stock. They are going to say, “That product’s not dependable!” They are going to blame you, the brand builder, for any foul-ups caused by your distributor or your retailer.
When you are producing and marketing branded retail products, customer service means “dependable!”
Brand builders can achieve product differentiation in many ways:
1. Target. Who wants it?
Who is your target market?
Successful branded products have differentiated themselves by better addressing their particular market or identifying their slice of the market in a new and different way. They have a much better chance of being in demand by that market.
For instance, when we started the Barefoot Wine brand, we differentiated our product from the majority of wine that was available at the time. We did this by narrowly focusing on our ideal customer. She’s a 37-year-old mom with 2 ½ kids, shopping for a dependable staple wine under six dollars.
This market had heretofore not been identified nor specifically addressed. It had been mixed in with the rest of the market. We differentiated our product by producing and advertising a dependable and predictable taste profile regardless of the harvest year. She could depend on it to taste the same in the future. On the contrary, our competitors were vintage wines with differing tastes depending on the effects of the climate on the grapes that particular year. Our multi-year blends gave her the consistency she was looking for and differentiated our products from the rest of the market.
What Does Your Target Market Want?
Brands who understand exactly what their target market wants and offer it to them may have to go through (as we did) an extended “missionary” period. During which they have to convince gatekeepers that the customers on the other side of the gate are looking for something different that a company yet has to offer. This type of product differentiation strategy often requires a great deal of patience and tenacity. But it is ultimately successful once your target market discovers it. This strategy also creates extensive brand loyalty.
Beyond product composition, this strategy is dependent on effective messaging that gets right to your potential customer. In our case, it took us several years to get the message to our specific target market. Our marketing strategy was based for the most part on discovering where our target market was hanging out and addressing them in an appealing and compelling way.
2. Name. What’s it called?
What’s in a name? Everything! It’s how your product is differentiated in the mind of your customer. It’s how they identify it, remember it, and look for it. Your name should be readable from 4 feet away – even when it’s on a label that’s as small as 3″x 3″. You should use a clear font, not fancy, not script, or even serrated. It should be surrounded by enough white space to make it identifiable on the shelf.
Your name should have something to do with your product, one of its attributes, or even the feeling or result your customer gets from using your product.
Family names are great if you have years of market penetration, or if your company is already widely known and respected. But if you are starting out with a new branded CPG product using a family name, you are missing an opportunity to use the product brand name to help sell your product. Nobody knows your family but your customer needs to know more about what your product does. This is a great opportunity to communicate this message by putting it in your name.
For the retail market, names should be in plain English, easy to read, and easy to pronounce. The most successful names are no more than three syllables long. Long names like Coca-Cola and Budweiser are quickly shortened by the market anyway into Coke and Bud. We like to say. “When it comes to commercial names, the shortest number of grunts wins!” In the market, one and two syllable names are the easiest to recognize and remember.
3. Logo. What’s the symbol?
Consider the Harsh and Competitive Retail Landscape
As we mentioned, the retail market is a very restricted environment. The best logos are more of a solution than a creation. Once you understand how limited you are in terms of artistic expression, you realize that you must solve the problem of creating a logo that will read, pop, and get noticed in that harsh and competitive retail environment. This means that fancy logos, curlicues, vagary, subtlety, mystery, multi-color, or anything fuzzy or hard to read from 4 feet away are pretty much out! This means that clean, crisp, simple, straightforward, solid, bright, advancing, and recognizable are in!
The best logos in the market have something to do with the name. Logo creation is a great opportunity to improve name recognition and product differentiation. We think the best logos are a picture of the name itself because they reinforce a single message using both print and graphics to improve memory, recognition and identification. For instance, at Barefoot, we deliberately chose an image that was the same as our name, a bare foot.
Most of the time in the retail market, it’s the logo that people are looking for. Yours has to pop out from the other logos. We recommend that our clients spend extensive time in the market becoming familiar with what’s already out there. What shapes are being used? What colors are being used? And what are the logos that pop out in your category when you view them from 4 feet away? The answers to these questions will give you a big hint about how you have to design your logo to be differentiated from the sea of sameness.
While you’re there, take special notice of how the products are lit with overhead lighting that has a blue hue. This will affect the colors you choose especially when your products are tucked back and under the shelf that shade them. When we got started, we were fortunate enough to be advised by rank and file buyers, clerks, and warehouse people about what worked and what didn’t work within such an environment.
4. Package. How does it shape up?
Standing Out From the Pack
One effective strategy for product differentiation is the design, shape, size, color and form of your package. Successful products that have differentiated themselves from their competition have used packaging that was deliberately designed to stand out from its competition. Is it a rectangle when everyone else is a cylinder? Is it bright yellow or orange when everyone else is drab? Does it have a “waistline” when everyone else is straight? Does it have a unique closure, cap or lid?
The package itself is bigger than the name, logo, or label. It is tactile. It is what they handle. Doesn’t look like something they want to pick up? We found, interestingly, that customers would rather buy smaller quantity for the same price if it came in a taller package. Even though the shorter, stubbier package had more value, their perception was that taller was more desirable. Many products, especially smaller ones, have successfully differentiated themselves by using bigger packaging even though it was less practical from an efficiency standpoint. It was their strategy to get noticed in the market.
Packaging can also include quality queues such as raised lettering, gold ink, medallions, and other decorations to indicate superior value. A great example of packaging used for product differentiation by a company is Apple. Their packaging is simple, elegant, and memorable. The package itself raises the bar on the customer experience by helping them anticipate the value of the products before they even unwrapped it. Another company that has developed a unique package that their customers look for is McIIhenny Company Tabasco sauce with its small bottles, thin neck, and slender rectangular boxes emblazoned with pictures of the product inside.
Marrying Uniqueness and Practicality
Again, like the other product differentiation strategies, you are limited by the retail environment. When it comes to packaging, your package must be practical as well as unique. It means your package can’t be easily tipped over because it’s narrower at the base than it is on the top. It means that you have to maximize the number of packages you can fit on the shelf. So, radical shapes may distinguish your product but they will minimize your stock which hurts your sales. Package design is really more of a solution than a creation – given the retail market environment.
5. Signage. What are you saying?
Another strategy for product differentiation is your message. But in the retail environment, you have very little space to express it. For the most part, you convey your message through signage. Typical shelf signage which appears under your products on the shelf cannot be more than 4 inches wide by 4 inches long. In some cases, even that may be too large. Shelf signs don’t want to be so long, for instance, that they block access to the products on the shelf below yours or the store will not allow them. Furthermore, your shelf signage is the easiest advertising materials for your competition to remove.
Fitting Your Message on Small Signage Space
This is why you want to keep your message short, sweet, and compelling. It must be easy to read. Many successful brand builders have distinguished their products with one-liners. These include slogans, catchphrases, descriptions, and endorsements. Terms like, “the best,” “lowest-priced,” “the highest value,” “the largest volume,” “the original,” or “the highest quality” are examples of short messages that can distinguish your products on small signs.
For instance, we tried to distinguish our products with the moniker, “Best Wine, Best Price” where best price referred to the most popular price, and best wine referred to the most awards and third-party endorsements at that price. We chose a short catchphrase to distinguish our product as fun and approachable when compared to the stuffy and staid competition in our industry at the time. We said, “Get Barefoot and Have a Great Time!” Both messages were only a few words, easy to read, easy to remember, and more importantly, fit on a 3″x 3″ shelf sign. The retail market won’t let you go on and on about your products, features, and benefits. You’ve got to be both effective and efficient.
Vying for Bigger Message Space
In the retail market, nothing differentiates your product more than a floor display – the bigger the better! You may have to stand in line to get a floor display or a display facing the cash registers where everybody has to wait to be checked out. But it’s well worth it because customers will be more likely to see your products. And you will have a much larger display piece to convey your message. Even here, you should be frugal with your words, explode your logo, celebrate your name, and get one compelling message across.
Sure, you can use the latest technology including QR codes where folks can just scan and watch or even set up an iPad where they don’t even have to scan to watch. But compared to signage, these solutions are either onerous or expensive. So you will likely be dependent on signage and trade dress.
And sure, your quality can distinguish your products. But your products still have to be in stock, your customer has to buy them, try them, remember your name and logo, and find them again!
Outside of the rigid retail environment, there are many other ways to distinguish your brand. Advertisers will be happy to sell you radio, television, and display ads that position your products in unique ways. But the most effective form of advertising we have found in retail is at the point of purchase. It’s the only place where your product, your customer, their money, and their decision all come together. That’s the place where you have the best opportunity to answer the question, “But how is it different?