Brand differentiation is the process of showing the world how your business is different from the competition.
Differentiation in your branding builds credibility and generates customer loyalty – which, in turn, drives growth.
For differentiation to be effective, it must do the following:
- It must be relevant to clients and prospective clients. If the differentiator has no impact on clients and prospects, it will have no impact on your business.
- It must be rooted in truth. You can’t just say your business is different, it needs to be different.
- It must be verifiable. The differences you provide must be provable and achievable every time.
Let’s take a look at three effective ways you can differentiate your business from competitors.
1. Differentiate with a strong business name
Your business name is the cornerstone of your brand identity. Choosing the right name for your business can be one of the most crucial parts of building a strong brand.
To avoid any common naming mistakes, take the time you need to choose the perfect business name.
Random, generic, forgettable business names, such as those you get from an online business name generator will make it harder for your customers to fall in love with your unique company.
When selecting a brand name that can differentiate your business from others, consider the following:
- Who are you? Your company name should identify the who of your business, service, or product.
- Can the company name be shortened? Keep it short and sweet when possible.
- Is the company name memorable? If a client can’t remember your name, you’ve already missed the mark.
- Is the company name manageable? Consider ease in spelling, pronunciation, and abbreviation.
- Is the company name free from negative connotations and misrepresentations? When considering your company name, especially if your goal is to become a global brand, ensure that the name isn’t associated with any negative connotations across all borders.
Company spotlight: LUSH
The beauty industry is projected to be worth 758 billion dollars by 2025. It can be difficult to stand out in a market that size.
But LUSH is crushing it with brand differentiation.
LUSH’s brand champions premium-quality beauty products that are simple, fresh, and no-fuss.
And, the name “LUSH” meets all the parameters for a great business name – it’s short, memorable, evocative of their brand, easy to spell and pronounce.
And, that helps Lush to stand out in its very competitive market.
2. Differentiate with a compelling visual identity
A strong brand identity doesn’t just happen by chance.
To stand out from your competition, you must approach your brand identity design strategically.
Strong brand identity design attracts clients by showcasing how and why your business or its products or services are better than competitors. This can be due to a superior quality product, unique features, or simply because people love your business for other reasons.
The important thing is that you know what your differentiating factors are – and that you communicate them visually to your prospective customers.
Brand identity is made up of many visual components. The following three are the most important:
- Company logo: A well-designed company logo is one of the first impressions your business will make. Invest the time to get this right. Your logo should be easily recognizable, versatile, and timeless. But, most importantly, it must embody your brand.
- Fonts: Fonts impact people psychologically. Any differentiation strategy should include choosing fonts that send the right message about your unique brand. Select fonts that are easy-to-read, that communicate something about your business’s identity, and that are visually distinct from your competition.
- Colors: According to a study examining the effect of color on sales, 92.6% of people surveyed by the CCI: Institute for Color Research said that color was the most important factor when purchasing products. So, be sure to choose brand colors that are both on-brand and that help you to visually stand out from your competition. These colors should be consistent between your logo, marketing materials, and your business website design.
So, if you’re starting a new business (or have already started one) take the time to sit down and figure out your brand identity.
This step is always important, but it’s absolutely essential if you’re writing a business plan for a new business. Your brand identity will influence your marketing and sales plan, and ultimately, the success or failure of your business.
Company spotlight: Airbnb
Airbnb underwent a much-talked-about visual identity overhaul in 2014. Airbnb changed its logo, fonts, and color palette to send a message of inclusion.
The new Airbnb logo (the “Belo”) combines four principles—people, places, love, and Airbnb—represented by a simple, stylized “A” shape.
And, to underline their brand message of warmth and inclusion, Airbnb chose a pink-red colorway. This palette conveys a sense of love and nurturing – a unique brand position in the travel industry.
3. Unique products or services
When a person is faced with a shelf of products or similar services, what motivates their decision to choose one product or service over another?
The answer: product differentiation.
Product differentiation doesn’t mean the product is completely different from similar products on the market, but that it has at least one element that distinguishes and elevates it from others.
Product design is both an art and a science. Most people can’t build a strong brand selling products (or services) that are commodities. But, differentiated products (or services) can help you gain market share.
There are three types of product differentiation:
- Vertical differentiation: This occurs when one product’s quality is superior to another. Consumers will say product A is better than product B. This usually includes price differentiation – consumers expect product A to cost more than product B. (Example: Purchasing a BMW vs a Kia).
- Horizontal differentiation: Horizontal differentiation refers to distinctions in products that aren’t discernible in terms of quality. The distinctions can vary based on the product or service. (Example: Coke vs Pepsi. Taste is the driving consideration, not quality).
- Mixed differentiation: Mixed differentiation is a combination of vertical and horizontal differentiation. Consumers will have notions of what is “better,” while also considering other factors. (Example: iPhone vs Android. While the higher cost of an iPhone could signify a greater quality, other factors such as social status, ease-of-use, or customization also come into play).
Product differentiation and service differentiation matters because there are hundreds of new products and services entering the market every day.
When faced with too many choices, none seemingly better than the next, consumers are often overwhelmed and just walk away.
This is why it’s so important to highlight your product’s unique selling proposition.
Company Spotlight: TOMS
TOMS shoe company wins customers with a meaningful mixed differentiation strategy. They entice customers with quality shoes that their fans view as “better” than other slip-on shoes, while also appealing to buyers who place a chief value on ethics and company integrity.
TOMS’ “One for One” program promises that for every pair of shoes purchased, they donate a pair to a child in need.
This mixed differentiation of quality plus social cause is working. In 13 years of business, the company reports giving away nearly 100 million shoes.
Take the time to examine your business name, visual brand identity, and your company’s products or services.
It’s not hard to differentiate, but don’t leave differentiation to chance. Create a strategy to differentiate your business and get an advantage over competitors.
Ashlee is a Customer Support Specialist at crowdspring, one of the world’s leading marketplaces for crowdsourced logo design, web design, graphic design, product design, and company naming services. She helps entrepreneurs, small businesses and agencies with branding, design, and naming, and regularly writes about entrepreneurship, small business, and design on crowdspring’s award-winning small business blog.
