SUMMARY: The differentiation process as currently conceived can produce great results. But it contains a hidden problem. It lacks the prescription for achieving sustained long-term effectiveness. As a result, companies that have undergone differentiation often inexplicably hit a sales slump after several years — and in many cases appear near-powerless to rise out of it. This article discloses the key to overcoming this problem, and illustrates how to use the key with an example relating to a major pizza chain.

In their compelling book Differentiate or Die, marketing maven Jack Trout and co-author Steve Rivkin tell us that if a business is to have any chance of achieving maximum success, it must differentiate. Failure to do this, they note, will result in business death or, at the least, something akin to a competitive kick in the groin.

Trout and Rivkin make the case in 212 pages of captivating examples and convincing logic. However, the entire text can be distilled into a simple process.

Differentiation in Four Steps. Trout's differentiation process can be boiled down to these four steps:

1. DISCOVER a point of difference about your company that can be translated into a unique consumer benefit.

2. DEFINE that difference in terms of a brief statement (which we call a differentiation statement).

3. PROVE the truth of the statement through a logical argument or fact.

4. PROCLAIM the statement everywhere and project the point of difference through every aspect of the business.

Summarized in a single sentence, the 4-step process is this: Discover it, define it, prove it, proclaim it. The “it,” of course, being that thing which makes your company different from — and, therefore, presumably better than — your competitors.

The result of this process is that your company becomes viewed by the public as being beneficially different from your competition. We call this Beneficial Differentiation.

As Trout might tell us, beneficial differentiation is critical to business success for two reasons: (1) Without it, one's customers have no “memory hook” for recalling the business and, thereby, tend to forget about the business over time, and (2) without it, one's customer's have no reason for choosing the business over its competitors (except when the business offers yet another profit-gutting price-discount promotion or another short-lived, complexity-creating, new product novelty).

As expected, the assumed benefit of beneficial differentiation is a rate of sales and market share growth that tops the competition.

The Problem. It's clear that this 4-step differentiation process works (Trout cites a compendium of success stories). However, it's also disturbingly clear that, when viewed over the long haul, there's a problem with it. Over time the sales gains and competitive effectiveness initially generated by the process tend to diminish. Which is to say, the process lacks the legs needed for a long-distance run. We'll explain with an example: Papa John's Pizza.

From its onset, Papa John's has been a perfect practitioner of the above-cited 4-step differentiation process. The company has implemented it like this.

Step 1: DISCOVER IT. Early on, Papa John's discovered that it used better ingredients than its major competitors used and it realized that this difference could be translated into the consumer benefit of better-tasting pizza.

Step 2: DEFINE IT. Papa John's defined its difference in a short, memorable 4-word differentiation statement: “Better Ingredients, Better Pizza.”

Step 3: PROVE IT. The company proves its difference by pointing to the fact that its sauce is made from fresh-pack tomato product while the sauce of its major competitors is made from re-manufactured product. (When pressed to prove its differentiation statement in court, the company also points to other “ingredient quality differences.”)

Step 4: PROCLAIM IT. The company has made its “Better Ingredients, Better Pizza” slogan ubiquitous. It's to be found everywhere — on packaging, signage, advertising, stationery, and on and on. And, of course, it has been the centerpiece of multiple marketing campaigns.

So what has been the result? During the 1990s the company achieved record-setting AWUS (average weekly unit sales) and a record-setting expansion rate for a delivery/carry-out pizza chain. Astounding, to say the least. It had its competitors quaking in their pizza boots.

But then, circa 2000, something happened. Papa John's AWUS began to decline — slowly at first, and then a little faster. Predictably, profits declined and then stock price plummeted. And competitors breathed a collective sigh of relief that could be heard through the industry.

So Why Did That Happen? It cannot be said that it's because the company abandoned the above-described differentiation process. Indeed, it has devotedly applied the process (notably Step 4) with growing intensity — banging away at the “Better Ingredients, Better Pizza” slogan more often and more fervently than ever. Still, sales continued to slide or, at best, merely held their own.

So what's happening here? Simply this. Every competitive advantage — including a powerful point of difference like Papa John's — eventually diminishes in impact if left unchanged. We call this point-of-difference diminution. To retain its sales-generating impact, an advantage, or point of difference, must GROW. If it remains static, two things happen. First, competitors gradually “close in” on the advantage and, thereby, reduce the “advantage gap,” either real or perceived. Second, in order to retain its place within the human psyche, a concept must expand. If a concept remains unchanged, it gets crowded into a corner and covered up by competing concepts. The result is that the concept loses its power to motivate buyer purchases.

The antidote to these two problems is expansion of the point of difference. We call this point-of-difference proliferation. Point-of-difference proliferation makes a company's point of difference stronger within the pizza-buyer's psyche. And that, in turn, makes the point of difference a stronger motivator of purchase transactions. Without proliferation, a point of difference eventually declines in sales-generating effectiveness — no matter how doggedly the company persists in shouting its differentiation statement over and over.

Enter Differentiation Step 5. Therefore, for the differentiation process to deliver sustaining sales-building effectiveness, there MUST be expansion, or proliferation, of the point of difference. This is step 5 of the process. It's the missing ingredient to sales-sustaining differentiation. Concisely stated, it's this:

STEP 5: PROLIFERATE and protect the point of difference by installing differentiation-builders on an ongoing basis.

Add this to the prior four steps and we have …

The New 5-step Differentiation Process
1. DISCOVER a point of difference about your company that can be translated into a unique consumer benefit.

2. DEFINE that difference in terms of a brief statement (which we call a differentiation statement).

3. PROVE the truth of the statement through a logical argument or fact.

4. PROCLAIM the statement everywhere and project the point of difference through every aspect of the business.

5. PROLIFERATE and protect the point of difference by installing differentiation-builders on an ongoing basis.

Differentiation-builders are products, services, promotions, and methods that expand a point of difference and, in some cases, also protect it from competitive imitation. This is not to say that every new product, service, promotion, or method is a differentiation-builder. Indeed, most are not. And many are actually differentiation-degraders — they contradict, cover up, or obfuscate the point of difference, thereby weakening it.

An innovation is only a differentiation-builder when it expands or enhances the company's stated point of difference. Lacking that, an innovation might achieve some benefit, but that benefit is not that of point-of-difference proliferation.

In recent history — or at least since 1990 — Papa John's has done little to expand its better-pizza point of difference. Up until 2000 this didn't matter because the concept in its original embodiment had ample power to sustain sales growth. So, point-of-difference proliferation (or step 5) wasn't necessary.

However, circa 2000, point-of-difference diminution began to kick in. It happens to every point of difference that remains static — eventually it starts losing its power to generate new sales, followed by losing its power to sustain current sales. The only way to stop point-of-difference diminution is to counteract, or reverse, the process by installing differentiation-builders. So installing differentiation-builders is the antidote to the vexing, company-wracking phenomenon of point-of-difference diminution.

How to Create Differentiation-builders. A prior article cites examples of hypothetical differentiation-builders for the four major pizza chains (see Re-discovering Differentiation (Part 2). However, to explain how the differentiation-building process works, I'll continue with the Papa John's example and describe the process behind the creation of just one differentiation-builder (in fact there are many possibilities but we only need one to illustrate).

Our starting point is the original point of difference.

Stated in a sentence, Papa John's point of difference is: Because we use better ingredients, we sell a better pizza.

Condensed down to two words, the company's point of difference is: Better-quality Pizza.

From a strategic perspective, how do we expand this better-quality point of difference? At least three ways come to mind. First, we can expand the perceived quality of our line of current ingredients. This can be done by many tactics. Second, we can introduce new ingredients that further enhance the perceived quality of the pizza. This also can be done by many tactics. Third, we can expand the concept of “ingredients” to include the additional factors that impact perceived pizza quality. As a result of these three strategies we have a reservoir of possibilities for creating and installing an ongoing stream of differentiation-builders over many years to come.

It should be noted that the key to effective differentiation-building is not speed or quantity, but consistency. In other words, not a gush of innovation but, instead, a slow-but-steady drip, drip, drip (maybe one differentiation-building innovation per quarter, or per year, or per every couple years — it depends on the competitive situation). The idea is to insert an added differentiation-builder into the marketing mix just when point-of-difference diminution begins to (once again) set in.

Because the focus of my company (Correll Concepts) is pizza packaging design, I'll use an example related to pizza packaging innovation. This example pertains to the third differentiation-building strategy: Expanding the concept of “ingredients” to include the additional factors that also impact perceived pizza quality.

Correll Concepts has hundreds of pizza packaging design innovations. But one in particular — namely, PCE or Pizza Carton Elevation — is perfect for this illustration. Pizza carton elevation is achieved by installing LEGS on a pizza carton. Here's how they might look.

The primary benefit of Legs is that it results in a higher-quality pizza. The science works like this. Legs raise the bottom of a box above the cold tabletop (or car seat). This, in turn, keeps the pizza up to 33 percent hotter by eliminating conducted heat loss through the box bottom into the cold surface below. The result — better, hotter, fresher-tasting pizza at the point of consumption. (For more on PCE, click here.)

So it takes no genius to see the connection between PCE and a company that has a better-quality pizza point of difference. The “connecting equation” between Papa John's differentiation thrust and the Legs innovation is this:

Better-quality pizza + quality-enhancing carton =
Expanded pizza quality point-of-difference

This makes PCE, or Legs, a potential differentiation-builder for Papa John's point of difference.

Of course, merely installing Legs on the company's carton wouldn't automatically result in maximum point-of-difference proliferation. The innovation must be properly conceived and convincingly communicated. But that's easy enough. First we craft a message that explains to pizza-eaters how the Legs carton enhances the quality of the contents therein. It might look like this.

(For a LARGER PICTURE and more explanation, click here.)

The small text in the above graphic reads: “This unique BETTER-PIZZA carton with exclusive PIZZA-FEET sits above the cold tabletop. That keeps your pizza up to 33 percent hotter than a box without feet. It also keeps the box bottom dry (no more soggy cardboard). The result — BETTER, HOTTER, FRESHER-TASTING PIZZA to the last bite.”

This message introduces to Papa John's customers and the pizza-eating public the concept of a Better-Pizza Carton — specifically, a carton that yields a better pizza and, thereby, a better pizza-eating experience. Moreover, it introduces the concept of a Papa John's Better-Pizza Carton. The result is expansion of Papa John's Better-Pizza Point of Difference within the mind of the pizza-eating public. The outcome is increased differentiation, public recall, and credibility — which ultimately yields increased customer transactions.

This illustrates how point-of-difference proliferation can be achieved from the creative installation of differentiation-builders.

Back to the example, once the message is incorporated into the carton's graphics scheme, the box might look like this (the message being positioned along the front edge of the cover panel).

(For more info, click here.)

To further insure point-of-difference proliferation within the minds of the pizza-eating public, we'd also introduce the new Better-Pizza Carton in a 30 to 60 day ad program. Possible sample copy or dialogue: “Better ingredients, better pizza ... better box, better pizza. Papa John's — making your pizza better in ways no one else even imagines."

Should we ever be challenged to prove our claim that our new Legs innovation produces a hotter pizza and higher-quality pizza-eating experience, we'd produce our test results.

And should we want to prevent competition from closing the gap on our better-quality pizza point of difference by copying the Legs invention, we might consider obtaining an exclusive patent license on the invention.

Wrap-up. The first four steps of the differentiation process have been known now for a number of years — or, at least, since Jack Trout and his partner(s) have been writing books about it. So most business leaders are knowledgeable and comfortable with this aspect of marketing. But to achieve sustaining impact from the differentiation process, the above-described fifth step must be included — proliferation and protection of the company's point of difference by installing differentiation-builders on an ongoing basis. This is the key to successful long-term differentiation because differentiation-builders are the antidote to point-of-difference diminution.

Installing differentiation-builders is a new concept to the marketing arena. It'll be interesting to see how long it takes for business leaders to pick up on it. And, once they do, it'll be interesting to see the impact it creates for differentiation-savvy companies such as Papa John.

For a captivating look at five hypothetical differentiation scenarios for five actual pizza companies (Pizza Hut, Domino's Pizza, Little Caesars, Papa John's, and an Independent), see Re-discovering Differentiation (Part 2).

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This article was authored by John Correll.
Response may be directed to john@correllconcepts.com.