SUMMARY: The recent book Differentiate or Die makes a compelling case for business differentiation and describes a 4-step process for achieving that differentiation. This article summarizes that process and then adds a fifth step. Then the article shows how the differentiation drives of four major pizza companies have molded the pizza industry into what it is today. (For another great article on differentiation, see Differentiation-builders: The Antidote to Point-of-difference Diminution.)

In their ominously-titled book Differentiate or Die, marketing guru Jack Trout and co-author Steve Rivkin spell out a cut-to-the-quick 4-step process for differentiating a company from its competition. That process is:

FIRST, analyze your company and product in relation to the competition and its products. Figure out what it is about your company that's different from that of the competition. We call this the point of difference.

SECOND, formulate that point of difference into a concise, memorable statement — the fewer words, the better. The statement should identify, or at least imply, a compelling consumer benefit that your company provides and which your competition does not. We call this a differentiation statement.

THIRD, dig out, create, or identify some logical or factual proof for the differentiation statement. The stronger the proof, the more believable the differentiation statement is. And the more believable it is, the greater its impact in generating consumer awareness and sales.

FOURTH, communicate your differentiation statement at every opportunity and every way possible. In Trout's words, “Every aspect of your communications should reflect your difference. The bottom line is: You can't overcommunicate your difference.”

Differentiate or Die builds upon a very simple premise: To survive, or at least out-perform, one's competitors in this era of killer competition, a company must out-differentiate that competition. If anyone should know, it's Jack Trout — a world-renown marketing consultant of 30 years and co-author of such breakthrough classics as Positioning: The Battle for Your Mind and The 22 Immutable Laws of Marketing.

Trout Plus
We find Trout's 4-step prescription to be on the bulls-eye and perfect for application to the pizza enterprise. For easy recall we sum it up in a sentence: 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. Then we build on Trout's groundbreaking prescription by suggesting a fifth step: Proliferate it. When this is done, the following 5-step differentiation process emerges:

1. DISCOVER what it is about your company that makes it different from — and, therefore, better than — its competitors.

2. DEFINE that difference in a brief statement — the fewer words, the better.

3. PROVE that what's stated in the statement is true.

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

5. PROLIFERATE the point of difference by installing unduplicatable products, services, promotions, and methods that expand that difference and also protect it from competitive encroachment. We call these things differentiation-builders.

In light of all this two questions emerge. First, how has the drive for differentiation shaped the pizza industry to this point? Second — and most important — how might a pizza company apply the process for optimizing its long-run competitive advantage and success?

“Pizza Differentiation” in Review
Three differentiation drives — each manifested through a particular company — have shaped the pizza industry into what it is today. The three companies are Pizza Hut, Domino's Pizza, and Little Caesars. The three differentiation drives are (or, more correctly, were) pan pizza, guaranteed 30-minute free delivery, and buy-one-get-one-free. The drives emerged in the late 1970s. All three ended at nearly the same time — 1995.

In that 15 to 20 year period, two things resulted from these three drives. First, by riding the wave of its point of difference, each of these three companies surged to 5000 or more units by 1995.

Second, the need to respond to these three differentiation drives caused the rest of the industry to change dramatically. As a result, by 1995 (a) Pizza Hut-style pan pizza was on numerous menus, (b) virtually every pizza company was delivering and many were offering some variation of “30-minute delivery,” and (c) almost every company was advertising some variant of two-for-one, or two pizzas at a discount price.

In addition to changing the rest of the industry, these three companies also changed each other. In the early 1980s Little Caesars introduced Panza Pizza to neutralize Pizza Hut. Circa 1985 Pizza Hut introduced delivery service and “delco” units to neutralize Domino's. Circa 1985 Domino's Pizza introduced Domino's Doubles to neutralize Little Caesars. Circa 1989 Domino's rolled out pan pizza to neutralize Pizza Hut. Circa 1995 Little Caesars introduced delivery to neutralize the other two.

Finally, while these three giants were thrashing it out an upstart emerged. Papa John's rode in on a “new” point of difference: Better pizza resulting from better ingredients. It also introduced a secondary point of difference: Packing crust dipping sauce and pepperoncini in with the pizza. Unlike the differentiation drives of the first three giants, which simultaneously ended around 1995, Papa John's is still hammering away on its “better ingredients, better pizza” message. Company execs claim that this particular point of difference is the main reason for the company's former explosive unit growth and eye-opening AWUS (average weekly unit sales). In recent years, competitors — most notably Pizza Hut — have attempted to neutralize Papa John's asserted point of difference through legal action (claiming false advertising), but so far the “Better Ingredients Defendant” has succeeded in winning favorable court rulings. (For more on Papa John's, see Papa John's - Is It Back to the Future?)

Finally, it's also worth noting that at the time that Pizza Hut, Domino's Pizza, and Little Caesars each lost their point of difference, Papa John's expansion rate exploded.

TO SUM UP: The “Big Three” shaped the pizza industry into its structure of today by each pursuing a particular point of difference. Those differentiation efforts gained force in the latter 1970s and died around 1995. The cause of their demise was imitation — and, thereby, neutralization — by the competition. As the Big Three were relinquishing their points of difference an upstart galloped in on a “new” point of difference which remains to the present. So, as it stands today, three of the four largest chains have no readily discernible, aggressively advertised point of difference. The fourth continues to advertise and defend its point of difference … at least for now. It'll be interesting to observe how the situation evolves. For an eye-opening read on this subject, see Differentiation-builders: The Antidote to Point-of-difference Diminution.

Applying Differentiation
Part 2 of this article discloses five hypothetical differentiation scenarios created for five different pizza companies. We take a close-up look at how Pizza Hut, Domino's Pizza, Little Caesars, Papa John's, and an Independent could apply the 5-step differentiation process for gaining competitive advantage and expanded market share.

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This article was authored by John Correll.
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