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Wednesday, November 24, 2010

Points of Difference & Points of Parity

Point of difference (POD) is a term used for an outcome of product differentiation. In business economics, differentiation is seen as an important strategic move for companies to make. Because of an overwhelming variety of products and services on the market, those that stand out in some manner are better noticed by consumers. There are various (positive and negative) ways of being different compared to competitors in the same market. Differentiation is the term given to the positive way in which a company's product differs from its competitors. Points of difference (PODs) describe the individual factors of differentiation.

The key points of difference of a company are synonymous with its unique selling proposition (USP), and are critical in defining its competitive advantage and branding strategy. They must be attributes or benefits that consumers strongly, uniquely, and positively associate with the company's brand; and not with any competing brand. Once points of difference have been clearly communicated to consumers, the company and its brand are set apart from its competitors. Brand loyalty depends upon the ability of the company to establish and maintain clarity of communication with the consumer regarding their brand; and to maintain and expand the points of difference that defines the brand.

Points-of-parity (POP) are driven by the needs of category membership to create category of POPs and the necessity of negating competitors’ Points of Difference (POD) to create competitive POPs. In choosing points-of-difference, two important considerations are that consumers find the POD desirable and that the firm has the capabilities to deliver on the POD.

There are three key consumer desirability criteria for PODs,

1.Relevance:
Target consumers must find the POD personally relevant and important. The Westin Stamford hotel in Singapore advertised that it was the world’s tallest hotel, but a hotel’s height is not important to many tourists.

2.Distinctiveness:
Target consumers must find the POD distinctive and superior. When entering a category where there are established brands, the challenge is to find a viable basis for differentiation. Splenda sugar substitute overtook Equal and Sweet ‘n Low to become the leader in its category in 2003 by differentiating itself on its authenticity as a product derived from sugar, without any of the associated drawbacks.

3.Believability:
Target consumers must find the POD believable and credible. A brand must offer a compelling reason for choosing it over the other options. Mountain Dew may argue that it is more energizing than other soft drinks and support this claim by noting that it has a higher level of caffeine. Chanel No. 5 perfume may claim to be the quintessential elegant French perfume and support this claim by noting the long association between Chanel and haute coutre.

There are three key deliverability criteria.

1.Feasibility:

2.Communicability:

3.Sustainability:


Marketers must decide at which level (s) to anchor the brand’s points–of-differences. At the lowest level are brand attributes, at the next level are the brand’s benefits, and at the top are the brand’s values.

Thus marketers of Dove soap can talk about its attribute of one-quarter cleansing cream; or its benefit of softer skin; or its value, being more attractive. Attributes are typically the least desirable level to position. First, the buyer is more interested in benefits. Second, competitors can easily copy attributes. Third, the current attributes may become less desirable.

Research has shown, however, that brands can sometimes be successfully differentiated on seemingly irrelevant attributes if consumers infer the proper benefit. Procter & Gamble differentiates its Folger’s instant coffee by its “flaked coffee crystals, “created through a “unique patented process. In reality, the shape of the coffee particles is irrelevant because the crystals immediately dissolve in the hot water. Saying that a brand of coffee is “mountain grown is irrelevant because most coffee is mountain grown.
Crtsy - Prahalad Krishnamurthi.

3 comments:

  1. well the article clearly shows how important is the point-of -differentiation essential for a brand. But how to create this differentiation from the competitors?One aspect can be through the process of Line Extensions and Brand extensions as we see in the examples given of P&G. In the example of DOVE, as mentioned about the brand positioning: attributes, benefits and value, how will the marketers really understand to anchor from which level?because as stated in the lowest level attributes the chances of copying by competitors wll be prolific. I believe that for POD, apart from brand positioning, few more things like managing the customer touch point is essential and stimulus generalization within consumer is equally important.

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  2. excatly samrat, i do agree that mere creating or anchoring to one pod aspect is not enough, your competitors are always cautious and have been looking for your catch, so we got to play multi-differentiation game to survive in the market.

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