To be unique and different is generally appealing. In marketing, being different and unique offers a potential to charge a price premium (given that the unique space in question is attractive to customers). In marketing theory, we talk about “temporary monopolistic competition”. That means using innovation, market domination, patents or other measures to ward off all competition, and then being able to dictate your own markets.
This practice, however profitable, is difficult to attain and even more difficult to sustain. Competition, legislation, technical and societal development constantly works to bring the uniqueness back into the herd.
Red Ocean vs. Blue Ocean
This is where Kim and Mauborgne’s strategic framework of Red Ocean Blue Ocean comes into play. It describes two potential strategic directions in marketing: Blue ocean is the attempt to build an isolated market space where you have a monopoly. Red ocean is about competing in an existing market in the best way possible.
|Red Ocean Strategy||Blue Ocean Strategy|
|Compete in existing market space.||Create uncontested market space.|
|Beat the competition.||Make the competition irrelevant.|
|Exploit existing demand.||Create and capture new demand.|
|Make the value-cost trade-off.||Break the value-cost trade-off.|
|Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost.||Align the whole system of a firm’s activities in pursuit of differentiation and low cost.|
The Red Ocean vs Blue Ocean model is to some extent mirrored by two strategic approaches. Differentiation and distinctiveness. Differentiation is of course related to creating something different, whereas distinctiveness is a measure used for standing out in a red ocean market.
A clear example of how this works in practice is the market of coffee pod machines. Nespresso were first into the coffee pod market, creating a monopolistic situation and could easily charge X times the price for the base product (ground coffee beans) compared to the competition.
Soon however, competitors entered the market. Lavazza, Illy, Tassimo made similar products. What is interesting is that Nespresso is still able to charge a hefty price premium, but now that is due to the strong brand, rather than product uniqueness. A rich and strong set of assets (designed retail outlets, brand color and logo, even the brand ambassador they have in George Clooney) drive a distinctive image of Nespresso that allows them to charge a price premium.
When new shiny things (apps, influencers, omnichannel marketing etc) come along, we are extra prone to seeing things through the “Blue Ocean” glasses. A lot of discussion at the moment is around experience. Brand experience, user experience, the smooth omnichannel experience. What is important to remember in this is that sometimes an opportunity for differentiation does come along, sometimes it does not. Either way, chances are after some time that differentiation will be exhausted.
Adding an app and an appealing user interface to an existing market can have temporary merit. Imagine all companies attempting to get VC funding by presenting themselves as “The Uber of [Industry X]”. Uber definitely had a period in time where their offering was unique. But we now have Lyft, Ola and Didi offering very similar services. With uniqueness gone, these companies are all increasing marketing and branding investments to ensure market shares. In the electric scooter category, first there was Scoot, now there are Bird, Lime, Skip, Scoot and about 238 other companies.
AriBnB is not really different, it just has an incredibly strong brand and critical mass.
The value of UX/CX in differentiation
While we shouldn’t exaggerate the value of UX/CX in differentiation, we still need to see the potential value. Of course, a coherent and delightful digital experience around a service or product is something consumers value (79% of consumers rate experience as equally important to the actual product or service in a purchasing decision, according to Salesforce data). Being a part of product value, user experience also goes beyond the realm of advertising and can therefore be an exception to the current Binet & Field driven trend of moderating digital spend. In that, it is also a clear example of the importance of the marketer role to have a broader perspective than just media and advertising, for marketers to look and take responsibility across a broader scope.
But just because consistency in a consumer journey is good, doesn’t make it the answer to a marketer’s every problem. Generally, we need to come back to the insight that consumers do not care about brands or advertising nearly as much as marketers do, meaning they will not always appreciate brand efforts in that space. In some instances, differentiation can even come from a poor user experience; flying Ryanair, which has a clear low-cost brand offering, may not be an experience that everyone enjoys, but it it does score high on distinctiveness.
UX can help reduce price elasticity, increase conversion levels, and potentially be a relevant claim to base communications on (see Swedish Fintech brand Klarna’s smooth concept). As many other things it is a potentially important tool, but a tool that must follow on strategy, to be weighed against other tools and processes. “Experience” is not a strategy, and it is not something that automatically makes you unique. But that does not mean it should be ignored.