Even companies who truly believe that differentiation is the only way to build a strong brand might end-up with brands that are not differentiated at all- and not from the lack of effort on their part. It has become extremely difficult to create meaningful differentiation. That is why when you look around you at thousands of brands trying to catch your attention and win your wallet, we do not see many that are outstanding. It’s not that they are no good; they just happen to all look the same. In today’s market place, sameness is not an asset. It is equivalent to the kiss of death. So, why is it so hard for companies to differentiate?
Companies have an insatiable thirst of growth. Everybody sees it as a good thing, but there is a limit to how much a company can grow. Once a company has hit the ceiling in a particular market, it has two options. One is geographical expansion: it takes what it has and sells to customers in other markets. The second option is line expansion, which means the company moves into other category in a effort to bolster it’s sales.
Regardless of the way in which a company chooses to expand, it will contribute to Hypercompetition. For an example Blue Sparks and white heat light bulbs, Now let us suppose that Blue Sparks original market is Singapore and White Heats is China.
After Blue Sparks has exhorted it’s growth opportunities in Singapore, it may expand into new market like China. Suddenly, White Heat in China finds that it has a new competitor in it’s back yard and Blur Sparks is not alone. Other light bulb brands from other countries that have experienced a sales Plateau may also entering China in an effort to grow. So, the market for light bulbs becomes over crowded and Hypercompetitive.
But the problem for white Heat is just beginning. As if trying to defend it’s market against foreign invaders is not enough of a headache, it will also have to contend with new entrants that are traditionally not into business of making light bulbs.
For the purpose of illustration, let’s say their is a company in China called Top po that has been in the business of making and distributing power sockets. In an effort to grow, Top po decides to make and sell light bulbs as well. In a flicker, White heat has yet another competitor.
The drive for growth will result in everybody trying to get into everybody else’s business. Your brand has never been under so much pressure. Competitors are circling you like hungry sharks, waiting for you to make a mistake so that they can eat your lunch- and sometimes you along with it. The slightest mistake is punished existent by the market place.
Because of this Hypercompetition, it becomes difficult for companies to hang on to their Unique Selling Proposition. As soon as you find a USP, your competitors will jump on it, strip your product apart and reverse- engineer it, making it better and making it cheaper.
We met a polycarbonate lenses maker who told is that within three to six months of it launching an innovation, the competition introduces it’s own version and wins in the market place, because the competition comes in a form of better known brands like Essilor, Nikon and Hoya. So even with truly innovative products, you will still find it very difficult to hang on to your USP.