Brand Differentiation

Building a strong brand is crucial to success in today’s business world, and strong differentiation is necessary to build a compelling and powerful brand. Brand differentiation is the means by which a company’s brand is set apart from its competition, by associating a superior performing aspect of its brand with multiple consumer benefits (Carter, 2014).

Brand differentiation is related to a company’s corporate reputation. There are several elements of reputation, including a good customer service, packaging, prompt response to problems, and product-specific comments, that consumers seek when buying. These elements not only provide a basis on which the company can improve its reputation, but also help it differentiate itself from the competition. Corporate reputation may be enhanced by different activities that are closely related to the vertical differentiation of a product, such as technological innovation and a strong brand image. On the other hand, a solid corporate reputation may also help to differentiate a brand. Companies are increasingly recognizing consumers as their most important asset in building an estimable corporate reputation (Vahabzadeh et al., 2017).

In this era of globalization and hypercompetition, companies need to rethink the way that they manage their customer portfolio, as well as how they interact with their customers. Fader (2012) stresses that customers are an asset (customer equity) that should have a place on a company’s balance sheet. The author defines customer equity as “the sum of the customer lifetime values across a firm’s entire customer base” (p. 62). Since every company’s objective is to maximize its overall equity and since customers are perceived as an asset (customer equity) that is an integral part of the company’s overall equity, the company should dedicate the necessary resources to maximize its customer equity (Fader, 2012).

Employees are another crucial factor in enhancing a company’s reputation. They may help differentiate the company from the competition, as consumers evaluate the corporate reputation that is behind the product and brand presented to them. Accordingly, many companies use their corporate reputation as a vital resource in developing their strategic value. Reputation includes corporate social responsibility, innovativeness, and honest communication, which customers subconsciously convert into brand differentiation of the company’s products