Choosing the Right Competitive Frame of Reference

It is more important to choose an appropriate competitive frame of reference for your brand than you might think. The competitive frame of reference has significant implications for competitive strategy, brand strategy and brand positioning. And it has significant implications for brand research, including brand equity research.

As I am in the midst of conducting a brand equity study for a health care brand, I am reminded again how important it is to frame the category properly and to choose a category label that the brand's customers understand. For instance, people get confused about "health care" brands, "medical provider" brands, "health care system" brands, "health care network" brands and "medical center" brands. When asked about one or more of these brands in open-ended brand awareness questions, people list medical insurance companies, medical insurance exchanges, individual doctors, local medical practices, hospitals, outpatient clinics, dentists and other categories of brands. For instance, people might answer with all of these options for the same competitive frame of reference question: Blue Cross Blue Shield, Aetna, Kaiser Permanente, Obamacare, Medicaid, Medicare, Dr. Schwartz, Memorial Hospital, Johns Hopkins, Mayo Clinic, Springfield Medical Practice, Feldman Chiropractic, Rochester Medical Center and Gemini Medical Office Park. However, this list of brands is akin to comparing apples to oranges to bananas to cherries. 

To arrive at the right competitive frame of reference wording, you need to consider each of the following:

• The set of competitors you are most interested in for your brand
• The set of competitors against which you are positioning your brand
• The most appropriate label for this set of competitors
• Whether your customers will understand this label or whether you need to modify it for them to better understand it

I wish you great success in choosing the most appropriate competitive frame of reference for your brand.

To read more about this topic, my previous posts on the topic are here and here.

Category Definition

Choosing the right category definition is not a trivial exercise, despite the casual way in which many marketing professionals approach this. In general, people assume a category definition based on the current product portfolio and common sense. But sometimes common sense is not that sensible.

One can choose to use a category definition for which every advantageous brand position is taken. Or one can choose a category definition that allows for future growth. One can choose a category definition that can breath new life into the brand. Or one can choose a category definition that enables the brand to become a "category of one" brand.

Further, one can choose a category definition that makes sense to consumers or one that consumers find hard to comprehend. One can choose a category definition that provides clear product development direction or one that leaves the product development direction much more wide open.

And one can create a category definition based on product features/content or product use or consumer benefit.

Take the (non-alcoholic) beverage category for example. Following are potential category definitions. Each has its advantages and disadvantages. And each has its closer in competitors and further out competitors.

• Beverages
• Bottled water
• Non-alcoholic beverages
• Children's drinks
• Fun drinks for children
• Soft drinks
• Carbonated soft drinks
• Colas
• Un-colas
• Juice drinks
• Healthy beverages
• Hydrating drinks
• Sparkling ice
• Energy drinks
• Electrolyte drinks
• Sports beverages
• Live beverages
• Fruit beverages
• Flavored waters
• Sparkling waters
• Smoothies
• Yogurt smoothies
• Coconut water
• Vitamin-infused drinks
• Tea
• Flavored teas
• Coffee
• Coffee drinks
• Flavored coffee drinks
• Dairy beverages
• Flavored milk
• Dairy alternatives
• Calming drinks
• Hot drinks
• Cold drinks
• Refreshing drinks
• Snack drinks
• Mix your own drinks
• Frozen drinks
• Chillers
• Organic drinks
• GMO-free drinks
• Flavor-explosion drinks

And the list could go on and on. Next time you are quick to say which category your brand is in, give it a second thought. You might find that a new category definition is all you need to energize your brand and bypass the competition.

Brands and Competitive Frame of Reference

When executives are positioning their brands they should not forget about determining their brands' competitive frames of reference, or put another way, the product or service categories in which their brands are operating. 

I have already shared the example of Strong National Museum of Play. By choosing the category of "museums of play" (of which it is the only one) instead of "children's museums," not only does it stand out as a category of one brand but it also allows it to offer a variety of play experiences for adults, giving the museum a broader appeal and audience. 

Another example is Artisan Works. Artisan Works crams 500,000 art objects in 50,000 square feet of space, however it does not consider itself an art museum or art gallery. Rather, it is an event space. It hosts more than 300 events per year and has a rent-to-own art program. 

I am working with one brand that is trying to decide whether it is a gas station, convenience store, gas/station convenience store combination or something entirely new (we have tested many out-of-the-box new store concepts for them).

Urgent Care emerged as a new category that is separate from hospitals, doctor's offices or outpatient clinics. 

I worked with one industry trade association that broke out of its mold as a membership organization to become more of an industry think tank, expert center and consultancy.

What was Cirque du Soliel when it was first created? A circus? A theatrical production? Or something entirely new? What are Fringe Festivals? What is their category? What makes them different from other types of events or festivals?

Is this brand of food a snack food, a healthy food, a food for children, or a meal component? How it is defined makes a difference. The same goes for restaurants. What type of restaurant is your brand trying to be? To whom does it cater for what type of occasion (or non-occasion)?

Not that we have to put brands into small boxes, but thinking through a brand's competitive frame of reference will have an impact on its target customers, competitive set, type of usage and frequency of usage.

When one considers competitive frames of reference carefully, often it even has an impact on business models and potential revenue streams.

Don't neglect considering your brand's frame of reference.

Brands and Category Definitions

Marketers often take for granted the category that their brand is in. The category may be a given or at least seem intuitively obvious. However, often the obvious can be misleading or not helpful or even harmful to the brand’s growth potential.

What do I mean by this? Let’s consider a symphony orchestra as an example. Its marketing manager likely thinks of the orchestra’s category as "cultural institutions" or "cultural attractions" or perhaps "live musical performances" or "live classical music performances." What competitors might this imply? Chamber orchestras, music festivals, ballet companies, modern dance companies, opera companies, equity theaters, public art galleries including contemporary art galleries, historic homes, recreated cultural villages and architecture tours to name a few.

But do the same types of people attend or otherwise support all of these cultural institutions or attractions?

Is it more about music and people who appreciate music? How about jazz festivals and bluegrass festivals and rock concerts and raves and swing dancing classes, and ballroom dancing classes and nightclubs at which one can dance to electronica and house music? Are they competitors?

To what age ranges do symphony concerts appeal? The general consensus is that symphony orchestras appeal to an older crowd. What income segments are most likely to attend symphony concerts and support symphony orchestras?  Again, general consensus is that symphony orchestras primarily appeal to wealthier people. Do these two assumptions limit the brand’s growth and success potential?

Is there a geographic boundary to the category? A given metropolitan area? That and anything that can be experienced on television or online?  What if there is another metropolitan area nearby? Do brands in proximate markets also compete? Is the target customer likely to travel for other musical or cultural experiences?

What else competes for the symphony concert goer’s time and attention? A night out at the movies? Dinner with friends? A television show? A bridge game? A night at the baseball game? An evening on the sailboat? Travel?

To create your brand’s unique value proposition, you need to know what it is competing against. The way to do this is to understand who your current customers are and what their consideration set was before they chose your brand. That is, what other products or services were they willing to substitute for yours? What were their other options? These may lead you to an entirely different category definition, one that could lead to a stronger brand position or allow for greater growth.

Competitive Frame of Reference

Choosing the most advantageous competitive frame of reference is a very important part of brand positioning. I have already talked about Rensselaer Polytechnic Institute redefining itself from an engineering school to a place where technological innovation thrives (why not change the world?). I have also talked about The Strong redefining itself from a children’s museum to THE place that studies and explores play and American University redefining itself as a place for WONKs, focusing on its location in Washington, DC and even its association with public policy.  In all three of these instances, the brands intended to move from more crowded categories to a category of their own creation in which they became the only (category-of-one) brand.

I have also talked about how to define the category that a cola brand might be in. Is the category colas, or carbonated beverages or soft drinks or non-alcoholic beverages or all beverages or rehydration or human liquid consumption or refreshment or something else?

What category is Dasani Drops in? Perhaps the tagline defines it – “flavor enhancer.” Does this mean that the category is not flavored water? How does that help Dasani Drops competitively?

There are hundreds of professional associations and societies in health care, reflecting the degree of complexity and specialization in that field. We recently worked with a professional society that focuses on developing physician leaders. Is their competitive frame of reference professional societies for physicians, professional societies for physician leaders, professional societies for health care executives, professional development for health care administrators, leadership development for physicians or something else? While these may all seem similar, depending on what they have chosen, their competitive set and unique value proposition changes, especially in this crowded field.

Just as choosing the most advantageous target customer definition is not a trivial exercise, so too is choosing the competitive frame of reference. Choosing a competitive frame of reference based on the most powerful motivators for the target customers can lead to a previously undefined category in which your brand has few, if any competitors. That category definition helps your brand own the benefit more quickly before any other brand is able to claim it. Being able to redefine the category requires out-of-the box thinking.

If interested, we have tools to help you explore category description alternatives, including those that could transform your band into a category-of-one.

Creating New Categories Versus Battling it Out for Market Share

I have written about creating “category-of-one” brands before. Most brands spend their time trying to increase their share of existing markets. They pursue many different tactics to do so, from innovating new product functions and features and offering price promotions (which erodes brand equity) to improving product quality and creating value-added services. Some even create highly entertaining ads hoping this will help them break through the category messaging clutter. The problem with these approaches is that they are incremental and most of them can be very easily matched by the competition.

Brand managers know how difficult it can be to create brand differentiation within an existing category.  In mature markets, every market position has already been taken. True breakthroughs come only from creating entirely new categories, highly compelling new categories.

So, how does one do this?

• Break customer compromises. Remember the Harvard Business Review article “Breaking Compromises, Breakaway Growth”? It mentioned CarMax as a company that methodically broke the compromises that brands in the used car buyer category routinely made with their customers. The Internet enabled Amazon.com to create the first global megastore open 24/7.
• Redefine the category in a radically new way. Remember the book Blue Ocean Strategy? It cited Cirque de Soleil as a brand that created a new category of entertainment that was part circus and part musical theater.
• In an industry defined by functional categories, redefine your space by customer end benefits. My Alma Mater, Rensselaer Polytechnic Institute, chose to redefine itself from a technological university (or engineering school) to a place where people could go to change the world through technological innovation (why not change the world? ®). Similarly, Paul Smith’s College did this by refocusing on the end benefit of being THE college that allows one to live and play in the six million acre Adirondack Park while receiving a college education (The College of the Adirondacks ®).
• Create an entirely new category, enabled by technological breakthroughs. eBay is an example of this. The Internet enabled them to create more efficient markets through a global online auction platform.
• Create an entirely new category based purely through imagination and vision. The Strong could have touted itself as one of the world’s largest children’s museums. Instead, it created the only museum of play.
• Significantly change the existing business model. Netflix is an example of this. Consider what happened to Blockbuster after Netflix emerged. And consider how Netflix evolved as cable companies offered instant downloading of movies.
• Rebundle existing products and services in an entirely new way. The Mexican cement company, Cemex, shifted its unit of measure from cubic yards of cement to the appropriate amount of cement delivered within the requested delivery window.

All of these require out-of-the box thinking, which usually requires rethinking business models. Finally, they require identifying new ways to provide increased customer value, ways that are outside the norms