Brand parity. Can good enough be good enough?

My journey into branding began when working in ad agencies, with questions I had about parity. If two products are the same, have brand parity, what makes one sell better than the other? Some way down the road, that led me to the ideas of parity, identity and the differential, as the brand theories and practices emerged.

David Aaker was particularly important in developing ideas around brand parity, so if you want a more expert view, he is worth reading. His forms are competitive parity and category parity.

Let’s use tea as a consideration set, particularly teabags. Teabags can contain different varieties of tea. They might be black tea, green tea, flavoured and scented, herbal (like rooibos or chamomile) and oolong teas, to name a couple. The choices of varietals fall within consumer preference as a basis for a broad differential, and the identity and image complex.

Now let’s narrow the consideration set down further and focus on black tea, call it breakfast tea, the kind you reach for with shaking hands in the early morning, to widen your eyes and make your heart beat a bit faster. You still have plenty of choices, all of which are very similar.

Competitive parity says the various companies must be able to bring the same performance and capability to the table. Look at it this way… the tea could be loose, or it could be in tea bags. Loose tea is not a major feature on the shop shelves, so we can read into it that competitive parity requires companies to have the ability to produce teabags.

Category parity says competing products must have the same features. There must be similar or equal attributes to the products.

I don’t make tea often, so I don’t take the product for granted, and I notice things when I do make it. I made a cup a few days ago and observed that once I poured in the water, the bag produced a dark brew in about 30 seconds, not the three minutes I normally expect for the tea to brew. That gain on time is particularly important if you need the tea to help you wake up, and no doubt, every brand of tea uses 30 seconds as a benchmark now. Those that don’t or haven’t will lose market share to their lack of convenience.

In short, parity means that a company is a) able to match a competitor’s product, and b) uses that ability operationally. If not, it will likely lose market share. The caveat to this is that the identity and differential make the difference when products are in parity, so parity is the baseline.

Obviously, although necessary, parity is not sufficient to drive the bottom line. If not used by competitors with the support of their own brand differentials, products become substitutable. Other routes to breaking the parity deadlock are innovation, pricing and specialization of purpose.

Product innovation is a short-term solution, although necessary. As one company attains disproportionate product-led growth, other companies will emulate the innovation to catch up. Although the innovation may be patented, companies will need to emulate the innovation using other proprietary designs, so the state of parity is obtained again.

Pricing is difficult as it causes loss of potential revenue and denies the firm the financial resource that should be used to innovate, effectively setting it back strategically. On the other hand, there are niches that can be filled with low-budget, price-led products, depending on market structure.

Specialisation of purpose offers the best route to a market détente, assuming the market is mature and there is enough demand to accommodate all the competitors. Consider three types of toothpastes, the whitener, the cavity-fighter and the toothpaste for sensitive teeth.

A market détente will emerge in one of two ways. The firm may recognize that its business model can be destabilized if it chooses to split its competitive focus into two product lines. This may also lead to a split differential, which can cannibalise a firm’s own market, especially dangerous if a firm loses its revenue to a premium product in favour of a price-led product. In this case the firm should choose the status quo. The second détente is cartel behaviour in which firms consciously maintain the status quo.

Parity is a prerequisite for sustainable participation in a market, however good enough will not be good enough unless backed by a strong set of differentials and position.