Brand differentiation happens when a product or service matches superior performance with an important customer benefit, according to Phillip Kotler and Kevin Lane Keller. A customer benefit is either something tangible or intangible that the market needs or values. A company's brand differentiation strategy tends to evolve from its strengths. Organizations that are good at innovation, for instance, typically introduce products that become category leaders. A category leader is a brand that consumers first think of when seeking a particular benefit. For example, certain retailers are known for their "low prices," while others are known for "personalized service."


The features of a product or service may distinguish its brand from the competition. This strategy is difficult to sustain over time, because competitors usually are able to eventually duplicate most features. A feature of a product is a physical attribute, while a service feature is something a company provides. For example, a grocery store chain may provide home delivery service. A particular brand of tortilla chips may contain whole grains instead of corn. Although it is more difficult to differentiate a brand through features, it is still possible, especially with innovative products and services.


Nigel Hollis, in his article "It is Not a Choice: Brands Should Seek Differentiation and Distinctiveness," argues that brands can be "experienced" differently. By "experience," Hollis refers to a brand's tangible and intangible strengths. Consumers "experience" or "encounter" brands through advertising, slogans and product packaging. Some brands have characters or mascots that help differentiate the product or service from the competition. The character or mascot becomes part of the brand "experience." Consumers not only associate a slogan or icon's characteristics with the product, they see the two as inseparable.


Employees who interact with customers face-to-face are instrumental to consumer loyalty, according to "Gallup Business Journal." Companies in some product or service categories, such as financial services and airline transportation, rely on customer service for brand differentiation. Customers who connect strongly with a company's employees are more likely to remain loyal. The "Gallup Business Journal" argues that a company's people help establish a "brand bond" with consumers. The "brand bond" goes beyond the level and value of a company's customer service. For example, a universal image and personality among employees in various locations can become a means of differentiation.


Companies use pricing -- both discount and premium -- to differentiate brands. Premium pricing, which is the use of above-average prices, is often a result of perceived differentiation, according to Nigel Hollis. Perceived differentiation occurs when consumers view a brand as more desirable and quite different from the competition. An example would be consumer perception that one brand of gasoline is of higher -- perhaps superior -- quality. Discount pricing is at the other end of the spectrum. Some companies establish brands as low-cost in order to sustain long-term distinction, according to "Gallup Business Journal."