We often compete to be different. But what happens when the audience can’t relate to us? Think, it’s all about parity.
Competition between organizations is a necessary factor for economic growth. As markets worldwide become saturated with solutions, the buyer asks: What do you do differently?
This is an overlooked, almost silent question lurking in their minds.
The customer drives comparison between two businesses. They want something different; they want to be served according to the market standards.
A business must offer what its competition has and more. It’s called parity and differentiation.
Parity and differentiation are crucial for a brand to thrive in saturated markets. While this may seem like a lot to ask for, business success boils down to meeting a customer’s needs better than anyone else.
But how can a brand create a positive loop that benefits customers and organizations alike?
Parity and Differentiation are a positive loop that drives innovation.
Innovation has driven every part of our society and will continue. Especially in the knowledge era, we find novel solutions to most problems. But are these innovations in your opinion?
Innovations are considered great works. To do great work, Paul Graham of Y Combinator says, one must find a knowledge frontier and identify its gaps.
Within the context of brand strategies, it means recognizing the points of parity and bringing differentiation.
It is a continuous process as standards evolve and new opportunities arise. Brands that succeed at this process sit at the top of the food chain for longer periods. They identify emerging trends and cause disruptions. But to understand how you can do it.
You need to understand
What are Points of Parity (POPs) and Points of Differentiation (PODs)?
- Points of Parity: Every industry has a standard that they must maintain. If a business wants customer segments to take them seriously, they must provide these services. These services are uncompromising and expected from any player.
- Points of Differentiation: These are the unique selling points of a product. What does a business’ product do differently than a market? PODs empower a business to bring a change that gives them a competitive edge.
What makes them so important?
As we have said before, you could say these two are the dimensions necessary for innovation.
If your product is too different from its competitors and does not do the basics of what is needed, there is a chance it could be ignored completely. On the other hand, if it is just as good as the competition, then there is a zero-sum game. For new companies, it is difficult to supplant an existing player in the field.
For brands and their organizations, if they wish to create a difference, they first need to provide the market with what they want. Blind differentiation or straightforward parity will cause difficulty in competing, slowly causing downfall.
And that is best exemplified by the two products below.
- The Google Glass:
Google Glass is an innovative technology. But it was ten years ahead of its time. General people did not understand the use of the glass. A unique product with no competitor. And that is where it failed. Only tech lovers understood what it was trying to do. It was not relatable to the public at large.
There was no parity.
Between privacy concerns and low profits, Google had to discontinue the product, to the dismay of many. In the VR/AR market, it is difficult to imagine the product losing.
- Microsoft Zune:
The Zune presented itself as a competition for the iPod. But it did not take off. Zune was plagued by a single problem: It had no differentiating features.
The iPod was established, and it had the advantage of iTunes and Steve Jobs backing it up. Zune, on the other hand, failed at conveying its message. There was no clear message. Zune presented these beautiful and artistically inspired ads but it failed to reach the wide market.
And in the end Zune couldn’t establish a real reason to choose it over the iPod. Causing its failure.
For a brand and product to work, it has to walk the thin line of parity and differentiation. Organizations are bound to this loop, but it is not a negative loop. This loop sets the industry standards and then breaks them by innovating inside the frame of reference.
It allows customers to adapt and change with the product instead of causing a backlash or misunderstanding.
That is true innovation.
Points of Parity: Competitive Advantage
Parity can be used to undermine your competition’s uniqueness by adopting it as a market standard. As such, these innovation loops are not just good for isolated companies but for the competitive market in general.
Point of parity avoid the pitfall of alienating the audience by providing context and a frame of reference for the product. Ensuring that a large portion of the market does not find the product irrelevant or unrelatable.
And they empower a business to disrupt another by emulating or providing a better experience for the end customer.
Example: Google Workspace has been disruptive to Microsoft Office. Google’s tools allow users to collaborate worldwide because of its cloud-native solutions and cost-effective pricing.
It enabled small businesses to set up their workspaces quickly and at cost. On the other hand, big organizations could use sheets, docs, and Google Meet to set up meetings and work on large projects together.
This caused a problem for Microsoft. So, what did Microsoft do to break this advantage? They adopted Google’s toolset. They rebranded Office 365 as Microsoft 365, providing cloud applications and AI-driven features. And integrated Teams in their suite, helping businesses streamline their communication in one place by offering safe file sharing, chatting, and video conferencing.
It helped Microsoft not lose relevance as a collaborative solution. But they could not break Google Workspace’s market share, which sits at 44% compared to Microsoft 365’s 30%.
Even though Microsoft was an early player in the productivity game, Google broke it by adopting its point of parity and then putting their spin on it. They overtook Microsoft by a margin, making Microsoft adopt their differentiation as a new point of parity.
By understanding a market’s point of parity, you can position yourself as a disruptor, thereby adopting the points and differentiating.
Understanding your brand and the market is the road to finding parity and differentiation.
Discovering parity is not as simple as copying the existing trends that your industry falls into.
Parity is found by understanding the needs of your market, the existing solutions to their problems, and customer expectations.
A phone that does not provide advanced network connectivity will fail to the one that does. Even though it is the same market, there is a difference in expectations.
The two dimensions are closely linked together. And differentiation, essentially, is putting a spin on parity.
To find parity, an organization will usually go through these steps: –
- Conduct Market Research
- Identify customer expectations and existing solutions.
- Match your product to the existing market
- If the product is not ready to be understood by the market, it lacks relevant parity.
- Integrate customer expectations (A picture editing tool, for example, must have a .raw file editor)
- Rematch the product to check if it has the basic functions of an “industry-standard” product.
Once you know the points of parity. What is your brand or organization ready to add to it?
Adding your unique proposition to the market standards will create differentiation and innovation.
For Google Workspace, this was their cloud-native environment.
Equality and difference— that is innovation.
Parity and differentiation cannot exist in silos. To bring forth innovation, organizations must base their brand strategies on implementing the two together.
A unique perspective that does not resonate with the intended buyer will fall flat. And the same set of solutions will not rouse anyone into buying either.
After all, the race is on to provide an unmatched experience. But if the experience is not a mix of known and unknown, the end buyer will be disoriented and unable to understand what you offer, even if it is good.
Only by incorporating old strategies, finding their gaps, and then spinning them will organizations place themselves as customer-centric and innovators at the same time.
