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Thought Leadership for Healthy Food & Beverage Brands​

The Hierarchy of Product Differentiation

By Leonard Grape


Positioning is at the center of success for better-for-you F&B CPG brands. It encapsulates how your product is perceived by your audience, how valuable your brand is for them, and how unique you are relative to your competitors.

Customers are bombarded with numerous options and with the abundance of choices comes the difficulty of choosing. This is where choice fatigue comes in, a critical factor that makes it challenging for brands to stand out.

It is important to understand that consumers experience fatigue not only due to the availability of many choices but because of two factors among the options. The first factor is the Presence of Similarities while the second is the Absence of Difference. These two are expounded in this article where you can learn further about battling choice fatigue.


For this piece, I want to focus more on the second factor and expand it to help you think about the layers of your product that you can leverage on as the key differentiators for your brand. At The Vineyard, we have what we call The Hierarchy of Product Differentiation that outlines the five aspects that can enhance the uniqueness of a better-for-you F&B CPG brand.

Each layer increases in the level of efficacy and strength of your positioning starting from the very base and up.


Differentiator 1: Product Offering


The bottom of the hierarchy is focused on the product that you are offering. Are you a plant-based pasta? A dairy-free dessert? A functional fruit water? A junk-free vegetable snack? A sugar-free cookie? A gluten-free vegetarian bread? A vegan chocolate?

This differentiator is almost always based on what product category you are in. Obviously, the level of similarities here is high because most products in the better-for-you F&B CPG industry would have healthy as a common denominator across all categories.

You can immediately gauge that this is a difficult differentiating proposition because it becomes a battle of commodity. How many healthy cookies do you think are there in the market? Why would a particular customer choose one over the other? It’s tricky, right?

However, product offering can still be a strong unique positioning if you are introducing a real innovative concept. Say for example, what if you offer a volcanic-infused herbal tea? I’m not sure that’s viable but I hope you get the point. One of the few ways that you can make this work is by being either a first or by innovating existing product categories.


Differentiator 2: Product Features


There is a way around enhancing your positioning despite it being mainly focused on your product. If there is a strong unique feature about what you are offering, you can take advantage of that.

Explore asking, what other benefits can your consumers enjoy from your brand? It may be the antioxidants that are present in your product. It could be your tea’s capability to help induce better sleep. I have once seen a brand that offers low-carb snacks that have positive effects on skin. There is also a drink that has enhanced vitamins for kids.

This second level of differentiation focuses on benefits that your product has to offer. It doesn’t have to be always directly tied with your product’s ingredients. It can also be a feature of function. If it’s a healthy drink for example, it may be the benefit of convenience that is perfect for motorcycle riders. It can also be a feature of user experience where the customer gets to bake his own gluten-free and plant-based dough that can be ready for your family’s next breakfast with ease.

The challenge here for you is to think - is there one or two main benefits of your product that is relevant to the market and can be a strong differentiator from your competitors?


Differentiator 3: Tribal Market


The third in our hierarchy of product differentiation is having a tribal market. It is essentially choosing a niched audience that your brand is focusing on.

Let us say you own a natural, plant-based, and gluten-free biscuit brand. That is your product offering. Then you enhance it with a compelling feature that allows for better brain function for kids. How can you improve your positioning? You choose a tribal market. In this case, it would make sense to focus on serving young moms who are busy caring for their children and are worried about how their kids perform in school.

You build a tribal market by choosing a selected audience and going deeper on their needs, frustrations, and problems. If young moms would be your target customers, you need to further understand how your product can add more value to them.

A good logical example could be making your product packaging exciting for children, so moms won’t have a hard time giving it to their kids. Or making it easily consumable for their children so they won’t have to worry about it when they send them off to school.


Differentiator 4: Position in Perception


At the penultimate level of our hierarchy is ensuring you have a strong perception in the mind of your customers. This is where you build a desired image for your brand among your target market.

This is a positioning strategy that goes beyond just the product offering and benefit and probes deeper on the psychographics of your tribal market. This is all about how you want your customers to perceive your brand.

If we take our imaginary example of the natural, plant-based, and gluten-free biscuits for children, your desired brand perception could be the “second best bud of kids”, with moms being the first. It’s creating that deeper intent for the brand on how you are adding value to your tribal market. In this sense, you make moms understand that you are also after what is best for their children and to ensure that they will be eating a snack that is not only healthy but helps them perform better in school.

You want your brand to be perceived more than just a commodity. The gluten-free biscuit for kids is positioned to be a helping hand and a brand that cares to alleviate the demanding role of moms.


Differentiator 5: Emotional Registry


The top level of brand positioning that you can achieve for your better-for-you F&B CPG is the creation of emotional registry with your customers. The position of perception is your bridge towards the subconscious. What cements your long-term relationship with them in a deeper, more meaningful way is the emotional effect that your brand has.

What is it that your customers feel when they patronize and interact with your brand? How does it affect their self-esteem and their sense of belongingness? Are you pushing them forward to a better version of themselves?

Taking again the example of the healthy biscuit for kids, its position of perception is that it cares for the welfare and school performance of children and understand the predicament of being a young mother. The underlying emotional registry that it can build is its desire to give comfort to moms. It can present an intent to convey affirmations that being a mother is a fulfilling and noble yet an exhausting job. It can empower moms to be the best that they could be and to make them feel that it is okay to feel tired and falter every once in a while. By doing and integrating this across its brand efforts, the product becomes more than just a healthy biscuit that enhance brain functions of children but a brand that helps moms transform to their best possible self.

This is the highest in the hierarchy of product differentiation because it imbues a focus on caring for the customers. It consistently builds the kind of emotional registry so that it creates loyalty to your product. This is also the most difficult one to achieve as it requires long-term thinking, strategic foundation, creative innovation, and consistent brand development efforts.

Product positioning is an effective growth driver for any better-for-you F&B CPG business if it is done strategically. While the hierarchy offers individual levels, it does not mean that you should only focus on one. It would be much stronger if you are able to leverage on all product differentiation approaches.

The goal for your brand is to build a lasting perception and emotional connection with your audience. If you are able to do this, you are setting up your product to become preferred by your target customers and not just the alternative.

2022 The Vineyard. All Rights Reserved.​

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