Brand raditionally, the people responsible for posi- tioning brands have concentrated on points of difference –the benefits that set each brand apart from the competition. Maytag is distinguished by de- pendability, Tide by whitening power, BMW by superior handling. Such points of differentiation are, in many cases, what consumers remember about a brand. But points of differentiation alone are not enough to sustain a brand against competitors. Managers often pay too little atten- tion to two other aspects of competitive positioning: un- derstanding the frame of reference within which their brands work and addressing the features that brands have in common with competitors. There are always circum- stances in which it’s necessary to “break even” with com- peting brands. Effective brand positioning requires not only careful consideration of a brand’s points of difference,but also of what we call its points of parity with other products. Subway faced a brand-positioning dilemma in 2000 when its ad agency recommended that the sandwich shop chain present itself as the healthy fast-food brand, using as its spokesperson a 22-year-old man who had lost 245 pounds by following a diet that consisted largely of Sub- way sandwiches. The agency was so confident of the ap- peal of the weight loss story that it financed the pro- duction of a television spot, which ran regionally and produced an average sales increase of more than 15%. The agency was focusing almost exclusively on Sub- way’s key point of difference from other fast-food restau- rants: healthfulness. But Subway’s executives were con- cerned about the brand’s competitive frame of reference and the attendant points of parity.While they were eager to reposition the brand–sales had been flat for two years – they saw taste as the sine qua non of the fast-food frame of reference and believed that taste is more important than healthfulness to core fast-food customers. Subway’s research suggested that the company, which has more stores than any other fast-food operation, could success- fully compete on taste with the burger giants, whose sales dwarf Subway’s. And executives knew that fast-food con- sumers often perceive good taste and healthfulness to be at odds. Management feared that a strong health-centered campaign would jeopardize the perception of Subway as a fast-food establishment. Subway began running the agency’s advertisements nationwide. But recently it has been simultaneously run- ning another campaign promoting new products on the basis of taste. Whichever approach turns out to be right for the brand in the long term, the example shows that brand positioning focusing only on a point of difference leaves out important issues. Sound competitive position- ing requires the identification of an appropriate frame of reference and associated points of parity and points of difference. Subway can continue to differentiate, of course – differentiating is a smart way to keep other po- tential health-focused fast-food purveyors out of its busi- ness – but it can’t forget what business it’s in. Copyright © 2002 by Harvard Business School Publishing Corporation. All rights reserved. 3 T Three Questions You Need to Ask About Your Conventional wisdom says creating a brand is about differentiating your product. Think again. by Kevin Lane Keller, Brian Sternthal, and Alice Tybout