The situation assumed in your question never quite happens. Only one or two companies can excel at providing the generic category benefits, which are the benefits that matter most to most customers. These are the ‘simply better’ companies like Toyota and P&G, which over time, will dominate the market. The other, less successful, companies will provide the generic category benefits less well and/or focus on providing unique benefits that do not matter to most customers. Of course, I am oversimplifying and over-generalising this a bit.

Ries and Trout, and Rosser Reeves before them, don’t clearly distinguish between the offer itself (i.e. the product/service) and communications about it. As advertising people, they started with the valid insight that unless your communication is distinctive it won’t cut through, i.e. no one will notice them. This is even more true in today’s cluttered markets and media than when Rosser was writing.

Unfortunately, Ries and Trout then went on to say you should run your whole business on the basis of a distinctive offer. That’s where they went wrong. Having said that, beverages (eg Coke-Pepsi) are an area where the “simply better” argument applies less strongly, at least on the business-to-commerce side. (It applies 100 percent to the business-to-business side, i.e. trade marketing).

For some categories such as beverages and premium fragrances, brand communications (advertising, packaging, etc) are at the heart of value creation. Sidney Frank created Grey Goose vodka from nothing in eight years using brilliant brand communication, and then sold it to Bacardi for over $2 billion. But for 90-95 percent of categories, including virtually all service categories and business-to-business categories and most consumer products, the long-term winners are those who provide the generic category benefits better than the competition.