Over the last ten years, we’ve witnessed a heightened awareness of brands, driving companies to create stronger brands in order to compete. This awareness has spread from the consumer brands famously developed by the likes of Proctor and Gamble to the previously marketing adverse fields of business consulting, accounting, health care and law.

But with this heightened awareness, a counter intuitive trend has been developing over the past five years. In a study conducted in 2003, Brand Keys, a New York marketing consultancy, found that 69% of goods and services across both consumer and business marketing had fallen into the category of a commodity in the mind of the consumer. The same study conducted last year found that 79% now fall into the category of a commodity.

There appear to be several forces leading to the decline in differentiation:

• Marketers are focusing on the deal rather than the value
• Ad agencies are allowing entertainment to overshadow the message
• Designers are failing to understanding the mind of the consumer
• CEOs are overlooking the value of the brand

In our current economic state, marketers have been focusing on the deal rather than the value. Perhaps due to the general business slowdown or contracting consumer spending, marketers feel the need to cut deals rather than to focus on the distinctive idea that separates the product or service. Unfortunately, this leads to brand erosion. The more you focus on the deal, the greater the distraction from the brand.

Ad agencies have become obsessed with keeping you from the TV clicker by providing immediately entertaining spots. This meets their goal of greater viewership and viewer recall, but fails to provide a message to help consumers tell one brand from another.

Designers and consultants are also not taking the time to understand the mind of the consumer. This is clearly illustrated by Tropicana’s new package design and branding revealed earlier this year. After spending millions of dollars on design and production, sales fell over 20% because consumers couldn’t find their trusted container of Tropicana. Wouldn’t you think a firm as bright and savvy as Pepsi would have realized the need to test the design first?

Perhaps most significant is a lack of leadership from the top. Branding isn’t taught in business school and isn’t a line item on a balance sheet. CEOs frequently overlook the fact that the brand is their most precious asset. Once they realize that without clear differentiation, all you have to compete on is price, the CEOs will become the lead evangelists of the brand. Until then, brand distinction will continue to slip.