29
See also: Finding a profitable niche 22–23 ■ Gaining an edge 32–39 ■ Reinventing and adapting 52–57 ■ Porter’s generic
strategies 178–83 ■ Good and bad strategy 184–85 ■ The value chain 216–17
customers something that the
competition cannot or does not
offer—a Unique Selling Proposition
(USP). The concept was developed
by US advertising executive Rosser
Reeves in the 1940s to represent
the key point of dramatic difference
that makes a product salable at a
price higher than rival products.
Tangible USPs are hard to acquire
and hard to copy, which is what
makes them unique.
Companies must distinguish
their product or service from the
competition at every stage of
production—from raw material
extraction to after-sales service.
Products such as Nespresso coffee-
makers and Crocs footwear, and
service providers such as majority
Asian-owned hotel group Tune
Hotels, are all heavily differentiated,
each having a strong USP.
The primary benefit of
uniqueness, however it is achieved,
is greater customer loyalty and
increased flexibility in pricing.
Differentiation guards products
and services from low-priced
competition; it justifies higher
prices and protects profitability;
and it can give businesses the
competitive advantage needed
to stand out in the market.The challenge of difference
By definition, not all products can
be unique. Differentiation is costly,
time consuming, and difficult to
achieve, and functional differences
are quickly copied—“me-too”
strategies are commonplace.
Touchscreen technology was
introduced to the cell-phone market
as a point of differentiation for
Apple’s iPhone, but is now a feature
of most smartphones.
Differentiation often does not
remain a point of difference for long.
With functional uniqueness
being so elusive, marketing guru
Philip Kotler suggested that
companies focus instead on an
Emotional Selling Proposition (ESP).
In other words, that the task of
marketing is to generate an
emotional connection to the brand
that is so strong that customers
perceive difference from the
competition. For example, whilethe design and functionality of Nike
and Adidas sneakers are distinct,
the differences are so small that
they amount to only a marginal
difference in performance. The
products’ differences are, however,
magnified in the perception of the
consumer through marketing and
the power of branding—uniqueness
is achieved through brand imagery,
promotion, and sponsorship.
Apple achieved differentiation in
the fledgling digital-music market by
combining easy-to-use software ❯❯START SMALL, THINK BIG
Few companies enjoy the
monopoly privileges
afforded by market gaps....which requires
differentiation in product,
service, process, or
marketing.Enduring difference
can only be maintained
through a Unique
Selling Proposition.To achieve success,
especially in its early
stages of growth, a
company must stand out...But difference can
be easily copied
by competitors.Only then will companies
truly stand out in
the market.There is no such thing
as a commodity.
All goods and services
are differentiable.
Theodore Levitt
US economist (1925–2006)