As a business owner or startup entrepreneur, one of your most critical tasks is to identify what sets you apart from your competition; or, in other words, figure out your unique selling proposition. This mental exercise is invaluable for many reasons, especially when you’re working on your strategic marketing plan.
To help you get started, here’s a checklist to review if you’re not sure what your USP is:
Do you specialize in a certain area or type of product and target a narrow, single market segment?
If your product or service is highly specialized and you target a narrow segment of the market, you may have what’s known as a niche competitive advantage. What this means is that, while you don’t have a huge pool of ready-made customers, you also don’t have to compete against other businesses offering the same products or services that you do.
You don’t want to make the mistake of being a jack of all trades or master of none.
In fact, larger businesses often don’t cater to niche markets at all. Since you offer a product or service that is tailored to a particular type of consumer or their needs, you may also benefit from significant customer loyalty within that group. If successful, you could go on to be perceived as an expert or trailblazer within your field, even if other companies subsequently follow suit.
Do you have any strategic partnerships with other businesses in related industries or within the same industry? What connections/partnerships do you have that others don’t?
Partnerships can be a differentiating factor that sets your business apart from the rest, especially when you’re a small company looking to grow. For example, you may have cross-promotion arrangements with companies that offer complementary products or services.
Such partnerships can boost your customer base as well as strengthening your brand. However, while exclusive partnerships can be valuable, remember that exclusivity can be limiting as well, especially if you’re looking to keep expanding.
Is your workforce highly trained or are your employees better able to produce products or establish relationships? Do you have one key exceptional employee?
Your employees are one of your most valuable intangible assets, especially if they’re better than the industry norm. But beware! If this is the case, it’s likely that your rivals may try to poach them.
Keep in mind that retention is key. Your employees are the driving force of your business, and you need to ensure that they’re fully incentivized to stay with you as your grow your company. Above all, treat them fairly, provide them with the tools they need to succeed, and establish quality growth opportunities within your firm.
Do you hold intellectual rights to the products you sell?
Bear in mind that having a patent and having a successful patented product are two very different things. That said, if you hold a patent, trademark, or copyright for a product that is valuable, it can add significant market value to your business, particularly when you’re starting out.
While holding intellectual rights doesn’t guarantee that you won’t face competition, it can be a key driver of success — especially if your product isn’t easily substituted with something else.
However, if your intellectual rights are your USP, make sure that they are fully protected. For example, consider the importance of patent protection in the research and development-intensive pharmaceutical industry.
Compared to your competitors, are you able to offer a similar product? If so, is yours better quality or can it be produced/sold at a lower cost? Can you distribute your products more rapidly?
Try to see your business through the eyes of your customers. When they’re making purchasing decisions, what brands are they comparing yours against? It’s very important to consider how your product stacks up against other similar products in terms of price, quality, and ease of access. If you’re able to offer a better product at the same price point, you’ll have a much easier time attracting customers, all else being equal. Alternatively, do you have a cost advantage that allows you to offer a product of similar quality but at a lower price? As a smaller business, you may find that you have greater flexibility when playing with your profit margin.
This can be incredibly useful when times are lean, as you can price your products/services lower than your competition without taking an equivalent loss.
In some cases, cost advantages can come from operational efficiencies or economies of scale, or simply from your location, for example in terms of reduced rent, tax, or labour costs.
Are you much larger than your competition?
You may be able to leverage the size and scale of your company as a competitive advantage. If your organization is significantly larger than your competitor’s, you may be able to take advantage of cost efficiencies that arise due to economies of scale, allowing a lower cost of production per unit.
Greater size also often means greater visibility within the market, enabling you to benefit from increased name recognition that smaller players don’t have.
If you’re one of the first brands that come to mind when consumers are looking to buy your product or service, you’ll be able to capture more of the market share. However, keep in mind that big isn’t always better: small and nimble businesses may actually be better suited for some strategies, especially when it comes to providing any degree of customization in your products or services.