Strategic Positioning & Competitive Advantage

The SPACE or Strategic Positioning matrix assesses a business along four dimensions to find an appropriate strategic thrust and in this article, we’ll look at the SPACE factors for financial strength.

Financial Strength In The SPACE Matrix

According to the creators of the Strategic Position and Action Evaluation Matrix, (Strategic Management – A Methodical Approach”, Rowe, Mason, Dickel, Mann and Mockler. Published by Addison Wesley) the following items should be considered when assessing Financial Strength:

• Return on investment (low to high)
• Leverage (debt to equity ratio) (inbalanced to balanced)
• Liquidity (access to quick money when needed) (inbalanced to solid)
• Capital required versus capital available) (high to low)
• Cash flow (low to high)
• Ease of exit from market (difficult to easy)
• Risk involved in the business (much to little)
• Inventory turnover (slow to fast)
• Use of economies of scale and experience (low to high)

The factors for Financial Strength are marked from 1 to 6 and a high score is good, a low score indicates financial weakness.

Interpreting Financial Strength In The SPACE Matrix To Your Situation

This is the most generic of the dimensions in the SPACE matrix. High profit margins and access to cash to invest when you want it are valuable in any business.

Several of the financial measures are not black and white:

1. Leverage ranges from imbalanced (bad) to balanced (good) on the basis that equity finance is more expensive than moderate levels of debt so the business should aim for the lowest weighted average cost of capital. Finance theory is beyond the scope of this blog so I won’t go into details. In my accountancy training I was taught that a debt to equity ratio of around 1:1 was good but it is much more dangerous to be highly geared (high debt to equity) than under. Over the last twenty years many private equity deals have been done on the basis of high debt ratios and while the credit crunch has made access to funding difficult, the record low interest rates have prevented many bankruptcies.
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2. Liquidity also ranges from imbalanced (bad) to balanced (good) because high levels of cash will depress returns on investment while liquidity problems will mean the business struggles to pay creditors as they fall due and may mean the business is technically insolvent. Going back to my days as an accountancy trainee, a current ratio of 2:1 (current assets to current liabilities) and a quick ratio of 1:1 (debtors plus cash/creditors) was considered good.

Businesses have different financial needs in terms of:

• asset intensity – some businesses need large investments in capital equipment
• working capital cycles – a supermarket will be paid in cash by customers well before it has to pay its suppliers while a distributor may have to hold high levels of stocks/inventories, finance trade debtors and even pay for imported goods before they are despatched.

The Impact On Strategic Direction For Different Levels Of Financial Strength

Financial strength is used to offset any environmental instability on the y-axis of the SPACE matrix diagram. The other axis offsets industry attractiveness and competitive advantage.

A strong score on financial strength backed up with reasonable environmental stability suggests that either an aggressive strategy or conservative strategy is appropriate depending on the position for competitive advantage and industry attractiveness.

A poor score without remarkable environmental stability indicates that either a competitive strategy or defensive strategy is required.

The SPACE matrix assesses a business along four dimensions to find an appropriate strategic thrust and in this article, we’ll look at the SPACE factors for competitive advantage.

Competitive Advantage In The SPACE Matrix

According to the creators of the Strategic Position and Action Evaluation Matrix, (Strategic Management – A Methodical Approach”, Rowe, Mason, Dickel, Mann and Mockler. Published by Addison Wesley) the following items should be considered when assessing Competitive Advantage:

• Market share (small to large)
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• Product quality (inferior to superior)
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• Product life cycle (late to early)
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• Product replacement cycle (variable to fixed)
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• Customer loyalty (low to high)
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• Competition’s capacity utilisation (low to high)
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• Technological know-how (low to high)
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• Vertical integration (low to high)
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• Speed of new product introductions (slow to fast)

Each variable within the competitive advantage dimension of SPACE is assessed from 1 to 6 with high scores good, low scores bad.

Interpreting Competitive Advantage In The SPACE Matrix To Your Situation

While the list of potential sources of competitive advantage is interesting, this dimension more than any other in the SPACE matrix needs to be adapted to your business sector.

The competitive advantage matrix shows that even market share isn’t necessarily a strong cause of advantage in some situations.

For more general sources of competitive advantage (or disadvantage) I’d look to the PIMS database and Porter’s generic strategies.

However to best assess competitive advantage to use in the SPACE matrix, you need to look in detail at your business, your customers and competitors to see who is providing the best customer value.

The following strategy techniques will help:

Value chain analysis

Customer value attribute maps

Key Success Factors

This may mean that using SPACE analysis at different stages of your strategic planning work will generate different conclusions as you better get to understand the sources of competitive advantage.

The Impact On Strategic Direction For Different Levels Of Competitive Advantage

The competitive advantage rating will either reinforce or counteract the rating for industry attractiveness as they are on the same axis in the SPACE matrix. The other axis compares financial strength and environmental stability.

A strong rating on the Industry Attractiveness / Competitive Advantage axis (i.e. the business has a strong competitive advantage in an attractive industry) points to an aggressive strategy or a competitive strategy.

A weak rating (an unattractive industry and/or a competitive disadvantage) indicates that a Conservative strategy or defensive strategy is appropriate.

The SPACE matrix assesses a business along four dimensions to find an appropriate strategic thrust and in this article, we’ll look at the SPACE factors for environmental stability.

Environmental Stability In SPACE

According to the creators of the Strategic Position and Action Evaluation Matrix, (Strategic Management – A Methodical Approach”, Rowe, Mason, Dickel, Mann and Mockler. Published by Addison Wesley) the following items should be considered when assessing Environmental Stability:

• Technological changes
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• Rate of inflation
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• Demand variability
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• Price range of competing products
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• Barriers to entry into market
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• Competitive pressure/rivalry
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• Price elasticity of demand
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• Pressure from substitutes

Assessment of Environment Stability

Environmental stability is offset by Financial Strength on the y-axis of the traditional SPACE matrix. The other axis offsets the competitive advantage of the business and the attractiveness of its industry.

It is usually assessed as a negative, ranging from -1 (excellent, very stable) to -6 (very poor, very unstable).

The creators of SPACE recommend that each item is assessed individually before aggregating the score to form a composite measure. Special attention should be given to any extreme scores to make sure that there is substance behind the assessment.

My Thoughts On Using The SPACE Matrix In Practice

There is a danger of using the SPACE analysis system too literally.

What matters is tailoring the idea of SPACE to fit your own industry sector.

Looking at the list, you’ll see that the factors the authors picked are a combination of PEST Analysis factors and Michael Porter’s Five Forces. These two, well established models are an excellent starting point but for many businesses I’d want to factor in political issues like the uncertainty surrounding the Euro and the weak political response to the problems and economic issues like exchange rates.

As a general guide, if you feel the environmental instability is strong enough to require scenario planning because of some kind of fundamental uncertainty, then I think a poor score is appropriate.

What Does The Score On Environmental Stability Imply?

A strong score backed up with reasonable financial strength suggests that either an aggressive strategy or conservative strategy is appropriate.

A poor score without remarkable financial strength indicates that either a competitive strategy or defensive strategy is required.

The SPACE matrix assesses a business along four dimensions to find an appropriate strategic thrust and in this article, we’ll look at the SPACE factors for industry attractiveness.

Industry Attractiveness In The SPACE Matrix

According to the creators of the Strategic Position and Action Evaluation Matrix, (Strategic Management – A Methodical Approach”, Rowe, Mason, Dickel, Mann and Mockler. Published by Addison Wesley) the following items should be considered when assessing Industry Attractiveness or Industry Strength:

• Growth potential (low to high)
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• Profit potential (low to high)
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• Financial stability (low to high)
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• Technological know-how (simple to complex)
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• Resource utilisation (inefficient to efficient)
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• Capital intensity (low to high)
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• Ease of entry into the market (easy to difficult)
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• Productivity; capacity utilisation (low to high)
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• Manufacturer’s bargaining power (low to high)

Industry attractiveness is on the same axis as competitive advantage and a good score is a high score.

Interpreting Industry Attractiveness In The SPACE Matrix To Your Situation

The Five Forces model created by Michael Porter should be considered to see if there are additional attributes which need to be considered for your particular situation.

I’d be looking to include some measure for competitive rivalry – although the authors may argue that it is implied in the profit potential – but I’ve seen good industries destroyed by kamikaze competition based on price wars. I’d also want to look at the ability of customers to exercise their bargaining power to squeeze the profits.

The level of industry attractiveness is compared with an assessment of the competitive advantage of the business on the x-axis. The other axis contrasts financial strength and environmental stability.

A strong rating on the Industry Attractiveness / Competitive Advantage axis points to an aggressive strategy or a competitive strategy.

A weak rating indicates that a Conservative strategy or defensive strategy is appropriate.

I thought about putting together my own introduction to the value chain video and then I found these value chain videos from Professor Andrew Fearne which I thought were very well done. These focus on the industry value chain rather than the business value chain.

Who Is Andrew Fearne?

Andrew Fearne is a professor at the Norwich Business School.

The Videos

Value Chain Thinking

Episode 1: Value Chains

Episode 2: Business Benefits

Episode 3: Success Factors

Episode 4: Common Mistakes

Episode 5: Value Chain Analysis

Other Value Chain Videos

Value Chain Analysis is the big idea in Michael Porter’s classic strategy book Competitive Advantage.

Image Rights for diagram

The Advantages Of Value Chain Analysis

1. A big advantage is that the value chain is a very flexible strategy tool for looking at your business, your competitors and the respective places in the industry’s value system.
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2. The value chain can be used to diagnose and create competitive advantages on both cost and differentiation. I’ve written about this in Using The Value Chain To Create Competitive Advantage.
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3. It helps you to understand the organisation issues involved with the promise of making customer value commitments and promises because it focuses attention on the activities needed to deliver the value proposition.
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4. Comparing your business model with your competitors using the value chain can give you a much deeper understanding of your strengths and weaknesses to be included in your SWOT analysis.
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5. The value chain is well known and has been a mainstay of strategy teaching in business schools for the last 20 to 25 years. The book, Competitive Advantage was published in 1985.
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6. It can be adapted for any type of business – manufacturing, retail or service, big or small.
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7. The value chain has developed into an extra model, the industry value chain or value system which lets you get a better understanding of the much broader competitive arena. If you’re interested in this aspect of the value chain, watch the Value Chain Videos for an easy-to-understand introduction.

The Disadvantages Of Value Chain Analysis

1. It’s very strengths of flexibility mean that it has to be adapted to a particular business situation and that can be a disadvantage since, to get the best from the value chain, it’s not “plug and play”.
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2. The format of the value chain laid out in Porter’s book Competitive Advantage, is heavily oriented to a manufacturing business and the language can be off-putting for other types of business.
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3. The scale and scope of a value chain analysis can be intimidating. It can take a lot of work to finish a full value chain analysis for your company and for your main competitors so that you can identify and understand the key differences and strategy drivers.
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4. Many people are familiar with the value chain but few are experts in its use.
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5. Michael Porter’s book is excellent but it is a tough read. It’s also dated in its examples which can make some ideas more difficult to relate to and understand how things fit together in the Internet age.
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6. The value chain idea has been adopted by supply chain and operations experts and therefore its strategic impact for understanding, analysing and creating competitive advantage has been reduced.
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7. Business information systems are often not structured in a way to make it easy to get information for value chain analysis.

A Partial Analysis Of The Value Chain

A full value chain analysis can make the strategy process long, time-consuming and complex.

I don’t believe it’s necessary in many cases.

Strategy is about finding insight to create competitive advantage and then taking the actions necessary to put the ideas into action.

It can be very effective to identify the business processes and the individual roles they can play – positive and negative – for implementing a particular strategy.

Using the Value Chain To Find Value Destroying Activities

Sometimes stopping a value destroying activity is more important than strengthen a value creating process. These happen because the use of individual goals, targets and incentives can lead to actions that harm the bigger business goals.

A great example is the buyer in a steel company who is targeted with getting the lowest cost when the business has an overall differentiation strategy of fast lead times and reliable due date supply to customers. Something has to give – it may be the service promise or  inventory levels are forced to rise and may create as many costs as the buyer hopes to save.

Using the Value Chain For Focused Improvement Of Processes

The most critical processes can then be broken down into value activities for more detailed analysis of what the business is trying to achieve and how it is currently operating. That opens the opportunity for focused process improvement on the areas of constraint which offer most leverage.

Yes the belt and braces approach of doing the full value chain analysis can be comforting because you know everything has been looked at, analysed and considered.

But often, resources and time aren’t available.

My view is that some value chain analysis is better than none. Focus on the important stuff that really matters.

The Value Chain And The Six Step Profit Formula

I use a Six Step Profit Formula to help keep strategic management grounded in what can help you to increase profits in the short and long term.

The value chain is useful in a number of steps. In particular, it has a role to play in helping you to develop your irresistible promise and making sure that you deliver it consistently. It also helps you to think through how you continue to get revenue and profit from the relationship.

What Do You Think Are the Advantages & Disadvantages of Value Chain Analysis?

I’d welcome comments based on your own experience or knowledge of the value chain.

What advantages or disadvantages do you think I have missed?

What should be emphasised more?

I encourage you to contribute to the debate on the value chain as a way to develop your own understanding on it and to help others.

Using the concept of the industry value chain analysis is an important part of gaining an appreciation for the wider competitive factors that can impact on your business.

Background To The Industry Value Chain Or Value System

The idea of the value chain was introduced in the classic strategy book Competitive Advantage by Michael Porter as a way to understand and develop competitive advantage.

While much of the book looks at the value chain within a business, Michael Porter stresses the importance of linkages between the business and its suppliers and customers which gives rise to the analysis of the industry value chain or what Michael Porter called the Value System.

For more details of the value chain within a business please see:

Using the Value Chain For Competitive Advantage

The Advantages & Disadvantages Of The Value Chain

Videos About The Value Chain

What is Industry Value Chain Analysis

A business takes some form of input and creates an output product or service that a customer is willing to pay for.

Most businesses therefore buy products from suppliers and sell to customers who then either sell the product as it is or use it to create another product or service to sell.

This creates a value chain (or a value system) of suppliers and customers in an industry.

For example, a cheese company buys milk from farmers, turns it into cheese and sells it to a distributor who then sells it to the supermarkets who sell it to the consumer. That’s an industry value chain as each step in the process creates an element of value that the customer is willing to pay for in the final price.

Value chains can also branch out into different distribution channels so staying with the cheese company example,as well as the supermarket route to the consumer, the distributor also sells to food processing companies who use the cheese to create ready-made meals to sell to the supermarkets.

The supermarkets sell to local restaurants who use the cheese in their menus and the local sandwich businesses that provide your lunch.

Each activity within the industry value chain has its own needs and preferences and plays some role in shaping the product and the value the ultimate consumers gets from the product. Each activity has its own cost dynamics and the way the activities link together can either add value or create unnecessary costs.

Industry value chain analysis allows you to look at the way the entire system works together to help you to find ways to create competitive advantage so your business earns higher profits.

The Industry Value Chain Analysis System

The diagram below shows five different activities within the industry value chain or value system.

The Industry Value Chain shows the alternative ways of competing, each with advantages and disadvantages

I’d like you to imagine that you are the business highlighted in yellow, a provider of the third activity in the value chain which links various independent suppliers.

You analyse the industry value chain and whilst there are many independents like you, you notice that there are some competitors that are set up differently.

• One competitor who is vertically integrated backwards i.e. they have a business that combines what you do with your immediate supplier. This gives them an advantage over control of the incoming supplies and means that supply priorities can be much clearer, However there is a balancing act for scale efficiencies since the two processes are linked.
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• Another competitor is part of a group which has three business units, the first deals with the first two stages of production, the second does what you do and the next stage and the third sells the product to the final consumer.
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• The final competitor in the industry value chain is a fully integrated business that does all five steps.

Industry Value Chain Analysis – A Look At What Is

Once you’ve sketched out the industry value chain or value system, you’ll have a broader view of how you fit into the market since you’ll see yourself as part of a value delivery system which competes with alternative value delivery systems.

You can start looking at the implications of each.

• What causes cost and value to accumulate within an activity?
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• How some value chains create advantage for those who use them and how you can respond or react?
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• How profit accumulates in particular sections of the industry value chain? The classic example is the portable computer industry where Intel and Microsoft have created strong strategic positions which capture a high proportion of the overall profits made in the industry value chain, leaving other component manufacturers, PC assemblers and PC distributors trailing.

Understanding what is currently happening in your industry can help you to look at

• Business definition issues – what activities in the industry value chain should you be doing? Should you vertically integrate backwards or forwards? Or should you focus on building up your core competences in a tightly defined area and establish a strategic control position, just like Intel and Microsoft?
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• How you can create competitive advantage and where it is futile to try because the business design of your competitors has major strengths and weaknesses?
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• Where your own business model is vulnerable to competitive attack and what you can do about it?

Industry Value Chain Analysis – A Look At What Might Be

The book Profit Patterns by Adrian Slywotzky and David Morrison makes it clear that industry value chains used to be stable over the long term but over the last twenty years there has been much more movement which creates profound impact on the businesses operating within them.

Unfortunately many businesses miss the changes that are happening around them until it is too late and they are trapped in a no profit zone and business system. This is a significant threat which should be identified and included in your SWOT Analysis.

They identify a number of profit patterns to look out for:

• Value Chain Convergence – competitors from previously distinct industries start to compete against each other as their products compete to meet the consumers’ underlying needs. As an example, think about how Skype and the other voice over the Internet providers have damaged traditional telephone service providers like British Telecom. Or how the development of smartphones impact on laptop PC providers and how touchpad products like the iPad make the dividing line between products much fuzzier. Slywotzky and Morrison identify three levels of convergence – supplier convergence, product convergence and complementor convergence.
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• Value Chain De-integration – businesses focused on one value activity have created strategic control positions that capture a high share of the profits created by the entire value chain – this is the Microsoft or Intel example.
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• Value Chain Squeeze – how growing strength of operators in the activities either side of a particular value in the industry chain can apply the buyer power and supplier power from Porter’s Five Forces to create a no profit zone.
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• Value Chain Strengthening The Weak Link – one activity in the industry value chain may be systematically destroying value for the entire chain through high costs and poor quality and service. Strengthening this weak link can put a business in a very powerful position to exert influence and capture profit from the entire chain.
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• Value Chain Reintegration – while disintegration can create value, so can reintegration. Apple was once a struggling business that was losing the PC operating system against Microsoft because of its refusal to let others use its operating system. Now look at it and the control it has over many stages in the industry value system, outsourcing when appropriate but keeping control over key elements including close links with consumers through the Apple stores.

Changes to the industry value chain are a little like the analogy of the boiled frog who doesn’t notice that the water is gradually getting hotter until it is too late, by which time it’s too sleepy to do anything.

The way to look out for industry value chain movements and what might be happening is through competitive analysis to keep track of changes each year. This way you can get an early warning of the patterns that might be developing in your industry and have the time to either decide to participate or to create defensive strategies.

Industry Value Chain Analysis – A Look At What Could Be

The third element of industry value chain analysis is to use it pro-actively to think about how you can configure it to your advantage over the long term.

You don’t have to wait for the profit patterns to happen based on the actions of competitors, if you see the opportunity you can start the process yourself.

Opportunities arise from:

• Deregulation of previously regulated activities
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• Changing customer needs and priorities
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• Technology changes

Your competitors, who may not use industry value chain analysis, might not notice what you are doing or might not realise the significance of your actions until you’ve established a long-lasting advantage.

Industry Value Chain Videos

I found these value chain videos from Professor Andrew Fearne which focus on the industry value chain or value system.

Have You Used Industry Value Chain Analysis?

Have you used industry value chain analysis and found it helpful to:

• Understand what is happening in your wider competitive space?
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• Identified potential threats early?
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• Identified opportunities?

Please leave a comment and share your experience or any tips you’ve found that makes doing the industry value chain analysis easier.

As I look at classic offers which have defined a business, a great way to start is with the offer  / USP which built up Domino’s Pizza since it is so often quoted as a fine example.

“Fresh hot pizza delivered to your door in 30 minutes or less… or it’s free.”

There are so many reasons why this is such a great positioning statement.

Looking At The Domino’s Classic USP Using The 7 Big Questions

Let’s look through the lens of the 7 big questions of differentiation.

There’s “the what” – fresh hot pizza

There’s “the how” – delivered – you don’t have to make any effort

There’s “the where” – to your door

There’s the when – in 30 minutes or less

And finally we return to “the what” – the risk reversal of “or it’s free”.

The Domino’s Classic USP Template

You can see a template for crafting these positioning statements here in the Dominos example.

[what] [how] [where] [when] [what risk reversal]

It’s also very notable for what it doesn’t say.

What The Domino’s Classic USP Doesn’t Say

The pizza may be fresh and hot – but that doesn’t sound too demanding since there’s nothing about it being delicious of made from the highest quality ingredients.

The USP doesn’t include an indication of who, either in terms of who the customer is or who the supplier/staff are a bit different from the Spearmint Rhino offer since there are many people you just wouldn’t want a lap-dance from.]

Is it marketing hype or does it need to be designed into the culture of the organisation. I think it’s the second because everything needs to be done quickly to meet the big double whammy which made the offer so successful – it’s quick and it’s guaranteed.

The Irresistible Offer Also Looks At The Domino’s USP

If you want to go deeper into the logic of crafting statements like the Dominos USP then I recommend that you read an excellent book called The Irresistible Offer by Mark Joyner.

Your unique selling point (also known as unique selling proposition and often shortened to USP) answers the big question:

Why should I buy from you rather than any of your competitors?

I was reading a book about branding and marketing earlier today which said that the USP is dead.

I don’t agree.

The idea of the USP is still very much alive and kicking and it should be an essential part of your business.

I’ve written before about the origins of the USP and Rosser Reeves and recently reviewed his book Reality In Advertising.

What I hadn’t realised until I checked the Google statistics was there is an English versus American language problem with the abbreviation USP. In the UK, USP is much more commonly known as the Unique Selling Point, in the United States it is the original Unique Selling Proposition.

Unique Selling Point & Marketing Slogans

There’s some overlap with marketing or advertising slogans and while slogans can emphasise the USP of the business, they are often meaningless platitudes.

I can’t stop myself from sniggering when I hear Lloyds TSB tell me that they are “for the journey.”

They’re my bank and I have no conscious loyalty to them whatsoever. It’s only customer inertia and the lack of a stronger offer which has retained my custom for the last 30 years.

What Is A Unique Selling Point?

Your Unique Selling Point is intended to be a short statement or idea which sums up why your business is special and different.

It summarises your key factors of difference and may also include more general key success factors. This is a slight change from the way Rosser Reeves explains Unique Selling Proposition which is based on taking one big idea away from a marketing message which is a benefit to customers, is unique and which is strong enough to sell.

Your unique selling point should be the solution to a problem or pain that the customer is experiencing.

The USP becomes the foundation stone for your marketing and indeed for your business.

It’s the few ideas, concepts, features and benefits that you want your target audience to associate with you when they hear your name or think about your products and services.

From the research I’ve done I’m the only business coach in the UK who specialises in helping small business clients to profit from differentiating their businesses. If somebody copies me, I’ll have to emphasise that I am the first and best!

I invite you to get a copy of my free report The Profit Tipping Point and the mp3 of the 7 Big Questions of Business Success which explain the main dimensions for differentiating your business. Some combination of these factors will form your Unique Selling Point which you can include in your promotions.

The Classic Unique Selling Point

The classic example of an extremely successful Unique Selling Point or positioning statement is Domino’s Pizza which was so powerful, a business started to pay university fees became a huge international business.

“Fresh, hot pizza delivered to your door in 30 minutes or less… or it’s free.”

It’s not used any more because of allegations of reckless driving to beat the time limit but it doesn’t reduce the marketing genius of the statement.

It’s the solution to the problem that you or your family are hungry and you’re too tired or too busy to cook.

Using Domino’s USP To Model Your Own Unique Selling Point

You can model this statement in various ways and use it as a USP formula to create your own Unique Selling Point.

A Unique Selling Point Formula From the 7 Big Questions

Using my 7 Big Questions approach,  the Unique Selling Point formula based on Domino’s is…

What [fresh, hot pizza] where [delivered to your door] when [in 30 minutes or less] what guarantee [or it’s free]

A Copywriter’s Version Of A USP Formula Using Features & Benefits

A copywriter might model it as a different formula…

Benefit [fresh], Benefit [hot] pizza Benefit [delivered to your door] Benefit [in 30 minutes or less] Guarantee [or it’s free].

Others may argue that it should be

Feature [fresh], Feature [hot] pizza Feature [delivered to your door] Feature [in 30 minutes or less] Guarantee [or it’s free].

Sometimes features are so clear that they don’t need to be translated into benefits e.g. hot is the feature, the benefit is that it’s ready to eat as soon as you get it because you don’t need to reheat it, saving you effort, energy and you can satisfy your hunger immediately.

The beauty of this Domino’s USP is that it is very specific. It doesn’t leave you in any doubt what you’re getting for your money. There is a clear customer return on investment.

Whichever way you choose to work, the Domino’s Unique Selling Point is an extremely powerful statement with a lot of credibility packed into a few words.

The Unique Selling Point Trap

You need to be careful when creating your USP.

You don’t want to fall into the trap of having a shallow marketing promise that you can’t deliver consistently and reliably. To really differentiate your business, you need to make sure that your business systems, processes and staff are aligned with the promise.

Other pizza companies could have imitated the Domino’s USP but if they didn’t have the systems designed for speed, they would have failed – and because of the guarantee, failure would have been very expensive.

Yes, competitors will copy eventually if they really want to but it takes a big, bold decision (which doesn’t offer any advantage since it’s only neutralising a disadvantage) and time to get all the internal resources lined up.

Rosser Reeves makes the point that while competitors can copy, it is much more difficult to take away ownership of the idea in people’s minds. If the Domino’s had the big idea of “pizza fast” then competitors advertising pizza in 30 minutes or even 25 minutes may in effect be advertising for Domino’s – ouch!

The Problem With Creating Your Own Unique Selling Point

The idea of the USP is to communicate what’s special, unique, different about your business to your customers and your target audience.

But often you can’t see these special factors yourself. You’re too immersed in your business.

There may be a big bold Unique Selling Point hidden away that you can use or you may need to work on the differentiation factors before you can find your winning USP.

The idea of the Unique Selling Point is very much alive and is the foundation of your marketing and business.

What Do You Think About The Unique Selling Point Concept?

Do you think it’s dead or do you agree with me, that the idea of clearly communicating your differentiation is more important than ever?

Let me know by leaving a comment.