Why should a customer buy from you instead of a competitor? What makes your product or service better or different from that offered by other companies?
You have to find a way to differentiate what you sell from similar products offered by competitors. This is called product differentiation, which is communicated by creating a unique selling proposition or USP.
What’s your USP? It’s all about achieving true product differentiation and then communicating that to your customer base.
Key Takeaways
- Product differentiation is what makes your product stand out from the competition
- You communicate your product differentiation in a unique selling proposition or USP
- Your USP must concisely convey your product’s competitive advantage and how it serves your customers’ needs
What is Product Differentiation?
Product differentiation is the process of making your product or service different from other similar products or services. The goal of product differentiation is to make what you offer more appealing to a certain market segment or group of customers. By differentiating your product you create product demand, brand value, and customer loyalty, among other benefits.
To differentiate your product or service, start by identifying those things that your product does especially well. Then, make a similar list for competing products. Compare the two lists and note the advantages that your product has over the competition. Those are your differentiating factors.
Next, analyze your differentiating factors in terms of how well they meet real customer needs. If what differentiates your product are features that your customers want and need, you’re good to go. If your customers highly value customizability, for example, and your product is highly customizable (and competing products are not), then that is your key differentiating factor.
On the other hand, if your differentiating factors are not that important to customers, you need to go back to the drawing board. For example, if your differentiating factor is that your product comes in pastel colors, but customers don’t care about color, then what makes your product different is not important.
Revisit your product and develop unique features that do matter to potential customers.
There are many ways that companies differentiate their products from the competition, as shown in the following table. You can differentiate your product on the basis of customer service, quality, packaging, convenience, and other factors that matter to your target audience.
If your product really isn’t that different from the competition, then you have a problem. Why would a customer buy from you instead of a competitor if your products are essentially identical? If you can’t differentiate your product, the only way to attract customers is by selling at a substantially lower price or by engaging in expensive marketing campaigns. It is more effective to have a product that stands out from the pack and has a true competitive advantage.
How Do You Communicate Product Differentiation via a USP?
Once you’ve determined your competitive advantage you need to clearly communicate it to potential customers. You do this by creating a unique selling proposition, or USP.
Your USP tells customers what makes your product, service, or business different from and better than the competition. It encapsulates in a short phrase why customers should buy from you instead of from another company. It answers the question:
“What makes this product different from all the rest?”
To be effective, your USP must focus on what your product does well, what your competitors don’t do well, and what your customers want or need. Remember, a USP is more than just a slogan, it is a statement.
The following video provides several real-world examples of unique selling propositions – and here’s a list of twenty more.
What’s Your USP? — Here’s How to Narrow it Down
The first thing you need when creating a USP is product differentiation. With that clearly in hand, you should walk through the following steps to come up with your unique selling proposition.
Step 1: Define Your Target Audience
Before you can write your USP, you need to know for whom you are writing it. You need to have a clear picture of your target customer in mind, both demographically and psychologically. It’s important to know who they are, what they want and need, and what motivates them when making a purchase. The more you know about your audience the better you can mold your USP to their specific needs.
Step 2: Define the Problems You Solve
Next, clarify just what your product or service does. What problems does it solve? What needs does it meet? Remember, customers only think they are buying products; what they’re really buying are solutions.
Step 3: Research Your Competitors
You can’t differentiate your product if you don’t know what the competition offers. Research competitive products and services – what they are, where they’re sold, what they offer, how much they cost, and more.
Pay special attention to how competing companies are positioning themselves to prospective customers. What are your competitors’ USPs? Are those USPs effective – and if so, why? Learn from what your competitors are doing well and identify their weak points.
Step 4: List Your Competitive Advantages
Make a list of your three or four top competitive advantages. Think like the customer and realistically determine what differentiates your product from the competition.
Step 5: Combine All You Know into Your USP
Take all the information you’ve collected and work them into a single paragraph that talks about your audience, the problems you solve, and your unique competitive advantages. Now take that paragraph and condense it into a single sentence.
The USP should make a statement about what makes your product unique and better for the customer. It needs to be short and succinct, catchy yet informative. It can’t be marketing blather; it has to speak the truth and speak to what your customers need. When you boil it down into a simple statement, you have your USP.
Let the Boom Communications Group Help You Develop Your USP
The Boom Communications Group has a long history of providing marketing, advertising, and printing services to small businesses in southwest Florida and beyond. We can help your company differentiate its product and create a compelling USP that wins you more customers. Contact us to learn more about how we can work together to ignite your business growth.
Contact Boom Communications today to help create your unique selling proposition!