Beyond a USP: The Secrets to Competitive Advantage
The concept of competitive advantage has evolved over the past 60 years. Some companies have attempted to apply advertising pioneer Rosser Reeves’ concept of the unique selling proposition (USP) as a way to maintain competitive advantage in their markets. Reeves’ brilliant conception of the USP was simple: “Buy this product, get this specific benefit.” It remains a powerful technique for marketing individual products. However, when applied to an entire company, it has an inherent weakness.
I discussed this concept during a session I led at the recent MeritDirect Business Mailer’s Co-op in White Plains, N.Y. When FedEx began overnight delivery to all 50 states in 1980, the company strategically positioned itself with the slogan, “When your package absolutely, positively has to get there overnight.” The carrier’s innovation changed the way we do business.
Over the next six years, UPS chipped away at FedEx’s positioning and matched it in 1986. No longer did FedEx hold the same competitive advantage over its chief rival. Though it pioneered overnight delivery, FedEx was now just offering a commodity service.
Harvard professor Michael Porter once wrote in the Harvard Business Review that when a company’s business strategy is based on one element, such as service, price or breadth of inventory, that company sets itself up to be easily copied. The concept of “fit,” he wrote, “drives both competitive advantage and sustainability: When activities mutually reinforce each other, competitors can’t easily imitate them.”
The smaller your niche, the better your fit needs to be and the more all of your activities need to mutually reinforce each other. You develop and source product, and position that product through pricing and benefit statements. You promote it through photography, copy and marketing. You answer questions about your product and close sales for it through phone calls, Web sites, faxes and outside sales. You ship your product to your customers, accept returns and reship orders.
So, the more innovations you can introduce in these areas, the greater your competitive advantage will be.
In their article, “How to Brand Sand,” Sam Hill, Jack McGrath and Sandeep Dayal identified six generic activities that help create competitive advantage.
1. Quality control: value from product consistency;
2. Quality control: value from consistent service;
3. Packaging: value from product convenience;
4. Taking responsibility: value from convenient service;
5. Matching: value from product customization; and
6. Knowledge-based applications: value from customized service.
Use this list as an outline of the broad categories that you need to focus on to introduce innovations in your company. When you bundle as many of these activities as possible, you create a competitive advantage that’s not easy to copy.
And then, when you’ve introduced these innovations, promote the benefits of them to your customers. For example, if you introduce a Web 2.0 functionality that allows for the customization of products or helps customers select the right product for them, actively promote that functionality in your catalog.
In this way, you increase customer loyalty and market share, and boost profits through sustainable competitive advantage.
George Hague is senior marketing strategist at J. Schmid & Assoc. Inc. You can reach him at (913) 236-8988 or at GeorgeH@jschmid.com.
A columnist for Retail Online Integration, George founded HAGUEdirect, a marketing agency. Previously he was a member of the Shawnee Mission, Kan.-based consulting and creative agency J. Schmid & Assoc. He has more than 10 years of experience in circulation, advertising, consulting and financial strategy in the catalog/retail industry. George's expertise includes circulation strategy, mailing execution, response analysis and financial planning. Before joining J. Schmid, George worked as catalog marketing director at Dynamic Resource Group, where he was responsible for marketing and merchandising for the Annie's Attic Needlecraft catalog, the Clotilde Sewing Notions catalog, the House of White Birches Quilter's catalog and three book clubs. George also worked on corporate acquisitions.