One of my readers, Tony, asks the following question:
Is market differentiation the same as “Unique Selling Proposition”? If not, what’s the difference?
Let me start by providing some context.
The term “Unique Selling Proposition” (USP) is a term used by advanced marketing professionals that basically states every advertising campaign must explain what’s unique about a particular company, product, or service.
In short, one’s unique selling proposition is the answer to the following question, “As a potential customer, why in the heck should I buy from your company instead of every other company on the planet?”
In today’s marketplace, you’d better have a darn good answer.
In response to Tony’s question. USP is the public communication of a company’s market differentiation.
Let me illustrate by example.
In marketing circles, Domino’s pizza in its hey day is often cited as an example of a company with a really compelling unique selling proposition.
Between 1972 – 1992, the company’s marketing slogan (note: not all USP’s need to be expressed in a slogan) was “Hot Fresh Pizza Delivered to Your Door in 30 Minutes or Less Guaranteed… or it’s Free!”
That is the USP.
The company’s market differentiation began in 1960 when company co-founder and CEO Tom Monyhan decided to focus exclusively on the pizza delivery business (radically different for the industry at the time).
He then decided to ditch all the dining tables and chairs in Domino’s locations. Decided to pick our real estate parcels for new locations that were much smaller (as they only needed to house a kitchen and not an entire dining room).
Because the real estate requirements of a Domino’s was a lot smaller than say a Pizza Hut and because the company only focused on delivery, the decision was made starting in 1960 to pick locations that were 1 – 3 stop lights closer to customer’s homes.
So rather than be in the major commercial districts, Domino’s locations were in nook and cranny properties closer to customers. Again, this was possible because Domino’s could fit their operations into smaller spaces where larger ones were not always available.
The entire Domino’s operation was factually DIFFERENT from the other company’s in the market. Every facet was different.
This made it possible for Domino’s to operationally deliver on their USP of “Hot Fresh Pizza Delivered to Your Door in 30 Minutes or Less”.
Other companies tried to copy Domino’s USP. But these companies could not actually deliver on the same promise.
Sure Domino’s marketers were clever.
But the real genius in Dominoes was not just the tag line / USP, but the very deliberate decision to be operationally different from day one.