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Ken Keller: Your points of difference

Posted: July 21, 2013 2:00 a.m.
Updated: July 21, 2013 2:00 a.m.

Ken Keller

 

Theodore Levitt, a professor at Harvard Business School, suggested that, “Differentiation is one of the most important strategic and tactical activities in which companies must constantly engage.”

I enjoyed working in the coffee business for more than a few years. One of the struggles that every coffee company had was in differentiation.

Coffee is the second largest commodity traded in the world and is price-driven. Yet no coffee company wanted their product to be purchased based on price.

So, what did these companies do?

They touted their high quality of roasted and ground coffee beans. They put that product into state of the art packaging, easily identified by their loyal customers (and interested prospective customers) by the color and design of the label, located at the local supermarket.

Each label had easy to use instructions. The beans offered a rich aroma when the packaging was opened, and that same aroma was also enjoyed while brewing or being poured into the cup. The final product, hot brewed coffee, of course, tasted better than any of the other brands!

The first point of difference is a competitive advantage. It’s good to work at creating one, but it is elusive. In the case of the coffee companies, none of them could create a competitive advantage but each enjoyed one: their hundred plus year-old the brand names.

When Howard Schultz launched Starbucks, he recreated the coffee business in the retail grocery, foodservice and industrial segments. He still has a competitive advantage with the retail stores but otherwise, Starbucks is just another coffee brand on the shelf.

For validation, I once enjoyed a speaker who had worked at Quaker Oats. She said that, as hard as they tried, nobody at Quaker could find any difference between the oats they bought, processed, packaged and sold versus any of their competitors. This validated my thinking that the brand name, or reputation, is all many companies as a competitive advantage.

There are three additional areas where business owners and leaders should focus related to creating points of difference.

The first is finding market niches.

A niche, according to the Business Dictionary, is “A small but profitable segment suitable for focused attention.
Niches do not exist by themselves, but are created by identifying needs or wants that are not being addressed by competitors, and by offering products that satisfy them.”

When I hear “niche” I think about what the CEO of Smart and Final said, “We stay in our niche or else we get nicked!”

The second is the brand promise. Mark Di Somma, a branding expert, says that “a brand promise is the commitment to deliver made between that brand and its audience … ultimately of course a promise lives or dies on whether it is believed and delivered on…”

One thing that made the retailer Men’s Wearhouse successful was the promise made by founder George Zimmer. Zimmer always said, “You’re going to like the way you look; I guarantee it.”

The third is the unique selling proposition (USP). The USP is a proposition to the prospect convincing them to switch brands. USP tells the buyer the specific benefit they will receive from buying the product.

A useful USP must be one the competition cannot or does not offer. It has to be unique, it must provide enough motivation to move the buyer to purchase and it has to have a specific benefit.

BMW offers include no cost maintenance for four years or 50,000 miles on the purchase of a new vehicle. FedEx used to say “When it absolutely, positively has to get there overnight.”

Developing points of difference is so important it can’t be left to anyone but the person at the top. If you don’t position your company and your offerings, the competition will do it for you.

Ken Keller is CEO of STAR Business Consulting Inc., a company that works with small and midsize business owners to grow top line revenue. He can be reached at KenKeller@SBCglobal.net. Keller’s column reflects his own views and not necessarily those of The Signal.

 

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