Everyone says they are different to their competitors – but few companies actually are.
Business plans (and business leaders) focus hard on price, cost and the size of the available market. However, too few start out by creating a product or business that is unique or sustainably different. Many set out to make their offer the lowest cost, but with no idea how to design a company that can deliver such low pricing, consigning themselves to a life of financial under-performance. Many more do not set out with a low price mentality but find themselves irresistibly drawn in that direction as they seek to compete.
Companies use high-level sales techniques, great-personality salespeople, extremely generous customer hospitality, flashy and heavily advertised ‘sales’… but perhaps just put effort and thought into making your product truly unique instead – create a genuine point of difference in your marketplace.
Unfortunately, people and businesses stay in their comfort zone – however poor the result that has traditionally delivered. But if you are unable to see a way of creating a point of difference, then why make life hard for yourself by staying (or launching) into that market?
Creating a point of difference, or uniqueness, for your product or service does not necessarily make it more expensive. Consider Tupperware. They make plastic boxes, admittedly very attractive plastic boxes with innovative ways of keeping airtight, but if ever there was a product sector destined to be a race to the bottom of the price curve, this is it.
However, their point of difference is provided through the very act of the purchase itself. By setting up networks where the salesperson is your friend they make the consumer want, and indeed obliged, to buy! The famous Tupperware party model has been copied in countless other industries, from cookware to underwear, because this format creates a captive audience where the product is the only one available and the consumer is prompted to buy there and then because the act of purchase is a social experience. They made a commodity product easy to sell by wrapping it in a great night out that is cost-free to the company.
Another company with a strong point of difference is BrightHouse. BrightHouse has a business model that enables them to sell electronic goods on the highstreet at four times their retail price to people with the least disposable income. They do it by offering the one service that their customers will pay more for and often struggle to get anywhere else: ready credit. Brighthouse make more margin from selling one £100 item at 4 times the price than Currys would from selling 13 at the recommended RRP. All other things being equal, Brighthouse will need just 8% of the sales turnover of Currys to make the same profit.
I hear the voices who will condemn this as a predatory tactic aimed at the poor and financially illiterate but Rolls Royce sell jet engines to cash-poor airlines using a similar model.
Take a look at the wider market: The world’s largest taxi company owns no vehicles (Uber). The world’s largest accommodation provider owns no properties (Airbnb). Young, agile, disruptive companies are coming up with new points of difference for traditional products that make the competition irrelevant.
So take a moment to think about what your point of difference truly is. Is it genuinely a different offering to everyone else in your market? If not, how can you create one?