Establishing Your Unique Value Proposition
Years ago, establishing a unique value proposition was easy. Today, with the advent of technology and competition from all over the globe, the ability to hone in on and communicate - to customers, investors and employees - why your product or service is unique requires the creativity of the entrepreneurial mind. In this lesson we show you some techniques for honing in on and developing your unique value proposition.
When developing your value proposition, keep these techniques in mind:
- The Seven Why's. There is an old technique that was originally developed as part of the Toyota lean manufacturing process in Japan called the "7 Why's". It says that if you truly want to get to the root of an issue, ask the question "why" seven times. Start by asking yourself (perhaps with some friends and colleagues) why your product, service or approach is unique. When you get the answer, ask "why" six more times. At the end, it will give you a deeper sense of your value proposition and how it needs to be honed to be truly unique.
- Intelligence That Only You Possess. Anyone can start virtually any company these days. What cannot be copied is the intelligence that comes with experience. A local politician won a mayoral race in a big city against a politician that was well known in the state. The underdog winner focused on things only he could know from having grown up in the city, like the pothole on 5th avenue and the underperforming train system. He used a knowledge he could only obtain from the years he spent growing up in that city. You can't copy intelligence or experience so find yours as the basis of a unique value proposition.
- Unique Doesn't Just Mean Product or Service - It Can Mean Approach. Your uniqueness does not have to be a feature of your product or service. It can be the way you approach your market. Take Starbucks. When they launched there was no shortage of coffee in America. Take Apple. The technology behind songs and MP3s existed for a decade. But each of them took a unique approach.
- No Need to be Unique to Everyone - Just to Your Target Market. It is virtually impossible to be unique for an entire market in this day and age. And while it still takes creativity, it is much easier to be unique to a specific market segment. Think of a high end car club in which members get access to multiple high end cars. Approaching a whole market where there are existing services might be hard, but what if you only approached affluent women in Nashville and created a car club that really focused on the Nashville scene? Might be pretty unique.
- Special Distribution Channels. A unique distribution channel can be a great way to differentiate your company and build a competitive advantage, often in industries where the product or service itself may be at risk of being undifferentiated (like some financial services products). If your company can develop a more effective or less expensive channel to bring your product or service to the marketplace, you can develop a big advantage over companies that do not have your distribution channel. For example, Coca-Cola. The bottling network and distribution that placed Coke everywhere a customer could possibly want to buy is a huge competitive advantage even in an era where the product itself may be waning in popularity. Tesla decided to not work through car dealerships and to sell directly. Edward Jones, the stock brokerage, focused on building a broker network in small towns across America when the other brokerage companies were not focused on small town America. McDonald’s used a franchise network as a distribution channel and it gave the company a unique advantage beyond just their food as the food is much more difficult to differentiate.
- Established Relationships. Exclusive or integrated sales and marketing relationships can add to a unique value proposition. When AT&T agreed to distribute the new wave or iPhones from Apple, it gave them a value proposition that other competitors did not have. An established relationship can give you a unique value especially if that relationship is exclusive or highly integrated from a technology or relationship perspective.
- Intellectual Property. While it is harder to truly create unique intellectual property, if your service or business has trademarks, patents or technology that is unique, this can be a foundation of your unique value proposition. A great name can cut through a market just like a unique piece of technology.
It truly requires the entrepreneurial mind to create a unique value proposition. Here are a few examples:
- Different Branding. A service that provided DNA testing for pregnant woman was struggling to grow sales. Their approach was to focus on how to coach the moms through the testing process. Once they changed to an emotional appeal (i.e., is there anything you wouldn't do for your unborn baby) they started taking off.
- Focus on a Market. A company was providing online wellness services for health plans and they were struggling. In one of their projects, they were offering these services for the Hispanic market where the need were unique. In that market, transportation, religion and family member by in to health decisions were critical. They used this unique knowledge to gain real traction when they took it and focused on the Hispanic market.
While it is hard to find a unique value proposition, with the creativity we all possess there is always a new way to create one.