Define your unqiue selling points

Every time a customer buys a product or service, it involves a decision, and that decision is made based on one or more of the same six elements: price, product/service quality, innovation, marketing, convenience and extensions...

Price

When customers choose a product on the basis of price it is usually obvious that they have done so. They shop around, check the prices in a number of shops or compare all the products on offer before making the choice.

However, there are products they choose because, even without comparing prices, they are sure that they will be the cheapest. This shows the power of good marketing. Because the consumer associates the brand as being value for money, he buys the product assuming that rival brands will be dearer.

Types of companies that compete most strongly on price include Easyjet and Ryanair.

Product/service quality

Consumers sometimes opt to pay more because they believe a more expensive product will be of a higher standard quality. This is usually reserved for items that are bought for performance, taste or reliability or items they intend to keep for a long time.

Whatever the reason for choosing a pricier item, the most important aspect of this choice is trust. If the customer is not completely sure the item is the best, they will be reluctant to pay more for it.

Examples of firms which charge more than many other competitors but are perceived to offer better quality are Waitrose and Rolls Royce.

Innovation

Although customers are faithful to some brands and products, and buy them time after time they like to try out new products, and some items are bought purely because they are new or fashionable such as electrical goods, audio equipment, software etc. This may be because consumers like to keep up to date with the latest fad or the most recent editions and versions.

Businesses known for their innovation include Apple and Pantene.

Marketing

We may not want to admit it but we have all made purchases based on packaging, adverts, publicity or some other form of marketing. Often this is because the marketing tells us what we want to know, that the product is cheap or innovative etc. However, there are some products customers choose simply because they know and trust the brand and do not consider whether the item is the cheapest, newest or best. This is a consumer choice based entirely on marketing. It is often evident that customers have been swayed by marketing when they buy a variety of different products from the same company, purely because they like the brand.

One company that markets its brand very effectively is Virgin.

Convenience

There are some things that consumers willingly pay more for simply because they are convenient to buy. Supermarkets, for example, often charge more for their products than corner shops but the convenience of being able to do the shopping all under one roof means that customers are willing to pay more. Supermarkets know this and so make the buying process as easy for the customer as possible, providing car parking, the use of trolleys, offering cash back and so on.

Extensions

There are some products we choose not simply for the product itself but for the additional products or services which are also available. These could be optional features which can be added to the initial product such as Nokia mobile phones and their changeable covers, logos and ring tones, or additional products which can be purchased at the same time as the core products, like Tesco's clothing range available in its supermarkets.

As these are the options consumers face when purchasing you should consider which of these categories your product will fit into. Why will consumers decide to buy your product instead of that of your competitors? Is it because you're the cheapest, the best, the latest, the most fashionable, the easiest or is it because of the extras you offer? However, there are a few points you should bear in mind:

• Being a price leader means that everything you do in your business will need to be at the lowest cost, not just single products or services.

• If you have opted for 'higher than' pricing then you will need to ensure that the product/service is better than others on the market. 

• Offering superior customer service usually has a cost attached to it. Are all your customers worth this treatment? Will customers value the additional service you provide?

• How important is offering a wide range to your target customers? Holding a wider range of products will take up more of the business's time and money.

• Added value services, bringing everything together in one place, may not only help customers but also provide the business with additional ways of making money. The flip side is that adding services costs money and may be seen as irrelevant.

• How important is being new and innovative to your customers? Introducing new products and services can be both costly and risky.

• Establishing market leading awareness is usually very expensive.

Once you have worked out why customers will choose your product over the competition you will have defined your unique selling point (USP). Understanding your USP not only defines your competitive advantage but also provides you with a basis for your marketing. However, if you find it difficult to identify any competitive advantage offered by your products or services you will need to improve them. Here are a few questions to ask yourself when identifying your USP:

• Is your USP significantly different from that of your competitors?
• Will your customers find value in your USP?
• Will your USP benefit customers?
• Will your USP motivate customers to make a purchase?

Your next step is to compare yourself with the competition to ensure that your product actually has the competitive advantage you have identified as your USP and that you can beat the competition in this area. Your USP is what sets you apart from your competitors, and your knowledge of your customers, your line of business and your market will help you to decide upon a winning one.