By placing the so-called unique selling propositions at the heart of your marketing strategy, it is possible to stand out from others in an oversaturated market and thereby push aside any possible competition. The concept in question has been first developed in 1940 and is still an important marketing tool and a source of success for numerous products and services.

Defining unique selling propositions (USPs)

What exactly hides behind the term that often denotes the secret for commercial success?

Definition USP

Unique selling proposition, unique selling point, or the abbreviated USP all relate to the same marketing concept grounded firmly in sales psychology. The three terms are used synonymously and stand for the distinguishing features of products or services, which make them stand out from other similar products on the market by means of advertising. The concept of USPs can also be conferred to other sectors, such as politics and art.

In times of oversaturated markets and increasing exchangeability, unique selling points are vital distinguishing features of various products or services when positioning, advertising, and selling them. This becomes especially important when facing strong opposition on the market.

Significance of USPs in marketing

Rosser Reeves, the founding father of unique selling propositions, introduced the concept to marketing theory by defining it and putting it into practice in 1940 as a uniquely binding sales promise. According to him, USPs should be designed in such a way that underlying products and services will clearly stand out from similar, rival offers on the market. This is representative of the extent to which both the purchasing decision and the buying impulse are triggered (provided, of course, that the offer is appropriately adjusted to the target group).

Development of USP theory and practice

In 1961, Reeves published “Reality in Advertising” (Knopf, New York 1961) – a book referenced to this very day, in which he primarily suggests that advertisements should clearly delineate why it is the product on offer and not its rivalling equivalent that should be acquired by each potential buyer. He also highlights that USPs included within advertisements must mirror the promises pertaining to corresponding products or services. In other words, the offer cannot be in any way misleading and must deliver the promised benefits when obtaining a product or service. Only then can a seller achieve lasting success. Reeves distinguishes between two different types of unique selling points:

  • Natural USPs: derive from a product, its characteristics, or its production method
  • Artificial USPs: attributed to products by means of advertising – also known as unique advertising proposition (UAP)

Reeves constructed the basic concepts for his theory while working for Ted Bates & Co. – an advertising agency based in New York. He repeatedly attempted to present the unique selling propositions of his advertised products in greater detail. He put them at the heart of his marketing strategy even during the US presidential campaign of 1952, when he successfully applied his marketing knowledge in the Republican camp to promote Dwight D. Eisenhower, who later became the 34th President of the United States as a consequence. In the following years, presidential campaigns became more advertisement-oriented as a result.

USP requirements

To ensure that unique selling propositions help achieve long-lasting success, three basic characteristics must be met:

  • Target group orientation: USPs must not only be tailored to a specific target group, but must also meet its needs
  • Profitability: To stay profitable for a long time, USPs should not entail any high costs  
  • Ability to last long: USPs must be able to hold their ground when confronting competition on the market

Compiling unique selling points

A unique selling proposition is generally worked out in four steps:

  1. Set out a target group: The potential clientele must be clearly defined. Generally speaking, in order to get to the core of the public’s needs, target group members are divided according to decisive features such as age, profession, and individual tastes.
  2. Find the source of the public’s main problems: It is worth stepping into the shoes of the potential client to learn more about various problems and wishes. Existing customers should also be interviewed, if possible.
  3. Specify how offers differ from each other: All product- or service-specific offers of a given market should be then listed and filtered out to find those that meet the needs of the defined target group in the best possible way. In this way, offers coming from the competition’s advertising campaigns are analyzed, on the basis of which it is possible to determine which product features are left out from the competitor’s offer.
  4. Define USPs: USPs should be defined in the shortest and most comprehensible form possible.

USPs in today’s marketing strategies

Nowadays, unique selling points of a product or service are an inseparable part of the marketing and branding strategies that we see around us. They are applied to various sectors as a result.

Product lifecycle

The product’s lifecycle describes the different phases of its useful life – from the moment it enters the market up until it is forced out of it. Choosing appropriate marketing measures becomes an easy task once the product supplier is aware of the phase in which a product currently finds itself in. Each phase is of great importance to marketing based on the unique selling proposition.

Image: Five phases of product life cycle
Five phases of product life cycle – from its development to its decline.

Product lifecycle phases

Phase 1: This phase usually begins when the product enters its corresponding market and ends when it is accepted by the target group. Sales figures rise as a result. Often, by the end of this phase, the profit threshold, or the so-called break-even, is attained.

Phase 2: The phase starts off with a sharp increase of profits and sales. The product eventually prevails over predecessors and other competing products. At the same time, competitors are on a constant rise in the market by offering similar products. A patent sets the only exception to this rule, as competitors generally cannot offer a competing product in its presence. Phase 2 ends as soon as the growth rates decrease.

Fact

If the market is not saturated with similar products to the one that you produce, the unique selling proposition concept works exceptionally well during the first and second phase. Here, the distinguishing features make advertising campaigns very convincing.

Phase 3: This phase represents the transition period between strong growth and market saturation. Since no new customers can be gained, it is about not losing market shares in the face of competition. If sales increases are no longer possible, the market is said to be saturated.

Phase 4: This phase is characterized by market saturation whereby sales come to a standstill and the competition becomes fierce and predatory as a result. To extend this phase, some product suppliers revise their offers to make themselves stand out from competitors for an extended time.

Fact

Upon injecting comparable products or services into the same market, their unique selling point substantially loses in value. Consequently, the marketing strategy must be adapted to the conditions of the advanced lifecycle phase in which a product finds itself at a given time. This is, for example, made possible by means of price changes. In other words, either the same service is offered at lower prices or more services are offered at the same price.

Phase 5: A significant drop in sales and turnover occurs in this final phase and competitors begin to bring newer offers into the market. Suppliers ideally prepare for this phase long before it comes into effect by either replacing their offers with new versions or leaving the market altogether.

Significance of USPs in SWOT analysis

SWOT analysis is often used to identify the strengths, weaknesses, opportunities, and threats related to various business activities in the presence of competition. One is therefore able to determine which areas show signs of possible business opportunities and in which areas it is necessary to protect the company from competitive risks. By means of the SWOT model, it is possible to formulate unique selling propositions in such a way that producers react quickly to market opportunities.

Example: Small businesses can hardly compete with larger competitors on the production and delivery speed fronts. For this reason, their strengths usually lie in personal consultation and greater flexibility.

USPs – practical examples

USPs can differ in many different ways.

Time saving USPs

Products are manufactured and delivered in short time spans, whereas services are quickly executed. The time factor plays an essential role and is ideally suited for a unique selling proposition. This is used, for example, in fast food chains such as McDonalds or in delivery services promising express shipping.

Customer service-oriented USPs

A hotline available 24 hours a day, products guaranteeing either full satisfaction, money-back options, or free repairs – these and many other services are considered excellent unique selling points. However, for the USP to have a desired effect, it is required that no other company (either in your proximity or within the same industry in which you operate) offers similar services.

Environmental compatibility

Rising ecological awareness is becoming an increasingly important factor. Sustainably-produced goods, abandonment of ingredients from questionable sources, or even environmentally-friendly technologies are nowadays ideally suited to stand out from the offers of your competitors. A good example is Toyota’s recent Hybrid Synergy Drive (HSD) system, which combines both a combustion engine and an electric motor, thereby reducing fuel consumption and exhaust emissions.

Secret recipe

The biggest product-related secret is usually its list of ingredients. In this way, Coca Cola managed to create a successful unique selling point over the years. Its strength lies in the fact that it is not possible to copy a product. Recipe-oriented USPs can therefore work on a company-wide scale. Perhaps the best example of this are products with an assigned geographical indication, which are consequently protected by various rights (Mexico’s tequila for example).

Product exclusivity

Emotional values such as exclusivity and prestige also play an important role when trying to convince potential clients to buy various products. For instance, why is it that a specific brand of engagement rings, let’s say Cartier, is so crucial to some people, when other, less common jewelers have equally beautiful and high quality jewelry? The French company used as an example here simply enjoys a better reputation among connoisseurs.

Price

Not all industries make it possible for their underlying businesses to stand out from competition by means of services offered at lower prices. However, industries such as those offering passenger transport can certainly avail of such USPs (low-cost airlines).

Summary

USPs can significantly increase the demand for your products and services. The most basic prerequisite is that the distinguishing features of what you have on offer should satisfy the needs of your target group. It is for this reason that a detailed target group analysis is deemed essential when striving for business success. You therefore need to place the unique selling points of your products at the heart of your marketing campaign. Now, you must rely on the consumer to discover and promote the unique selling points for you.

The safest practice encompasses a clear advertising campaign, which highlights both the uniqueness and the advantages tied to your offer. To achieve long-lasting success, it is necessary to keep an eye on the reaction of competitors. In this way, you can also react in a quick manner and adapt or readapt your offer as soon as your direct competitors begin to offer similar products and services.

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