We are often told that in order to succeed in business, a company must have a compelling brand. After all, branding is sexy and the business world is full of examples of successful brands. Just walk down the street or turn on the TV and you will be bombarded with advertisement after advertisement of companies like Nike, Apple, Coca-Cola and BMW to name a few. It is therefore easy to believe that if you spend money on building a brand, your business will succeed.
What many do not realize is that before a brand can succeed, the business must first fulfill a market need. Just as there are many companies that have succeeded based on building a strong brand, there are just as many companies that have failed despite of their strong brands. Prominent examples would be Nokia, Blockbuster Videos and Borders.
Branding is a vicious cycle. Even with social media, it takes money. So unless a business can generate sales which it can then reinvest into advertising, money will run out. At the height of the dot-com bubble, where money was “free”, businesses had monthly burn rates of tens of millions in their effort to rapidly build their brand and capture users. Unfortunately as many of them did not offer a product or service that met their customers’ needs, and had product and services very similar to each other, the revenues did not materialize. When the money ran out, the companies closed.
In all of the above examples, the missing factor that determined the company’s success or failure can be traced to the lack of, or a poor, Unique Selling Proposition (USP). The USP is what makes a company different (usually better) than its competitors. The USP is what makes the company stand out from the rest of the market and this focus on differentiation is the most important strategic activity companies must constantly find and refine.
At the heart of any successful business, is a strong USP.