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.
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