Unique Selling Points & Differentiation (DP IB Business Management)
Revision Note
Written by: Lisa Eades
Reviewed by: Steve Vorster
The Importance of Having a Unique Selling Point (USP)
A unique selling point (USP) is a distinguishing factor or characteristic of a product, service or brand that sets it apart from its competitors
The USP helps a business to differentiate itself and give customers a reason to choose one product or service over others because it offers something distinct and valuable
There are a range of reasons why businesses develop a USP which can include
Developing a brand identity
Achieving a competitive advantage over rivals
Effective communication with customers
The attraction and retention of customers
Achieving power over pricing
Encouraging innovation and adaption
Diagram: reasons for developing a USP
Competitive advantage: A strong USP gives a business a competitive edge by creating a barrier to entry for other businesses in the market
If a business can offer something that is difficult to imitate, it becomes more difficult for competitors to gain customers
Brand identity: A unique selling point helps to shape the perception of the business in the minds of consumers
It becomes an essential part of the brand's story and message, which allows customers to associate specific qualities or benefits with the brand
Communication: A well-defined USP provides a clear message that highlights the unique benefits and advantages offered by the product/service, making it more compelling and memorable
E.g. Emirates' USP is a high-quality service and luxurious amenities supported by extensive marketing efforts such as sponsorship deals with sports teams and events
Retention and attraction of customers: A unique selling point can help attract new customers by appealing to their needs and desires, making customers more likely to choose and remain loyal to the brand
Pricing power: A strong USP can often justify the firms decision to charge higher prices for products/services, as customers are willing to pay more
This pricing power can improve a business's profitability and financial performance
E.g. Volvo has a reputation for safety, reliability and comfort, which means that customers are willing to pay premium prices for its vehicles
Innovation and adaptation: Developing and maintaining a unique selling point encourages businesses to continuously improve their products, explore new ideas and adapt to changing customer needs and preferences
E.g. Apple customers expect to be able to upgrade their technology devices frequently and value the ability to buy complementary goods, which add value
Examiner Tip
You should consider the value of a businesses USP to its success. Those which are difficult or expensive for competitors to replicate or which are protected in law (such as patents or copyrights) are the most valuable and are likely to lead to long-term competitive advantage.
Business & Product Differentiation
Product differentiation is an attempt by a business to distinguish its products from those of competitors
This involves creating functions or features of the product (or firm) which help it to stand out from its competitors
Strong product differentiation helps the firm to develop its competitive advantage
The development of product differentiation often helps a firm to create a unique selling point for its product which can be used in marketing
Product differentiation may be tangible (clearly visible) or it may be intangible (a perception) that is created about the product in the consumer's mind
Common methods used by businesses to differentiate products include
Diagram: methods of differentiation
Successful business or product differentiation helps the business to increase demand for its products, increase brand loyalty, and allow the business to charge higher prices
Differentiation Methods
Method | Explanation | Example |
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Marketing and branding |
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Packaging |
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Functions and features |
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Customisation |
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Customer service |
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