USP & How To Find Your Niche (Specialize)

Unique Selling Proposition (USP) first appeared as a theory in 1940’s. It was furthered by practitioner, Rosser Reeves, and professor, Theordore Levitt. In 1986’s The Marketing Imagination, Levitt wrote that search for “[t]he meaningful distinction is a central part of the marketing effort”. He proposed that everything else business does is a function of that distinction.

This blog will discuss how to measure the impact of your USP. I assume that a USP statement was created and, perhaps, started to execute on it. I will discuss the leading and lagging indicators that might help measure USP’s impact. After having measured USP, a company will be armed with the most powerful but fast-expiring component to success in business world – insight. I will show how you can use that insights to build a deeper presence in any marketplace by specializing using basic economic and strategic thinking.

Part I: Measuring USP

USP fills the gap between customer’s needs and firm’s offering (be it a product or service). It is a vital tool for any business to determine its place in the market. The USP identifies and attempts to fill the gap that is not served by the competition. To execute properly the USP, the managers need to unite all of the business’s processes together to help deliver on the promises enshrined in the proposition. Remember, what Gore Vidal (or Larry Ellison or Genghis Khan) said: “it is not enough to succeed, others must fail.” Armed with a powerful USP, a company needs to maintain its position. If you think of Southwest Airlines, Wal-Mart, and your local pizzeria, all of them are working toward executing on strategic factors that differentiates them from their substitutes. Southwest Airlines and Wal-Mart are “keeping cost down” while the local pizzeria emphasis convenience. Definition of a tool is “something that has practical function.” USP can only be useful if it offers practical and immediate action.

Remember the adage, “it is all course correction”. There is no USP that is right or always right. There is one that is appropriate for the customers’ current needs. If you have different strata of customers, for each there should be a USP. Using data to evaluate what is working and what isn’t is a very valuable management practice. We are going to collect quick and dirty qualitative and quantitative data.

There is a key difference between leading and lagging indicators. Lagging indicators are typically “output” oriented, easier to measure but harder to improve or influence. Leading indicators are typically input oriented, harder to measure and easier to influence. I look at the leading indicators as hints of the future events (tends to change ahead of the future event) while lagging are reports of the past activities.

Leading indicator

  1. Vision
  2. Customer Feedback[1]

Lagging Indicators

  1. Sales
  2. Competitor’s reaction

Leading Indicators



What is the success of a start up? It is the clear vision for the company. The vision potency is measured how your team or partners accept the vision. Creating a want in the market and fulfill it is a long-term proposition achieved only after a momentum of demand for your product or service is achieved. Furthermore, it is likely that you only have secondary or indirect data on your market. The vision should be specific and well understood image of where managers are taking the company. Consistency is vital.


customer-feedback-social-media-800x400There are three groups you should continually ask for feedback: your customers, your team, and your suppliers.

For your customers, find out up to 30 customers. Ask them specifically about your business. Ask them

  • Why do you do business with us?
  • Tell us about your favorite service experience you have in this industry?
  • What is the one thing none of your vendors do that you wish they would?
  • Is there a recent example where we have not met your expectations?[2]

This information will help you find a gap that you can fulfill but, remember, you can’t be all things to all people. Concentrate on the one thing at a time that is missing that will make easier or unnecessary.

For your team, employees and partners, ask them

  • What excites about the role when they started working? What is exciting them now?
  • What’s one thing the company does better than others?
  • What is one thing the company could do to create a better experience for the customers?

Often, your suppliers are overlooked partners for your company. Although not always eager or available, they have wealth of information and insights. Ask them

  • What would you Google to find a business like ours?[3]
  • Do you refer us to potential clients, and if so, why?
  • What other companies do you love to refer?

Lagging Indicators


Profit is the sign of sucAAEAAQAAAAAAAAOVAAAAJDBmMjJjZmJmLWVkMzctNDlkNS1iMmYyLTc2NTJiODY5M2ExNwcess in the private sector. Everything comes down to the revenue. Can you revenue sustain your vision and your expectations for the business? If market does not support your current version of USP, assumptions need to re-examined and experimentation should take place with different of channels delivery.

Competitor’s reaction

Your USP changes the dynamics of the competitive landscape. Or at least that is what you hope for. Before you entered the fray, there was equilibrium or certain way of doing that was settleconquestingd. You will have to analyze to see if your USP made a difference on your competitors’ marketing, product offerings, or pricing. Your USP is always under evolutionary process of change. It is always under threat from others. You will need to adjust it based on what your competitors do to stay relevant for your customer and their experience with your product.

You can take one more steps for a richer understanding of your market dynamics.

Part 2: How to Specialize Using USP


The greatest asset that a company has is its customer profile. The essence of business is to have the most precise list of customers or leads. Why? Specialization. Specialization success comes from segmenting the roster of customers or leads who will purchase at higher rate (either price or volume) your offering. Specialization does not necessary arises from products or services. Think of Twitter. Its original target failed. Viagra was blood pressure pill. Specialization can only come from achieving comparative advantage in the market place by having the lowest opportunity cost. When it comes to specialization, the primary job of an entrepreneur, regardless of company’s stage of development, is to choose where to specialize the company, its processes, and its employees.

Taking the information from Part I, I would recommend using Reduce-Eliminate-Create-Raise framework developed by W. Chan Kim and Renée Mauborgne[4] to find specialization. To use this framework, seek only using specific actions for each quadrant. Two important elements will help you find competitive gap that you can fill.

First, Industry standard or best practices do not always apply to all markets. Sometimes competition sets its own standards that are not followed by the average of all the firms in a given industry. Furthermore, geographical and environmental factors (land, labor, capital, policy) determine their own micro-market dynamics. For example, Philadelphia, being 5th largest city in US, is not present in the Case-Shiller Housing Index.

Second, there are two types of comparative advantages[5] – absolute and relative. Whereas absolute advantage refers to the superior production capabilities of one company versus another, comparative advantage is based on the concept of opportunity cost or autarky price, i.e. at a lower relative marginal cost prior to delivering your product or service. The opportunity cost of a given option is equal to the forfeited benefits that could have been gained by choosing the alternative. Remember, as an entrepreneur, you are looking to lower relative opportunity cost. One does not compare the monetary costs of production or even the resource costs (labor needed per unit of output) of production. Instead, one must compare the opportunity costs of producing goods across best practices/standards by both competitors and alternative markets[6].

Now, putting it all together, when utilizing the Reduce-Eliminate-Create-Raise quadrants, you need to decide what specific actions will reduce your opportunity cost. I would include both competitors and complimentary or alternative companies. Today’s creative destruction is in hypermode of reducing perceived barriers between industry and its suppliers. For example, HTC used be just a provider of parts to iPhone. Currently, it is producing its own phones.

To fill the quadrants

  • What specific actions do you need to reduce below competition and/or industry standard?
  • Which action do you need to eliminate that your competition and/or industry competes on?
  • What specific factors do you need to rise above the average offered?
  • What do you need to create that your industry or competition never saw?

The Four Quadrants

After this exercise, you will have much more clear understanding if your USP is meeting the needs of your customers. The framework will also help you understand what specialization capacities your company needs to develop to achieve and sustain competitive advantage. The focus on the production of those goods or service for which a firm’s resources are best suited is called specialization. Given limited resources, managers’ choice to specialize in the production of a particular good is also largely influenced by its comparative advantage.


Your company is an important extension of your vision for this world. The gap that it fulfils is enshrined in your USP. Continually studying and researching your USP and its impact on all the players, ensures the future for your vision and higher revenue.










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