The pain factor on this one is VERY HIGH because you’re probably going to spend a boatload of money before you discover that you’re failing.
Deadly Mistake 4: No unique value proposition.
To illustrate my point, let me take you back, back, back in time to the heyday of U.S. retailing giant K-Mart. Here was a company that predated Target and Wal-Mart but lost the retail leadership position it enjoyed because it lacked a clear value proposition. K-Mart pioneered the idea of everyday low prices but could not keep up with Wal-Mart’s dominant global supply chain technology. So it abandoned that idea and tried to sign on designers and celebrities to provide exclusive clothes and home products to compete with Target. This confused its core customers (seniors who wanted to find the latest in polyester) and loyal Target customers wouldn't be caught dead in a K-Mart.
So, it spent a fortune on bigger, newer stores (remember Super K-Mart?) that were Target-like but still selling goods that nobody wanted … at prices higher than Wal-Mart. Confused yet? I
Anyhow carrying on with the story, K-Mart’s last gasp was to leverage the chain’s iconic "blue light specials." In the 1990s, it created "Mr. Bluelight". The company said, "Mr. Bluelight does not just represent a sale or clearance anymore. With Mr. Bluelight, we are making the shopping experience fun. We know there are more people than ever today who see shopping as an escape and a reward, and we are giving them the entertainment and excitement they seek."
WHAT?? The best thing they had going for them was the blue-light clearance and now they are abandoning it for yet another value proposition: K-Mart is FUN and EXCITING?
My dear readers, how is that for creating a clear value prop for consumers!!
So what can we learn from K-Mart’s demise? If you’re starting a business, you must conduct upfront research to find your clear points of differentiation – what makes you UNIQUE in the marketplace? Why do customers should buy from you? The prospect’s unmet need your company will satisfy? Thats just the basic concept of value proposition you read in the books.
Once you have that strategy, you need to stick to it with a laser-focus.If you have an established business, your unique value proposition should be already well-understood – at least your customers understand it or you probably would not be in business! Still, you need to constantly check your strategy, adjust, re-invent yourself and defend your position, like Wal-Mart.
Many people get into business who think they can take on existing businesses and simply convince prospects they have a better product or service. They announce to the world, "We might not be first, but we're going to be better." That might be true, but if you're late, and you have to battle well-established competitors, bring a bundle of cash baby!
I'll ask all my readers a question here, was K-Mart really going to challenge a Wal-Mart that was rolling in cash? Never! A well-managed company is going to defend its market share ferociously until you are broke. So, once you have your niche, DOMINATE it.
Another pitfall is having a great value proposition but not being able to explain it simply. Can you explain what you sell and why you sell it in 30 seconds? Sometimes that can be excruciatingly difficult, especially if it's a new category or a new technology that requires education. The biggest marketing successes come with simple, but powerful explanations of the product offering.
Here was Wal-Mart’s value proposition: "Everyday low prices. Always." Compare it to K-Mart’s: "Home of the blue light special." Wal-Mart had a clear point of differentiation and could tell the story in four words, and later ONE word, "Always."
This economic recession is an excellent time to re-evaluate the relevance of your value proposition. Your customer needs are probably changing. Make sure you are innovating to stay aligned with the new unmet needs that are being created all the time.