How Entrepreneurs Stand Out in a Competitive Market
By: Joanna Liu
If you’ve read the last post in our Entrepreneurial mindset series, then you understand some key misconceptions of idea generation and the importance of an idea that has a purpose and resonates with your market. But how do you design your features and test your product to ensure that you can stand out in a competitive market? Welcome to the next steps of the startup process.
Before we discuss what to do after you come up with an initial concept, let’s go over some key terms and definitions that will be helpful to know in the next steps of the product creation process.
Terms and Concepts: USP, MVP, and Product Specification
A unique selling proposition, (also called a unique selling point or USP), conveys YOUR product’s key selling points and benefits (Entrepreneur). A good USP will clearly tell buyers what you can offer that other companies cannot, often leveraging in areas like the company’s slogan and marketing campaigns. USPs are important because they allow your product to stand out and make a connection with your customers and thus, gain a competitive advantage in the market.
Minimum Viable Product (MVP), according to Founders of Lean Startup methodology Eri Ries, is “the version of a new product that allows the team to gather the maximum amount of proven customer knowledge with the least amount of effort” (Forbes). That is, it allows one to test their idea without having a fully polished product. We briefly discussed this in the previous article, when we talked about the importance of developing working prototypes.
Last but not least, Product Specification, also called Product Spec, acts as a blueprint for how you and your team will create the product. A Product Spec contains key information, contains key information — such as your goals, target users, and business needs — that will guide the creation and testing of your product (Product Plan).
Now that you have a better understanding of these definitions, let’s take a look at how USP, MVP, and Product Specification help real entrepreneurs succeed in the market.
Case Study: Starbucks
If you’re a coffee lover like me, you might know about a little company called Starbucks. Despite opening years after coffee chains like Dunkin’ Donuts and Peet’s, the company is by far the most successful in America and the International market. There are over 35,000 Starbucks Stores around the world (triple the amount of Dunkin’ Donuts), and as of today it’s the largest coffeehouse company in the world. How did it gain such popularity? A brief examination of the company’s USP, MVP, and Product Specifications will reveal some of the aspects that have made Starbucks as successful as it is today.
First, let’s examine the company’s unique selling proposition. Instead of trying to provide customers with everything, Starbucks focused on a key selling point — premium quality beverages. Walking into a typical Starbucks, you’ll notice the warm lighting, rustic wooden tables and chairs, free wifi, and open seating for studying and working. The store’s high-end appearance enhances the USP, giving the impression that it’s selling high end coffee.
But how did Starbucks decide on this idea? Back in the early days of Starbucks, it wasn’t a coffeehouse at all — instead, the company made money selling coffee and tea in bulk. When Howard Schultz, the current CEO of Starbucks, was hired by the company in 1982 as the director of marketing, he realized that Starbucks had the potential to implement espresso bars.
However, instead of completely changing the company, Starbucks decided to test the idea with a Minimum Viable Product. In May 1984, Starbucks opened a sixth store, which included its previous features but now also hosted an espresso bar. Its extreme success with neighborhood office workers allowed the company to fully implement this idea, becoming what it is today (Farr, Starbucks: The Early Years).
Finally, all of Starbucks’ enduring success drips down to the focus of its product specifications. While we have no way of knowing all of the company’s business goals and needs, we can clearly see that all of the company’s features — the store design, the drinks, the deals and events — are carefully curated to satisfy its target demographic: educated middle and upper class citizens living in urban or suburban environments.
Key Takeaways to Stand Out in a Competitive Market
What are the main things we can learn from this case study?
- You can’t have it all: Rather than trying to be the best at everything, a successful product or service will have a unique selling point that entices their target market. When designing your product, make sure you have a USP in mind, which will help you choose what to prioritize.
- Don’t count your chickens before they hatch: Avoid going all in on a product in the early phases of design. The worst situation is when you’ve finalized and manufactured your product — only for it to crash and burn when it enters the market. Instead, test and experiment with the product. What works and what doesn’t? Creating an MVP, which you can test without investing significant time and money is an important tool for product development.
- Remember who you’re doing this for: When creating product specifications, always pay attention to how it positively or negatively impacts your target market. Additionally, pay attention to how your product relates to your USP. A product that fits your company’s proposition or the target market’s needs is usually an unsuccessful product.
Make sure to tune in next time, where we’ll be discussing the importance of testing, as well as the product-testing process.
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