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The perils of over-similarity

Imagine two, three or more companies, nearly identical one to the next. Their products are essentially the same. They all serve the same market. Their product development, customer service and marketing activities are almost indistinguishable. No appreciable differences whatsoever. Why should a cus- tomer buy from one company rather than another? If there are no perceptible differences, a potential buyer doesn’t really have much logical basis for a choice.

The more information a prospective customer has about companies competing for his business, the easier it is to choose. Factors influencing customer choice can include best physical location (which company is based or has a physical presence closest to the customer), lowest prices (and its cousin, best perceived values), and best reputation for quality and service.

Profit Chart

In the brick and mortar business, information can be difficult to gather, which makes it hard for a customer to compare all the variables. Without complete information, intelligent shop- ping is a tough proposition. When a customer does have com- plete information – especially where products and services are quite similar – PRICE often ends up being the deciding factor. In such a scenario, businesses seeking to drive up their sales volume sometimes slash their prices so severely that profits are reduced to ZERO – or worse.

1.2.1 – Profits disappear if you’re the same as everyone else

Let’s look at a market where homogeneous products are being offered by closely related companies. In such a situation, the more information customers have about the products, the less profit sellers can make:

As you can see, the better customers are informed, the lower sellers’ profits will be.

Copy Cake Area

In the online world information is plentiful and comparing companies is as easy as doing a Google search and a bit of study. If your company’s offerings are the same as all the oth- er companies in your niche (or even apparently the same, in the eyes of potential customers) are you likely to come out ahead in the sales-and-profits game? My guess would be NO. And this is exactly where this book is meant to be valuable to you: it teaches you how to differentiate your products, your services, and your company itself so that these factors are, first of all, unique among the customer’s options, and – go- ing one important step further – correctly perceived as better than the rest. When it’s clear to potential customers that it’s to their best advantage to deal with you, you’re going to bring in a lot more business.

1.2.2 – From copy cake to unique

The better you can make your product offering – and the better you can differentiate it from others’ offerings, – the more money you stand to make. Differentiation and high product standards are inseparable when it comes to optimizing your profits.

If your idea is only slightly different from others’, your posi- tion is still weak and you’re likely to struggle. You definitely don’t want to be a “copy cake” within the dotted area in the diagram on page 21, you want to swing on up to the ‘bril- liant idea’ area, where the “unique cake lives”. Once you’re “unique,” you’re set to start earning vast sums of money – or at least you’ll be far more likely to.

Down in the sticky, crowded copy cake area, you face big com- petition, you look just like your competitors, and your profits are meager at best. Companies who have made it to the ‘bril- liant idea’ area of uniqueness are marked by high quality, high value, strong uniqueness, and have terrific profit potential. They understand the benefit of adding the extra topping and to make the cupcake be yummy and one of a kind.

Make good use of the principle shown in this chart: exam- ine your market and your business closely, and then work effectively to optimize both your quality and your unique- ness. Your long-term chances of building a highly profitable company will skyrocket. The potential will be there to become very profitable.

Definition of copy cake and unique
The copy cake is a metaphor for companies that are copying each others’ strategies, products, companies and things they do. The copy cake is pretty much just a replication of all the other cupcakes. That’s why it’s boring, not interesting and just another similar product compared to any other cake. On the other hand, a cupcake that isn’t like all the others, has topping, the finest ingredients and just tastes better, is the unique cupcake. That’s what you want to “bake” and create: a unique cupcake. Not a copy cake.

Gothersgade Mojo

1.2.3 – Tasting the best brownie

The idea behind this book was actually born in a café – “Mojo” – on a street called Gothersgade in downtown Copenhagen (www.mj-coffee.dk – if you are ever in their neighborhood, do yourself a favor, and stop by). As I sat there enjoying the very best brownie in town, I asked myself, “Why do I always end up here, eating their brownies?” There were many other fine places in the neighborhood, but actually there was no other place with a brownie like this one: a simple chocolate brown- ie, but made perfectly and unique. In addition to the heavenly brownie, they had the fastest Internet connection of any café in town. Now there’s a unique combination!

Later on, I will get back to what makes a brownie so im- portant, in a book on marketing and differentiation. First, though, let’s get to the essence of why I’ve written this book in the first place:

Grandma’s Secret Recipe is intended to help you, as an entrepreneur responsible for your company and its strategies, to create a more fundamentally strong and actively competitive mindset than your market competitors.

Every single day I’m amazed at the number of fine online companies that are doing all sorts of good stuff. At the same time, I often find myself wondering why so many of them look almost exactly alike – as if there were some single, fixed way of doing things, with no other options! A group of companies might all have the same basic product, but I’m very certain that under each one’s skin they have the power to make them- selves unique and clearly different. In other words, they each have the potential to change into something quite obviously different from any of their competitors.

Going back to our earlier illustration, we see crowds of companies, all jammed together in the copy cake area, fighting over limited available profits:

Copy Cake Area

Many books have been written about the importance of a USP – a unique selling proposition. They talk about how to come up with USPs, and how build a company on one, or several. However, I have yet to see a book such as this one – aimed at helping any company to come up with a unique and terrific idea, and differentiate itself. And then to continually develop, maintaining uniqueness and always delivering at a high, high level of quality. In writing the book I’ve attempted to make it as easy as possible to understand a rather complex field (even with little prior knowledge) and to be able to implement its concepts in any company.

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