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Choose your USP carefully

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by Peter Switzer

The likes of Google and Microsoft are often held up as great examples for small business people on how an entrepreneur can build up a knock-out business. But what if their example encouraged business owners to break the law?

This was the proposition that was put to me following a speech in Bendigo earlier this year. And I had to confess to Glenis Pace of Caterworx that I did not know the answer and that homework would be completed.

Q&A

Let me set up the actual question that resulted in this revelation.

One of the standard questions someone like me puts to an audience is: “Do you have a unique selling proposition?”

A business’s USP defines what they stand for and helps them stand out from the crowd. It, in a nutshell, answers the key question marketing should answer for a potential customer, that is, why should I buy from you?

With Microsoft it was 'the operating system of the world'. Then for Google, 'the search engine of the world'.

I will often hold these up to an audience and make the point that USPs can be a little exaggerated when they are first used but they have a happy knack of driving entrepreneurs to actually make them come true. The statement, in effect, is a dream that the business builder makes come true.

Mind the law

Enter Glenis Pace, who told me her USP, which effectively said her business was the best in her segment in Victoria, was barred from using it by a business directory, because it was not probably true. The USP was ‘Country Victoria’s Leading Hospitality Suppliers’.

So, clearly, we have a legal matter that could mean the inspirational intention of a would-be Richard Branson of the future could be frustrated by a little thing called the law.

John Lee, partner at Griffith Hack Lawyers says this area is governed by the Trade Practices Act. In particular section 52, which prohibits "misleading or deceptive conduct" in trade.
“In advertising, the law allows a certain amount of ‘puffery’,” he says. “Generally a business can say for example they are ‘a leading supplier’ or ‘best value in town’.”

But there is a line drawn, though it is a tad fuzzy.

“If a business makes specific, unsupportable statements in advertising or promotion of their business, they can breach section 52,” he points out. “The test is whether the advertisement conveys a meaning that is false.”

For example, in one leading case a battery company's TV advertisement claimed they made the ‘world's longest lasting battery’ and this was regarded as a breach of section 52 and a court ordered them to cease advertising.

Lee admits that there is no clear-cut line and it will depend on the nature and context of the advertisement and the consumers.

It means you might get away with the USP 'striving to be Australia’s best coffee maker', but you might not get away with 'Australia’s best coffee'.

With the former claim, it would help if your business actually won a national barista competition. And it might also help if you don’t advertise on TV but restrict your big USP claims to local advertising but the potential legal challenge would remain.

Lateral thinking

In constructing a winning USP, like with most things in business, you will need some lateral thinking so it makes you stand out from the crowd. However, it has to prevent you from one day standing in a witness box in court.

For advice you can trust, contact Switzer Financial Services.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Monday, November 22, 2010