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Safeguarding your USP

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For any business owner starting out in a regional area, one of the many challenges is coming up with a unique selling proposition (USP) that makes your business stand out. While it has to be unique, there are some important points of law you need to keep in mind. Lateral thinking is also a must.

Companies like Google and Microsoft are often shown as great examples for small business people on how an entrepreneur can build up a knockout business. But what if their example encouraged business owners to break the law?

This proposition was put to me following a speech in Bendigo. And I had to confess to Glenis Pace of Caterworx that I didn’t know the answer and that I would find out.

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

You might be the best regional business, but can you back it up?

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’. 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. 

Abide by this region of law

Glenis Pace told me her USP, which effectively said her business was the best in her segment in Victoria, was barred by a business directory because it was not verifiably 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 1974, 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’re ‘a leading supplier’ or ‘best value in town’.”

But there’s a line drawn, though it’s 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.” 

All in the wording

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

Lee admits there’s 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 a USP, which says ‘Striving to be Australia’s best regional restaurant’, but you might not get away with ‘Australia’s best regional restaurant’.

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. Still, the potential legal challenge would remain.

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.

At a glance – three steps to a great regional USP
  1. Be aware of section 52 of the Trade Practices Act 1974 to ensure you’re not in breaking the law when it comes your USP. Is it misleading or deceptive?
  2. Think outside the square to develop a great USP. Think about what you want to tell your customers and potential customers about your business.
  3. Make sure your USP answers the important question, why should I buy from you?

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Published on: Wednesday, January 12, 2011

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