Can Davids actually win against Goliaths?

By evoke
December 15, 2010

See if you can match the cell phone company to its USP:

A. Wind MobileXXXXXXXXXX1. Lowest price

B. Public MobileXXXXXXXXX2. Lowest price

C. MobilicityXXXXXXXXXXXX3. Lowest price

The obvious question arising out of this exercise is how is a customer to choose? When price is the only USP, purchase decisions are often based on market presence (e.g., size of advertising budget). The brands that advertise the most often win the share battle, and the biggest spenders, by far, are Bell, Rogers (and Chatr), Telus (and Koodo) and Fido.

So how can startups such as Wind, Mobilicity and Public Mobile afford the advertising war it will take to compete on price? The answer is they can’t. Yet they are all burning through early stage investor cash, beating their brains out for the same little plot of “land”. The probability of early stage investors recovering their investments is slim.

Given the cash crunch faced by all of the smaller competitors/startups in such a commoditized category, how do you differentiate? A good place to start is to ask yourself “If our features and benefits – including pricing – is a means to an end, what is the end purpose of what we do?” This forces you to look beyond features and benefits alone – or worse, pricing alone – as the reason for people to buy, and it leads you to a more compelling answer to “Why should I choose you?”

As Simon Sinek, a prof at Columbia’s business school says: “People don’t buy what you do, they buy why you do it”.

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