Imagine if Ford tried to differentiate its cars from Toyota by removing one wheel and the windshield from every car. What would that do to the number of cars they sell every year?
"But being different is important!" whine the marketers with just enough knowledge to be dangerous. Wrong. Being different in a meaningful and valuable way is important.
Being different by not meeting customer expectations is very bad. Instead, be different by exceeding customer expectations. If you are in a field with a lot of competition you have to do at least what your competitors are doing and exceed what they do in a few key areas.
Can you differentiate with stripped down service? Sure, there are some exceptions. Unfinished furniture stores, pick your own apple orchards, classic car kits are a few examples. A major selling point for these businesses is the do-it-yourself component that some people enjoy. However, I don't think a sign reading, "Pick your own rotten apples" would probably land too many customers.
Ill never forget a time where I went to a pub with some friends for dinner. I tried to order a Coke, "we don't have that," said the waitress. Pepsi is OK, "no we just have some other brand of cola." Well what is it? "I don't know its something else and the tap isn't labeled."
If you own a restaurant in the US and you make the risky decision to not sell Coke, Pepsi, or Diet Coke, the top three selling carbonated beverages in the US, you had better offer something amazing. You had better train your waitress to sell me on how delicious your cola is. She had better know the name and why its so much better than Coke or Pepsi.
If you are really original and open up a business with no direct competitors your marketing still needs to point out how you are different from alternatives. If I am the first person to open a karaoke bar in my home down that doesn't mean I have no competition. I am competing against all the other choices people can make for entertainment including staying home and watching TV, going to a non-karaoke bar, or doing nothing at all. Moving people outside their comfort range to try a totally new service can be difficult.
You should be looking at all of your competitors marketing materials and advertisements. Make a list of every feature, benefit, claim, offer, and promise made by every competitor. Then look at what features, benefits, claims, offers, and promises you can make that your competitors don't.
Find out what's important to your customers by talking to them. Small businesses usually don't have the budget to run focus groups, but you can learn a lot by having frank conversations with your customers. One of the best questions you can ask is, "what are the main reasons you choose to do business with us?"
Then you are well on your way to being meaningfully different.