New Method for Product Differentiation – How to Create a Product Worth Selling

November 21, 2013

Bright idea to product differentiationOne of the toughest questions is how to make a product more valuable to the customers. The goal is simple; the more valuable the product is in the eyes of the customer, the more the customer will pay. Product development creates real value since it’s development that puts the bells and whistles into every product. So what’s needed is a development process that is integrated with marketing. Why? Because customers don’t pay for real value, they pay for perceived value and its marketing that’s crafts perceived value.

Old-style Product Differentiaton Process

In a nutshell, development adds the bells and whistles and marketing takes them and creates the perceived value for the customer. The problem is this is a usually a serial process. If the development team hasn’t added true product differentiation that the customer is willing to pay for, marketing is going to have difficulty generating demand and sales won’t be able to convert customers. Even if marketing was involved in the early stages to define the product, the market can change dramatically over the course of the development time, and development can completely miss the mark by the time the product is ready for market.

Simple 5 Steps to Define a More Desirable Product

This process is based upon designing a product to sell at a anticipated price instead of designing a product to see what happens – an experiment of sorts.

Step 1. Customers will always compare your product or service to others in the marketplace. Even if you have a new product, they will compare it to how they are doing it now. Determine the top three contending products.

Step 2. Identify the features in these products. Now here’s the hard part. Try to determine the value of every feature; how much is the current customer willing to pay for that particular feature. The product’s price is the sum total of all the features. Next, determine the priority of the features from the customer’s perspective.

Let’s take a simple example. Consider a home, how much do buyers value every room and every aspect of a room. It seems to me that people place a higher value on the rooms that they spend the most amount of time in. That’s the kitchen, family room, home office, and their bedroom. Home buyers don’t value guest bedrooms, kids’ bedrooms, or formal areas that they only use during holidays as much.

Another example is a tablet computer such as an iPad. An iPad is much less capable then a system unit. Tablets thrive because more than 95% of personal computer users only used their computers to search the Internet, read email, and connect on social networks. The average user didn’t care about whether their personal computer could develop software – so how much more would the average user been willing to pay for this capability – nothing.

Step 3: Now that you know that value of every feature in a competing product, determine how the features of your upcoming product compares. Are your features better or worse than theirs? Now, you have a relative price the customer will be willing to pay for that feature.

Step 4: Integrate this procedure into the development of a new product or creation of a new service. Every time someone suggests adding a new feature, ask how much the customers are willing to pay for it. At the end of the development cycle, sales has to turn those features into revenue. This forces both development and marketing to be thinking about how much value each feature creates for the customer. This process should be done several times over the course of a development activity in order to ensure the most desirable product possible.

Step 5:  Think about how to convey the product differentiation in a simple way that is easy for customers to compare to the other contenders. When it comes to marketing and showcasing a product’s outstanding points, a common mistake is to confuse the customer. Proven wisdom says, “a confused customer never buys unless they must”. The customer has to be able to understand how feature compares across products. If they can’t and they must buy then they base their decision on price – and do you really want to compete on price or capabilities of your product/service?

Here’s an example. I was recently doing a competitive analysis on protective eyewear for sports. There are only two types of lens material used. Yet every manufacturer tries to use extra adjectives, extensions, technical descriptions or different brand names to convey this information. No two makers describe the lens material in their eyewear the same way, yet they are the same, purchased from the same material manufacturers. This leaves the customer confused and more than likely, the customer simply disregards this feature in their selection criteria.

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Filed under: Business Models,Marketing & Sales

4 Comments Leave a Comment

  • 1. Kate  |  November 29, 2013 at 2:39 am

    Thank you for sharing these wonderful tips. Indeed, when one plans to sell a product, he or she needs to emphasize its special features.

  • 2. Scott  |  December 9, 2013 at 4:03 am

    Cynthia,
    I really struggle with this. I believe my info product is better than others and hope others see that. Can you differentiate your product by having more detailed information in the product? I am putting an Ebook out about Virus and Malware Removal. Many of the processes others use are the same as mine but I put EVERY single step with images and videos. Just want to make sure customers see the benefits of mine right off the bat. Any thoughts! Thank you so much! Have an awesome week!
    Scott

  • 3. Harleena Smith  |  December 11, 2013 at 11:31 am

    It really hard task to start a firm which wants to deal Landscape Design and home decoration matters. I have trying several times and this time may be my final trail and watching some success in this startup.

  • 4. Administrator  |  January 8, 2014 at 3:14 pm

    Hi Scott,

    Info products represent expert knowledge, and knowledge is difficult to just copy and knock-off easily. Info products tend to survive better since its not just a simply matter of copying features. However, like with any expert, the customer doesn’t know how to qualify the value of the knowledge. People hiring lawyers don’t have the background in law to really evaluate a lawyer’s capabilities. Your customer probably doesn’t have the ability to really judge the difference between your info product and another.

    Here’s a few insights on info products – people buy ‘systems”, people buy a ‘process’, people want step-by-step instructions that lead to results with certainty – all studies have shown that people have difficulty placing a value on info products – people want evidence of the magnitude of the results or transparency of the results others have achieved – trust plays a big part in selling info products so partnering with those who have gained trust with their audience matters – the closer you are to an in-person contact, the faster you can build trust – segment target customers, if your info product is better than others, customers of those other products must be frustrated with not achieving results and therefore are desperate buyers willing to try another version – people don’t want to spend hours and hours learning how to do something, I once built an week long training course but people wanted a quick training course or one with short steps (so consider how long it would take to complete each step of your course and how long it would take to complete the entire sequence) – considering building a product funnel with increasing sales from each product (free speech, book purchase, CD purchase, membership site purchase, fee based workshop or seminar, to conference, etc)

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