the first and most important P!

It’s the first and most important element in your business marketing mix. It’s what brand building, pricing, positioning, packaging, promoting, distribution (place), prospecting and any other ‘P’ you can think of, all revolve around. If you don’t have a distinctive, unique, quality product offering, it’s really hard to convince consumers to buy from you.

Your product(s) must intrinsically have a core benefit that a consumer expects to receive when purchasing your product, thereafter there are multiple layers that can increase the value proposition and “augment” the product to higher value (or perceived value.) An example – a hotel guest doesn’t buy a room for the night (the night will be there no matter where they sleep!), they’re purchasing rest and sleep – the core benefit. The next augmentation to a basic (generally accepted) level is a reasonable bed, bathroom, towels, desk and TV. Further up is an expected level – Satellite TV, clean room, quiet, soaps, etc. Then an enhanced level will exceed customer expectations through over delivery – chocolates on the pillow, bottle of bubbles, super king luxury bed, etc.

Now obviously the price will increase as you enhance your product offering, but the point I’m highlighting here is the over delivery of the product offering relative to the level. If it’s a basic hotel, and they add chocolates to the pillow they’ve over delivered on the consumers expected product offering.
So? It creates a happy customer, because it was unexpected (and “over delivered” relative to the previously perceived value level = positive word of mouth = more business.)

“The winner is the chef who takes the same ingredients as everyone else and produces the best results.”
Edward de Bono –esteemed motivational author, physician and inventor of the term “lateral thinking”

How do you create product differentiation?

Product differentiation is relative to the basic features the product has and the markets it is targeted to. Some areas to look at to differentiate with are ‘form’ – the physicality of the product, adding product features (or decreasing to appeal to a different market), product performance levels (low, average, high or superior – honestly what level is yours? And what do you currently tell prospects it is? Super-premium level standard for $3.99 is not providing an opportunity to over deliver, rather the other way!), properties – durability, reliability, reparability and conformance: the degree to which all your products are made identical and to the promised specifications (Toyota is often viewed as having high conformance quality and also due to the reliability of it’s products) and style – often an easier factor to impact on and to differentiate your product.

“We are always saying to ourselves... we have to innovate. We got to come up with that breakthrough. In fact, the way software works... so long as you are using your existing software... you don't pay us anything at all. So we're only paid for breakthroughs.”
Bill gates – founder of Microsoft, the richest man in the world.

It doesn’t take a great deal to differentiate, but it does require a sound understanding of your market, your resources and your ability to communicate the differentiation. And fundamentally if your product(s) aren’t different than your competitors, why should they choose you?

Services can also be used to differentiate your product strategy – adding value and differentiating through ease of ordering as an example (multiple channels – phone, email, website, and fax) through delivery (‘guaranteed overnight delivery’ sound familiar? The former Unique Selling Proposition of FedEx), through installation (tradesmen guaranteeing to clean up after each visit). All these areas can add that necessary point of difference.

“I think it's very important that whatever you're trying to make or sell, or teach has to be basically good. A bad product and you know what? You won't be here in ten years.”
Martha Stewart –successful entrepreneur and media personality

Cooper and Kleinschmidt found that the number one success factor (in developing successful new products) is a unique, superior product. Such products succeed 98% of the time, compared to products with a moderate advantage (58% success) or minimal advantage (18% success.) So it’s most important to develop a product that is unique and that meets a customer’s need, want or desire (assuming you want it to be really successful.)

Unfortunately there is no magic, winning formula, (even the biggest brands in the World get new products wrong – Coca Cola introduced the sweeter “New Coke” in 1985 because of the stiff competition from the sweeter Pepsi, there was an absolute outrage, even pending lawsuits, and so after only 10 weeks, they withdrew the product and lost millions) but there are some techniques one can use to gauge success or start to develop new products.

Listen and ask your customers – frequently; survey them, discuss (broadly) some ideas with them, pose questions, ask “if there’s one thing we could do to make this product or service better, what would it be?” This question really narrows it down to a key driver, rather than just a wish list (which is often fanciful).

Concept test – define a specific market and create a new concept that would provide a unique set of values, features (and thus benefits) and characteristics for that market. Test it on a sample of that market to gauge opinion, feedback (further refinements, additions or deletions) reactions and importantly what they would pay for that level of product concept.

“The lifeblood of our business is that R&D spend. There's nothing that flows through a pipe or down a wire or anything else. We have to continuously create new innovation that lets people do something they didn't think they could do the day before.”
Steve Ballmer – CEO of Microsoft.