7Ps serie – Part 2: Are you reaping the potential benefits of continuous evaluation of your product?
Last week we wrote about how you apply classical marketing mix models like the 7P’s to understand and work on your business’ value proposition (see the article here). Also did we encourage you to have a look at your own value proposition? Did you find anything interesting based on that new understanding of it? We hope so.
In this week’s article in this series will we as promised dive a bit deeper into the P Product. As said, we are not here to guarantee but to inspire you to optimize and grow your business. If you want to take advantage of our lessons learned the hard way and improve your results, keep reading….
The first P: Product
There are so many things we could write about what to be aware of when addressing the product part in your value proposition. Let’s just mention some.
Need & Desire
If you are starting out on a new venture, as good as the idea might seem to you and to the ones closest, it makes no sense if you have a product or service that no one is interested in. Unless you are sure you can awake the interest, and you have the resources to make your potential customers aware, then we would encourage you to try something else. As a minimum make a market survey. It will take some time and resources but it is well spent.
This is based on our own experience. We started to market a service and software to the customer service industry in the country we resided in, as we knew about the sector and because it was a topselling solution in some of our neighbouring countries. We spent endless hours in potential customer meetings explaining the very obvious benefits the solution would have for them, and over the years we spent a ridiculous amount of money on trying to establish ourselves in the market. We failed tremendously.
Despite that many of the companies we visited were represented in the neighbouring countries where the product was a huge success and to some extend even the standard in the industry, and despite that they would benefit majorly seen from a customer experience/service and cost saving perspective, we finally realised that neither benefit per se was a priority for them. The companies were to our terror and astonishment fine with status quo.
The lesson learned is that your value proposition should match what the market wants and expects at that given moment. Being on top of what your potential customers want now and in the future. Tap into their knowledge and into their behaviour (and their mind-set, culture, “life philosophy”) to always anticipate their next wish. In short, do your due diligence.
Type Of Product – Do You Know What Your Real Product Is?
Your product doesn’t have to be tangible; it can also be a service or a combination of both (more about that in Process and Physical evidence). Don’t overdo things if not necessary (the 80/20 rule). Read what the customers wants in sense of quality and characteristics and consequently what they are willing to pay for it. You might need to have various models at different feature or quality levels, but you need to find the balance of perceived added value and cost. The perceived value is that of the customer, not yours, and you should go for the common noun unless you can charge a premium for a minority segment of customer (specialisation). You can’t cater everyone.
A classic is to be mistaken about why clients buy from you. A quick example. We have a café/restaurant close by. They have good food, nice atmosphere and reasonable prices. But they don’t have the best of either. People go there for a combination of the three, but to a high degree also because of the owners. The owners treat their clients like an extension of their family and people feel at home. Could you and your colleagues actually be the real product and are you exploiting that the best possible way? Ask your clients. Why do you buy from me? What do I have to do to keep you as a client? How can I make you purchase more?
That takes us straight to the next point. There is a quote supposedly from Einstein that goes “Insanity is doing the same thing over and over again and expecting different results.”
If you are offering the same as x other competitors in the area or on the web without any noticeable differentiation in any of the P’s we are discussing in these articles, it would be insane to expect that you should do better than them.
Differentiate! What are your Unique Selling Propositions (USP)? What should make a customer buy that thing from you?
An example to that is a bicycle store just around the corner from me. They carry a very famous brand, so that itself already positions them in the market. But they aren’t the cheapest (internet search reveals that in seconds) and neither the shopping experience nor their location is in different league. So why do people return to that shop over and over again?
Because the owner is a crack at what he does. He has almost 35 years of competitive experience, rides with his clients, gives tips and tricks, organises rides in new areas, fixes small things for free, and in general is a genuine straight forward honest enthusiast only selling you the best fit. He has more than once refused to sell me a bike I liked, because a cheaper model actually would fit my riding better.
Are you are aware of your differentiation? Are you emphasising it? Maybe people just like to have you as a buddy?
A good tip for you: Many people nowadays check out the product with you. They have you spend a lot of time and effort with them, to then just go somewhere else and buy the same or similar product for a better price. This happens a lot in the retail sector. Fight back. Tell them upfront that you don’t mind spending time with them and help them find the right product, but if they end up buying somewhere else your will charge them for your services. More people than you think will understand it and actually might find it sympathetic once you explain it to them. And make use of that one to one time with the customer to create the bond between you. You are the added value that might make them pay a premium and in worst case you can always match the other offer they have, whether it’s about price or add-ons.
Cost of sale
This is more product related than many realize. What do we mean by that? You might have a product or service that has an awesome response in the market, and hence you focus on that particular product, despite actually having products in your portfolio providing for a much easier sell potentially resulting in higher margins once you have deducted all the sales and marketing effort.
Maybe that one particular super product actually takes a toll on your customer service employees because a vast majority of the emails and calls proportionally speaking are concerning that product. So what you win on the swings you lose on your round-abouts/carrousels. Do your math and look for that underdog product if you will. The “Bang for bucks” product providing an easy and economic sale.
In general the “Bang for bucks” statement is one you should always have in the back of your head no matter what you do. Where do you get max outcome of each EURO or each hour invested.
Up-Selling, Cross-Selling, Ancillary Revenue … or just the extra mile.
You have probably heard about these sales measures. And there is a lot of truth about them. But it is not always a question about selling a superior product or an adjacent product like the accessory that goes with the main product. At times it’s just a question about getting into the customer mind-set and anticipate what they really would appreciate about a certain service or product? It’s not always about that add-on for an additional cost that you originally didn’t think of, but that actually hand on heart makes the product better.
Every good company whether selling services or tangible products can do that. Just go to Amazon, a house appliance dealer, car dealer or any low cost airline and watch and learn. Cross and upselling expertise is without a doubt a skill you should acquire within your team. In the low cost airline industry up to a whopping 50% of their revenue is based on sales outside their core product (Premium seats, extra luggage, hotels, car rentals, etc.).
But what we refer to here is the extra mile. As in the example of the architecture guided tour company we mentioned in previous article.
From the option to accommodate walking challenged customers on the tour. Or inviting a friend with Vietnamese knowledge to assist with the 2 customers from Hanoi. Giving a helping hand with the couple with the 2 small kids. Sort out a client’s hotel problems in a break on the tour. Take the solo traveller with you to the local café after the tour to meet your friends. You name it. The devil is in the detail they say, but this is about genuity and authenticity about your services and products.
Are you going the extra mile?
We like to keep what we promise, and we were supposed to write a bit about the P Price as well. But finally we added a bit more on Product. So stick with us and check out our next article on Price and what you can do and take into account to attract more potential clients, and grow your business.
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So until next article in 7 days, have a look at your products and services. Are you really selling what you think you are selling? And are you differentiated enough?
See you next time. Until then good business!
About the autor:
Christian Funck, M.Sc. International Marketing & Management
Christian is Interim Manager, Consultant, Entrepreneur and highly experienced and versatile Leader in international context. 15 years+ experience in analysing/elaborating/implementing business and marketing strategies in culturally, politically and economic “adverse” conditions.