Find the Sweet Spot for Your Products in Order to Stay in Business for the Long-term
Products fit into two generic categories,
- How unique they are
- And how much value they deliver.
How well they scale up on these two core categories will dictate how successful you are at selling your products and it also has a direct bearing on the longevity of your business.
Below is what I call the Product Success Matrix and on it you can plot your’s and your competitor’s products and services to see how likely your products are to be successful.
It’s extremely important you be honest with your product matrix so that you get the benefit of plotting it out. Leave your personal feelings aside and look at it from the customer perspective. Then mark on the Matrix how Unique and How Valuable Your Product is.
I have filled out the four corners for you so you can target your offering accordingly.
Product Success Matrix
A lot of value to both your business and your customers can be driven out of understanding how the uniqueness of your product and value to your customer can create a revenue stream that is far more profitable than any commodity based business.
Sometimes we think we have a great idea.
We think that because we can get access to an everyday product like dog biscuits we should sell that online because not many people are doing it and therefore there must be a huge demand for it.
Guess what? It’s a stupid idea.
Why? Because there is no money in this long term, it’s easy for your competitors to swamp the marketplace with common dog biscuits online.
And before you know it, what you thought was a profitable idea is all of a sudden a spiral of death as you compete for smaller and smaller parts of a market share with smaller and smaller profit margins.
Common dog biscuits have no value and are not unique. No matter how you choose to sell them you will never experience significant business growth or profitability as a result of selling these.
Are You Selling (or planning to sell) everyday Items? (maybe just in a new way like online)? – If so it’s time to shift your product offering. This is not a viable long-term business opportunity. There are lots of everyday items. Whether it’s dog biscuits, potatoes or fruit. You will make some money but eventually, your margins are going to be squeezed by price competition and the reality is, what you are selling is not high value.
Commodity items tend to be high value and not unique. These are NOT Growth areas. You are competing on price and price alone. Avoid at all costs.
Commodity items like computers tend to have a lot of value for your customers but almost none to you.
Your customers need computers to survive in business, without them they are basically working in the stone age and will never be able to scale their business.
But computers have notoriously low-profit margins (in business typically 3 – 5%) and they are not unique. Every man and his dog has a computer to sell someone and price competition is fierce.
This is not a market position you want to be relying on for solid, sustainable growth. If this is what you are doing right now as your core business, it’s time to look elsewhere for products that will grow your business, not shrink it. – Please note you don’t have to leave behind your technology business. Just be cognisant of the fact that by just selling computers (or any other similar commodity), you are in a commodity market and in those markets, margins shrink daily until people go out of business.
Whatever YOU Do, DON’T End Up in the Idiot Spot. Unless You want to be Bankrupt in a Very Short Period of Time.
Thirdly, Products that are extremely unique but have little to no value are what I call “The Idiot Spot” (The top left of my graph). You will never make any profit selling these, don’t even bother entertaining the idea.
The way you spot an idiot product is you ask a simple question.
“What value is in this for my customer and is it unique?”
If it’s little to no value and very unique then chances are you have an idiot spot product and it’s time to ditch it, no matter what you are feeling!
A great example of idiotic products that have little to no value for customers would be selling pens that can work in zero gravity or upside down for long periods of time.
This would be highly unique but of no value, because if you want a writing instrument that can write in zero gravity or upside down for long periods of time you would use a pencil.
The Ideal Position. Unique and Valuable!
Finally, you have the ideal position for your products to be in.
High value, very unique. Companies like Apple, Rolex and Versace have produced and continue to produce products that sit in this quadrant.
It’s not about the niche, it’s about value and uniqueness.
How much benefit is there in it for your customers and how hard is it for your competitors to copy. I cover this off in more detail in later blogs on business strategy and creating uncontested market space so you will be able to see how unique and high-value products and services create successful companies.
Unique, high-value products are where successful companies are aiming to be working in because without this combination you cannot open uncontested market space and generate new revenue.
The problem we have is, we can be very good at creating things that are unique but whether or not it is of high value to the customer comes from market testing. So you need to test the product on your audience and see if they will pay for it. If they will pay for it then the value is there. If they won’t pay for it, there are only two options.
- There is no value in your product offering (in that case ditch it)
- There is value but you have failed to communicate it properly.
Make sure that when you are looking into what products or services your company goes into that they are highly unique AND Highly Valued by your Customers.
Be brutally honest when assessing where your products and services sit on the chart. Be brutally honest about where your competitor’s products and services sit on the chart. Then you can truly assess how viable your business is long term.
The Finish. DFTBA