Product Strategy That Sells Customers
How To Create A Product That Draws Higher Margins
Surprisingly in many businesses products and services are developed by chance and the business is successful by the luck of the draw. Most of the time management doesn’t know how to quantify the success of their product strategy except through good gut instinct. Many times it is attributed to the successful insight of the owner or manager, which explains to others they are exceptionally good at what they do. Unfortunately, customers don’t like a product or service because of the owner’s intuition. That owner could easily make a mistake. Instead, customers like a product for their own reasons and it is up to the business management to discover those reasons and design the product or service around those reasons if they are going to be successful in the long run.
Increased gross profit margin by 33% after redesigning our service offering strategy to address customer requirements and preferences
When I started my business, the demand for our services were overwhelming and we didn’t need to think much about designing our service. We simply focused on fulfilling requests. However, as we became a successful competitor in the market niche, we sought to be more purposeful about our offering with a competitive advantage. Our competitive strategy was to be the quality provider in the market positioned against the leader who was taking the cost leadership position. To be consistent with this strategy we needed to design our service to match. We broke our customer’s perception of our service into six key attributes; functionality, sensory impact, unconcious associations, concious conclusions, price/value, and convenience. We did a survey of our clients to learn which of these were most important. We found that price/value and convenience were most important. That meant we needed to establish value of our service in a way that was unique from the cost leader and provide the most convenient service in a way our rivals couldn’t. I prioritized our resources to take advantage of our unique strengths as a company. We gained a perceived value with our clients and they were willing to pay more for our service. This was a key element in implementing our quality provider strategic positioning established in our strategic planning. By gaining a strong market differentiation, our company raised gross margin from 15% to 20%.