Product DefinitionIn part two of our Go-to-Market strategy we will discuss the Product Definition phase. I am reminded of the movie Field of Dreams and the illusion that “if you build it they will come”. OK in the movie Kevin Costner’s dream did come true and they did indeed come, but that’s Hollywood for you!
Don’t get me wrong, you need to have a dream or a vision for  your business, but you will need a rock solid strategy to go with it if you want it all to come true. During part 1 of the Go-to-Market strategy we covered market definition, this month we move on to product definition.

There are three critical elements to consider in this phase- Package,  Pricing and Positioning, and the end result will provide answers to the  following questions:

  • How should I package the product or service in a
    way the buyer can understand it?
  • How should it be priced so the buyer sees value?
  • How should the product or service be positioned
    so the buyer selects it over others?

Packaging
It’s important to put yourself into the mindset of your target customer  as you work through this exercise.  First  let’s look at Packaging; beyond the physical appearance of the product you  should think about how the product is purchased- single unit or multiple, is it  usually purchased along with another product (consider bundling). Should it be  available in different sizes- trial size, individual, family, daily doze,  weekly, bulk, etc. If you are selling a service; do you offer it for a one-time  use, monthly subscription service, or bundle it along with other services that the  target market requires. Maybe the package includes 30 days tech support, or a  special access to a premium service or future product.

If your target market is eco-conscious then you might forego the  elaborate and wasteful packaging, but if it’s an up-market luxury product then  the visual appearance and materials used will be vital to creating the right  perception of a chic or exclusive product. Often times once you break into the  package the product is similar to many others on the market, so this may be  your only opportunity to create differentiation.

Pricing
Moving on to pricing; the simple approach would be to work  out all of your costs, decide on a profit margin and launch. ie cost based  pricing. That’s not a bad place to start this exercise and provides a good  backstop to set the lowest price where you still have a financially viable  product. What’s missing from this equation is the customer- how much are they  willing to pay, how much does a similar competing product cost. Don’t get  fooled into thinking you have no competition, as unique as your great new
widget is there are always other ways to satisfy the buyers needs. (Revisit the  consideration set you developed from the market definition phase).

Also during the prior phase you will already have evaluated what  it takes to be in the consideration set and you know the buyers purchase  drivers- if cost was a major driver then you will likely be closer to the cost  based pricing end, however if it’s not even a factor in defining the  consideration set then market pricing is appropriate.

A third option is value-based pricing, and while it is highly  attractive strategy it’s very hard to get right. Price  is determined by the relative value of your offering and can be used to justify  a premium over what others may offer. You need to be able to answer the  question “As a result of working with us rather than an alternate solution, how
will the customer be better off”. The challenge of value pricing is doing the  work; it requires information, structure, training, controls and incentives to  be effective.

Positioning
The final  element of the product definition phase is positioning- at this stage in  developing the Go-to-Market strategy we don’t need to get into the whole topic of branding (promise, experience and engagement), that will be the subject of a future article. However we do need to be able to answer a few key questions:

  • What target market is the product designed for?
  • What is the single most important benefit it offers?
  • How is your product different from the competition?

A product or service can be positioned from the perspective of an attitude, belief or benefit, use or application, price  or level of quality. Even if you do nothing the market will position you, probably  based on what they hear from your competitors. Clear, concise, and meaningful product positioning helps you cut through the relentless advertising clutter and marketing noise.

The most important task is the development of a value proposition; simply stated what are the user benefits (real or perceived) that the buyer gets from using a product or service? What most people struggle with is separating features from benefits- a feature is a statement of fact about the product (what it does), a benefit is an expression
of why that feature should matter to the user. If the user thinks “so what” when evaluating your product they are unlikely to purchase.

While developing your value proposition remember to evaluate it against these 6 characteristics-

  • Is it Meaningful
  • Relevant
  • Significant
  • Sustainable
  • Believable
  • CredibleProduct Definition

Above all make sure to do this exercise from the customer’s  perspective not yours.

Unlike Costner’s character Ray Kinsella you don’t have to take the risk of just hoping your Hollywood dream might come true. But it will take a lot of work to gather all of this information; the good news is that if you followed the process during the market definition phase you already know who your customers are, how to reach them, how they make the purchase decision and what are the competing solutions on the market. In the next article we will start looking at sales channels and building your sales strategies.

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