Product Development and Strategies – Identifying Opportunities for Differentiation

Puneet Agarwal (EPGP Roll No: 1914002)

Individual Assignment
 A company has opportunity to differentiate itself at every point where it encounters its customers. Company
can identify new points of differentiation by (i) Mapping the consumer chain and by (ii) Analyzing
customer’s experience.
 Consumer chain can be mapped by asking these questions in sequence – How do people become aware of
their need for your product or service, How do consumers find your offering, How do consumers make
their final selections, How do customers order and purchase your product or service etc etc.
 Basically, answering these Mutually Exclusive and Collectively Exhaustive questions can help companies
come up with new ideas in several areas of consumer value chain – thus new points of differentiation. E.g.
By making iMovie, Apple made people aware of their need to be creative with their videos.
 After mapping the consumer chain, companies should try to analyze the customer’s experience. This is
done to understand the context/climate of customer decision making at each step of mapping exercise. This
can be best done by brainstorming by group of people in the company (like what Steve Jobs did with his
Top 100 people) and asking questions such as What are customer doing at each point in consumption,
Where are they, Who they are with, etc etc. Apple analyzed how customers are facing difficulty in using
music players by asking ‘What’ and came up with the idea of a device which was simple and convenient
to use – iPod.
 After identifying the points of differentiation companies need to figure which points have real commercial
potential. This can be done by following a framework which has three steps: (i) The buyer utility map (ii)
The price corridor of the mass (iii) The business model guide.
 Buyer utility map helps to create exceptional utility by defining six stages of buyer experience cycle and
six utility levers which essentially provides 36 spaces in the map. Companies can locate their
product/service in one or more of the spaces and can clearly see how their new idea is generating a utility
proposition.
 Apple utilized the buyer utility map by making computer the digital hub and developed iTunes and iPod
which increased customer utility by enhancing productivity.
 Next, companies should determine the price corridor of mass. Reason to do this is that, in this new economy
where new ideas involve high Capex, the market is driven by network effects and is more of a Winner
Takes All type. Thus, the chosen price should attract customers in droves.
 To identify price corridor of masses companies should widen their horizon and should look not just at same
form and function products but also at different form, same function and different form and different
function product markets as well. This will help companies to visualize a large set of customers that they
can poach.
 Even, within the corridor prices are set based on the barriers to entry. If market has low barriers to entry,
then prices should be set on the lower side and vice versa.
 Finally, a successful business needs a good business model.
o Pricing - This is done by basing cost structure based on target pricing and not allowing cost to
determine prices. Companies should keep its pricing strategy flexible and mold it according to the
customers’ requirements.
o Companies should partner with others in areas which are not their strong areas and should not try
to do everything on their own. This allows companies to move quickly and expertly.
o Adoption – There are always some hurdles in adoption of a new business model and its imperative
that those hurdles are not ignored else entire model could get derailed. Some of these hurdles are
Employees, Business Partners and General Public. Employees may be concerned how new business
affects their growth prospects, Business Partners may get worried about their revenue streams and
market positions and General Public may feel threat towards their established social and political
norms. With open communication and by properly explaining the merits, adoption hurdles can be
lowered.