How to build killing Products: from Functionally better through Cult to Commodity

Why should you care?

It is a fundamentally important question to see if a product (your product, if you have a business) will really sell or not.

To understand this, one must understand how innovation pushes through products from being unknown to become market leaders – and then to getting into commodity status, then, eventually, death.

And it is fundamentally important to choose the proper approach to market and sell your product. If you do not – you will fail in go-to-market irrespectively how good your product is.

The Holy Grail – or “yes, we make you a billionaire”

Yes – at the end of the article we will show you the Holy Grail. We are nasty as we will not explain it. We promise one thing: if you read this article from start to end – you will understand the table without any explanation.

And you can make Billions. We are not kidding.

All is Apple nowadays

…and of course Steve Jobs. Apple just gets mentioned too often nowadays. It is so boring. Right?

Wait, but why?

It is easy: it is so self-evident, that Steve Jobs could invent functional(ly better) AND cultlike products.

How Steve Jobs did market research? He woke up in the morning and looked into the mirror.

Contrast Steve Jobs with what is going on at Apple nowadays (Q4, 2019)? Not too many things. Why? Because Tim Cook does not look into the mirror? Or he does but he does not see the same things?

At the time of writing (November, 2019) Apple has still been increasing its R&D spending as % of revenue.

Still, we can hardly remember when it was last time that Apple introduced something revolutionary.

Or: it is even worse: as we can precisely remember.

What one needs to win in the market?

You can win on Product, Price, Place or Promotion. Wow! This is so old – but it is still the case.

And this list worths every letters’ weight in gold. Or diamond.

Types of product and businesses – that win

When it comes to the Product: How can you have a product that sells? What product types are there when it comes to differentiation or having a competitive advantage (over other products in the same category)?

1-Product

1a. A functionally better product is much better at the same price. Think of a better painkiller. Or a search engine.

1b. Sweets that taste or feel much better than before.

1c. A size product that in itself provides a cost- or time-advantage to the customer. Think of Amazon.com’s product line.

2-Price

2. A cost leader product is cheaper and does the same. As a result it has a better VALUE / PRICE ratio. Think of a cheaper painkiller.

3-Place (=Sales) and Promotion

3a. A cult product provides such a WOW! experience that it is impossible for the target group not to get. Think of…you know what? Harley Davidson.

3b. Commodity product where Place (=Sales) and Promotion are the main factors

+1. A new product category that creates a completely new market. Some would love to belong to this, I am sure.

Lies entrepreneurs and marketers tell themselves and to their investors or bosses – or: when better is not better

Let’s stop here for a second: what functionally better means? And how about the other 3 categories, above?

What a Functionally better product really is

The product needs to be REALLY, NOTICEABLY better from the perspective of the end user, the CUSTOMER. Please taste every word in CAPS.

It does not matter if you think that it is better. Or if it is slightly better. It has to be significantly better in at least one aspect.

What a size product is

Simply the size is the most important factor: you can find so many products, offerings there that you will use the product. Think of Booking.com or Amazon.com.

Cost leader products

A cost leader product can be another WOW! if it is sold to a huge amount of people and the change in cost fundamentally changes their buying patterns into the direction of your products.

Just think of IKEA or Ryanair or Southwest Airlines.

What a WOW! for a cult product means

It is so good, that when customers buy it, they literally say: WOW! It is that easy. You can have your focus groups, satisfaction measures etc. but do give your product to customers and hear them say: WOW!

Note: the trap (and difficulty) of multi-function, multi-feature products

You can say that your product can do this and can do that as well. And when combined, it is better. The question is, again, the same: will the customer really really care? How you will know this, of course, is if you try to sell your product – and you will see if it sells better, in competitive situations, than your competitors’ products.

But in the case of these products, again, there must be something that is clearly, visibly outstanding. Otherwise your product will be lost amongst the many other products in the same category.

Case 1a – better Product: Functionally better

Think of Apple iPhone – as a typical example. It is doing the same just like two product categories before, combined: mobile phones and PDA’s (can you still remember what do these 3 letters mean?). Apple iPhone can be thought of as a new product category – but it is not. It is “just” functionally better, thanks to its very smart use of touch screen + apps on it.

If you do it well – how much does being functionally better matter? It seems that may mean a lot:

(Source: https://www.statista.com/statistics/253649/iphone-revenue-as-share-of-apples-total-revenue/)

Case 1b – better Product: Sweets

Coke was not a new product category when it was invented in 1886, but in essence it was just another drink – think of water.

Its primary “function” is not to quench thirst – its primary function is  pleasure.

These products are Sweets.

In their case, again, tasting or feeling better than what we had before is what matters.

 John Pemberton and the much later version of his Coke

Case 1c – better Product: Size

When the Size of the product is the main selling point. It sounds crazy but customers love when there is a lot of…whatever.

Think of Amazon.com (or Barnes & Noble before amazon 🙂 ), booking.com or any other physical thing that is the largest. Customers love and welcome variety and love to see that they have plenty of things to choose from.

Case 2 – better Price: a Cost leader

It is simple: cheaper than before but functionally the same.

Think of low cost airlines.

30% – The market share of low cost airlines as of 2018

In their case, cost saving must be significant enough to fundamentally change the buying habits of the customer.

1% saving will not do. How much cheaper are tickets from low cost airlines? It is not rare to fly for a few $10’s.

Or think of IKEA.

Case 3a – Place and Promotion: Viral and Cult products

After Product, Price we have Place and Promotion – for Viral and Cult products

A Cult or Viral product is winning because others think it is winning. It is not necessarily functionally better, cheaper, sweeter or bigger in size, but the product is being used because others use it. Think of TikTok or Instagram (you will want to kill me to prove that these two products are so much better in…please let me know in what field?!? I am always open for education).

A Viral product is similar to a Cult product but still differs: it makes people to pass it on. Viral and Cult walk hand in hand: you feel the need to show it to others: you want others to belong. Then they feel the same. Think of Slack.

FOMO is the most significant factor in these cases.

This “feature” (viral and cult) of a product offering belongs to Place and Promotion as it will surely help to decrease the Promotion and Place (=Sales) cost of your product, business.

Smart Promotion: this is a type of Viral, where promotion itself works: just think of the advertisement from Dollar Shave Club. This advertisement in itself was THE PROMOTION of all times – at least when it comes to blades.

Lucky Promotion: we have to mention this one, as well: sometimes noone knows why an ad works. It just works so well that it solves years of brand building in one. Please notice that being Smart and being Lucky overlap: it is very hard to tell to what extent Dollar Shave Club was lucky with its ad.

Case 3b – Place and Promotion: Commodity products – and how can you still build a business with commodity products

There is no secret in this: some products just do not fit into any of the categories above: they are not functionally better, cheaper, bigger or viral.

Still there is a hope: as there are last 2 of the 4 P’s you can literally spend on:

Product, Price, Place and Promotion

Spending on Place and Promotion: One can build a business around commodity products: just think of WeWork. Yes, yes, we know. But still: its main-main selling point was what?!? We cannot remember.

WeWork is in essence a fully commodity offering.

But given sufficient money one can spend on – Place and Promotion. It is our take that spending Billions on Place and Promotion is NOT a failing strategy if the size you build will eventually build brand loyalty leading to significant promotion gains. Think of e.g. Danone: the same yoghurt (I am sorry but it is the same) but a tons of money spend on Place and Promotion.

Or one can buy itself into Place(s).

Just think of state monopolies (in telco, tobacco in some countries) where the Place where you can sell stuff is limited and your business is in these places. Congratulations! You will make lots of money out of it.

Building a business on Place (=Sales): One can build a business around commodity products in another way, as well: just think of Amway. With proper sales incentives and sales force – the business can grow without the need to be really that different in any other aspects.

When you do not understand why some professional services business is making it: just think of very strong sales incentives and kicking ass sales people.

(Or bribes. Did we say it?)

Case +1 – innovating a new product category – another lie marketers and entrepreneurs tell themselves (and their investors and customers)

New product categories are more rare than you could imagine. The marketer or the entrepreneur can lie to himself/herself (not necessarily on purpose) that her/his product is a new category – and as such there is no competition for it.

This thought (e.g. no competitors) feels so good.

The problem is that there is no black or white separation between a better product and a completely new product category. Usually the product in the new product category camp is so much different from anything else before that nothing compares.

In the majority of the cases a new product rarely stands in itself, without competitors. The situation is just the contrary: you may think of Pizza Hut’s pizzas have no other competition than other pizza chains’ pizzas.

But it is not the case: Pizza Hut’s pizzas have plenty of competitors: fast food chains, retail chains selling food, mamma back at home preparing a sandwich. So you have to really dig deeper and understand how your customer can replace you are selling with something else. In the majority of the cases they can.

So you may invent a super-super pizza with caviar on the top – still there will be other restaurants your customer can go to.

Summing it up – how to create a killing product

There are at least 6 ways to create a killing product:

Product 

• functionality: a really (!) better product – it must be really (!) noticeably much better for the end customer and this difference must matter to him/her
• sweet: the same product but sweeter: adding something that makes it taste, feel better. Functionally it is the same, just different: looks better, feels better, tastes better.
• size: the same things but a lot of it, be it cheap everything (wish.com)

Price (=total cost of buying)

• cost: cheaper but same functionality: again: the cost must be much noticeably lower

Place and Promotion

• cult or viral: I use it because others use it. No need for explanation, why. Just because. It. Is. Fashionable.
• commodity with place and promotion spending or mere luck or with some very good sales strategy

And how to create a killing killing (killing squared) product that will sell for Billions

It is simple: have more than one of the above.

Think about the really winning businesses. We will not explain this table. At all. Just think for yourself. But this table is beautiful in itself.

We just ask you one thing: when you judge your own business: ask yourself a question: in what field, with regard to the 4P’s your business is REALLY REALLY better?

The last word – from a much better product to Cult to Commodity

The product lifecycle is simple, taking into consideration all above:

YOU START WITH Functionality AND/OR Sweet AND/OR Size

AND/OR

Cost

AND/OR

Cult or Viral

AND/OR

Commodity sales and marketing

THEN

after a while these will become commodity. Think of Apple with Steve Jobs vs Apple without Steve Jobs. The latter is a fully commodity creating business today. Even the Cult feeling is shading. Just like the case with Harley motor-bikes: the decline in sales is thanks to some underlying changes – including losing its lure for its core market.

In this case there is nothing else the business can do…spend on place (=sales) and promotion.

Then we have the boring Apple ads with iPhone in the ventilator. Instead of real innovation. Is it the end of the world? Not so much. Apple is the next IBM. Or Nokia. Whatever. Who cares?