A Secret Weapon for Startup Ventures Differentiation A Secret Weapon for Startup Ventures

Entrepreneurs have a million things to do. Why add one more? 11/11/2018 Mary Brice

What can good differentiation do for a startup? Save time Save money Reduce uncertainty, which reduces risk Increase revenue potential Successful differentiation and positioning significantly reduce the number of items on your to-do list 11/11/2018 Mary Brice

So what is “differentiation”? I want those things! So what is “differentiation”? (and how can I get some?) 11/11/2018 Mary Brice

Differentiation: Is the process of creating and maintaining a meaningful and valuable difference between your product or service and those of competitors Gives your product a distinct value, relative to competing products. The process of differentiation gives you a competitive advantage. And it keeps you from having to compete on price. 11/11/2018 Mary Brice

Positioning: Defines your product by the difference you identify or create Communicating this difference gives your product a unique place in the minds of consumers This process is just as available to entrepreneurs as it is to large corporations. And, often, entrepreneurs can do it better. 11/11/2018 Mary Brice

Differentiation requires 2 things 1 A meaningful difference of your product from competing products 2 A specific target market you plan to sell to Differentiation requires 2 things 11/11/2018 Mary Brice

But simply being different isn’t enough But simply being different isn’t enough. Every product difference isn’t an added value. 11/11/2018 Mary Brice

Being competitive requires a product difference that is both meaningful and valuable to a particular target market. 11/11/2018 Mary Brice

A meaningful and valuable difference: Comes out of customer insight (understanding the market need really well) Drives which product features and benefits you include, and for what price Is always relative to your competitors Is always specific to a target market Differentiation lets you be competitive against the big players in your market. 11/11/2018 Mary Brice

How do I set my product apart in a meaningful and valuable way? Keep asking: “What does my customer really value?” Stay hyper-focused on your customer insight Ask your customers about their needs Test any concept or MVP you have on customers Don’t be a “focus group of one.” You are not always your customer. How do I set my product apart in a meaningful and valuable way? 11/11/2018 Mary Brice

Don’t just copy competitors Don’t just copy competitors. Instead, look for customer needs or wants they may have missed. 11/11/2018 Mary Brice

You don’t have to offer all the features your competitor does. Don’t get attached to any one product feature. Remove all features/benefits that are not needed or wanted by your customer Don’t add features just because you can Be willing to tweak features or even pivot as you learn about your customer You don’t have to offer all the features your competitor does. 11/11/2018 Mary Brice

How can I find ways to differentiate my product? Consider creative approaches to differentiation Use analogy. Look at analogous products outside your competitive set. Also find analogous needs. Add features and benefits that solve connected problems Consider out-of-the box features Remember that place is a feature. Consider different ways to deliver your product How can I find ways to differentiate my product? 11/11/2018 Mary Brice

Yet different people value different things. Okay, so I want difference, but only meaningful and valuable difference. 11/11/2018 Mary Brice

Sometimes very different. 11/11/2018 Mary Brice

1 2 Positioning requires 2 things That’s why….. Meaningful differentiation of your product from competing products 2 A specific target market you plan to sell to 11/11/2018 Mary Brice

What is a target market? Why can’t I just sell to everyone? The particular set of customers you believe will have the most interest in buying your product What is a target market? Why can’t I just sell to everyone? Trying to sell to everyone spreads your marketing effort too thin Then you can’t effectively sell to anyone Defining a target market lets you maximize sales for any given marketing effort 11/11/2018 Mary Brice

Be clear about who you can sell to. TAM—Total Available Market SAM—Serviceable Available Market SOM—Serviceable Obtainable Market 11/11/2018 Mary Brice

These limits to your market are actually good news. Focus on the customers who want the differentiation you have created. These limits to your market are actually good news. Total available market (TAM): all potential customers of a product type Serviceable Available Market (SAM): all potential customers for your particular product Serviceable, Obtainable Market (SOM): limits your SAM by geography, sales channels, competition, trends, and other factors 11/11/2018 Mary Brice

How do I find my target market? Ask these questions obsessively: Who really benefits from your unique features? Who is most motivated to change current behavior? Who is left out by the current offerings? 11/11/2018 Mary Brice

Who is “just making do” with the current offering? 11/11/2018 Mary Brice

Any users, direct or indirect, could be potential markets Look at all direct and indirect users of the product Which users decide which features really matter? Which ones have the money to pay for your product? Which ones can you sell to least expensively? Any users, direct or indirect, could be potential markets 11/11/2018 Mary Brice

The right market for your product may not even be the current buyer And, finally, look at every link in the existing buying chain Influencer Expert All other gatekeepers Current buyer (for competitors) Payer Ultimate consumer/user 11/11/2018 Mary Brice

I get the 2 things required for positioning, but…. Let me get this straight. I’m supposed to differentiate my product by adding features a particular market segment wants. But I’m also supposed to find the market segment that will be especially interested in my product’s features. This sounds circular (and possibly crazy). 11/11/2018 Mary Brice

So which comes first? 11/11/2018 Mary Brice

By the “right” mix, we mean the most-profitable one. This is an iterative process Either differentiation or target market identification can come first. But they are usually developed iteratively, with changes to one leading to changes in the other. Repeat the process until you find the right mix of features/benefits for the right target market. 11/11/2018 Mary Brice

And how exactly will this shorten my to-do list? Differentiation will: Save time Save money Reduce uncertainty, which reduces risk Increase revenue potential And how exactly will this shorten my to-do list? 11/11/2018 Mary Brice

1. Differentiation saves lots of time, so you can be faster to market. Seriously reduces time spent on: Product design cycle Marketing plan development Customer identification Selling story creation Financial modeling (by limiting variables) 1. Differentiation saves lots of time, so you can be faster to market. 11/11/2018 Mary Brice

2. It also saves money, reducing your costs. Reduces all costs associated with time savings, plus: Product production costs CAC (cost of acquiring customer) Wasted marketing spend 2. It also saves money, reducing your costs. 11/11/2018 Mary Brice

3. Differentiation clarifies key unknowns, reducing your risk. Reduces uncertainty (and therefore risk) around: Which are the truly necessary features/benefits What is the correct pricing What are the right distribution channels What are meaningful marketing messages Which branding strategies will work best 11/11/2018 Mary Brice

4. It increases your revenue potential. Protects you from unnecessary price pressure: Allows you to deliver the right features/benefits to the exact market segment that values them So you can price your products to capture this value and Avoid having to compete on price, which a startup can almost never do (Porter’s 5 generic competitive strategies) If done well enough, your product captures the entire TAM or SAM of a smaller--but lucrative--market 11/11/2018 Mary Brice

How exactly is this a secret weapon for startup ventures? 11/11/2018 Mary Brice

Good positioning can give the startup a competitive edge. It’s true that large, established companies use differentiation and positioning It’s also true that they have lots of resources for research into market segments and customer needs But the one thing that drives success in well- positioned products is customer insight Good customer insight is not driven by $$$, but by fresh, creative thought Differentiation and positioning rely on the strengths that come with being a startup. 11/11/2018 Mary Brice

These tools play to your strengths. This favors the entrepreneur You can understand customer better You can see needs others miss You can ideate features and benefits with a fresh approach The key word here is “can.” You can’t benefit from your competitive edge if you don’t use it. These tools play to your strengths. 11/11/2018 Mary Brice

Micro-case study: Similar products, very different positionings Traditional hotels airbnb Micro-case study: Similar products, very different positionings Target markets: Business traveler High-end traveler Large groups (i.e., weddings) Risk-averse traveler Time-sensitive traveler Target markets: Budget vacationer Small groups (i.e., families, friends) Risk-tolerant traveler What features and benefits of each product help it appeal to its target market? 11/11/2018 Mary Brice

Leverage the strengths that come with being a startup: your ability to get close to your customer your insights into what your customer really needs and values your speed in making product adjustments in response to these insights Identify the right target market. Differentiate your product in ways that have meaning and value for a particular market segment. This allows you to position your product as meaningfully different from all of your competitors (even the largest ones) in the minds of your specific market segment. Review of the steps 11/11/2018 Mary Brice

Using your secret weapon How might differentiation work for your business? 11/11/2018 Mary Brice