The Product: Competitive Advantages and Strategic Positioning
The existence or non-existence of a product's competitive advantages is an inseparable part of the chances of success for your invention in the market. We agree on this.
Let’s do an exercise before diving into definitions about product competitive advantages.
What is the competitive advantage of a product?
- The technical features that make the product different in the market.
- The knowledge that inventors have about the sector of the innovative product.
- The exclusivity of the idea. Being the first to come up with a solution.
- There is no doubt. The competitive advantage is having a patented invention.
Have you chosen option A - Technical characteristics?
You are among the 40% of inventors we have had the opportunity to survey 🙂 and there are quite a few.
It is a natural thought, as an inventor, to think of adding many functions and technical details to your idea or invention. However, innovation itself is not a business opportunity, nor a competitive advantage.
If we think like an example of an innovative product, what is the real competitive advantage of the latest iPhone? The most powerful microcontroller? The most innovative camera? Behind all of Apple's products, ease of use, interaction between devices in the Apple environment, and the status that its brand conveys are the arguments that make the latest iPhone different.
Have you chosen the knowledge of inventors?
You are among the 5% of inventors who have undergone the exercise 😉
It is true that the vision of the inventors, their knowledge and experience in the industry where innovation is taking place, are key arguments for the success of an innovative product.
The chances of coming up with a brilliant idea to transform the taxi world are very limited if I have never ridden in one.
There are several types of inventors, but it is true that those most likely to succeed are those who innovate and develop products after discovering and delving into a problem.
Have you chosen the exclusivity of the idea?
30% of inventors have confirmed that competitive advantages are related to the exclusivity of the idea.
However, the fact that the product is unique and that no one else has thought of anything similar does not guarantee that the product has advantages to compete in the market.
The birth of many ideas for innovative productscomes from the experiences of the inventors. Sometimes, these are very unique experiences and perceptions, not shared by the majority. When these particular needs motivate the creation of a product, it has a very high probability of failure.
“Life is too short to make products that nobody wants” Ash Maurya
Did you choose the patent as a competitive advantage?
25% of inventors also identify the patent as a competitive advantage.
Nothing could be further from the truth. Patents can represent a barrier to entry for new competitors of a product. If you have the money to defend it. But they are not a distinctive argument that you can sustain as a positioning in the market.
90% of inventors who patent in Spain do not take a second step in the product development cycle. They waste time and money. Therefore, the patent is not a competitive advantage of a product.
No. Patents, technical features, team know-how, or the exclusivity of the product ideaare not competitive advantages of a product.
What is a competitive advantage?
When we talk about competitive advantages of a product, we refer to unique characteristics that, in addition to distinguishing the product, are aligned with one of the 4 axes of strategic positioning.
What are these 4 axes to position an innovative product in the market?
In 1960, Professor E. Jerome McCarthydefined the famous 4Ps as the axes for the strategic positioning of an innovative product. The truth is that it was not until the 1980s when the famous father of Marketing, Philip Kotler, popularized these definitions.
According to the 4Ps of Marketing, an innovative product could mark its competitive advantagesby distinguishing itself in:
Product:Refers to the differentiating characteristics of a product. Yes, precisely option A from the previous exercise. The argument is: get the product to have better characteristics than the competition's products and you will be successful.
Plaza: Refers to the sales channels used to make the product known.In essence, the approach of the 60s was, promote your innovative product in the most populated plaza, and you will have a greater chance of success.
Price: Get a product that, despite having different technical characteristics, can maintain the same price, or improve the price of competing products on the market.
Promotion:Distinguish your innovation in the way you advertise your product, and you'll generate clear benefits. Design ads and promotional impacts related to the distinctive features of an innovative product.
What is the common denominator of these axes to position a product with competitive advantages?
The innovative product. The general approach of professionals in the 60s was perfect for the moment: Design an innovative product, advertise its differentiating element in the most populated square and sell it at the best price. The competitive advantages were the differential points in any of these axes.
Position an innovative product on the market.
The market has changed. It is not possible to think that the market dynamics in 1960 are similar to those of today. Nor can we think that the demands of products in 1960 have anything to do with the demands of today's consumer.
What is the most important change in product positioning?
In the 1960s, the key to successful business was the product. Today, the competitive advantages of an innovative productare derived from customers' perception of value.
Strategic positioning axes for innovative products
Product – Cultimate: The technical characteristics of the product take a backseat. What is really important is the differential value that the product can provide to customers. For example, the competitive advantage is not that “the touch screen of the Model X is larger than that of other mobile phones on the market”. The competitive advantage is: “users, thanks to the giant screen of the mobile phone, will enjoy the most ergonomic interface on the market”
Plaza – Convenience: The key is no longer to be in the most populated square. The key is to distinguish yourself because the product can be purchased in the most comfortable and convenient way.
Precio – Coste: Thinking that the competitive advantages of an innovative product depend on its price is a serious mistake. The challenge is to distinguish the cost or effort of access to the innovative product. For example, Netflix did not enter the battle of prices for cable TV service. Netflix has managed to control the effort of access to the store, the prices of fines for paying late, etc…
Promotion – Comunication: Promotion is 1.0. The distinctive features of the product are promoted. Communication is key to generating competitive advantages for the product. In other words, interaction, feedback collection and adjusting the product based on it. You can generate competitive advantages if you communicate and listen to your customers in a unique way.
Example of competitive advantages of an innovative product.
At Let´s Prototype we have invented and manufactured an orange juice making machine, with an integrated self-cleaning system.
According to the 1960 principles, the competitive advantages of this example of a machine would be:
- Inclusion of a fluid management circuit, with its corresponding tank, and an electromechanical system to dispense cleaning liquids inside it, at strategic points to maximize cleaning.
- It includes an electromechanical system to efficiently manage waste inside the machine.
Thinking about this very example of an invented product in our invention factory, the real competitive advantages are:
- Minimize the effort of users in the process of cleaning the juice machine.
The electromechanical and fluid management system is not a competitive advantage of the product.
The real competitive advantages of the self-cleaning orange juice machine are:
Culterior: Minimize the time spent cleaning the juice machine.
Convenience: Using the same space as an orange juice machine, a juice machine with a self-cleaning system can be included.
Coste: With a very similar effort to that required to access an orange juice machine, you can obtain a self-cleaning juice machine.
An important detail when defining the competitive advantagesof a product is that we should not expect competitive advantages in each of the axes of strategic positioning. There are innovative products that only have one competitive advantage. This is more than enough for an innovative product to have a chance of success in the market.
Advantage of a product:The competitive advantages of a productare the different points of the product that are also linked to at least one of the 4 elements of strategic positioning of Marketing, or 4C's of Marketing.
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