What do you sell? A new view on brand based products

What do you sell? I guess there’s already many ways of classifying this, nevertheless I would like to add one more. Do you sell a product or a commodity? Our economy grew out of what were largely commodities; agricultural products were traded in markets, often at market prices. Cotton is cotton, the only differences between vendors are price, quality and quantity.

As our society closed in on the industrial revolution we made a leap forward, we started making products. Pants are not equal to each other, even if they are made from the same material. The reason is that when we add some sort of processing to our commodities, we make them into products, but a side effect is that products vary more in terms of (perceived) quality than commodities do. Sure there’s good cotton and bad cotton, but nothing that justifies the kind of price differences we see in for example clothing.

This insight is something that is often overlooked, especially in economic theory. After all, consumer’s perceptions are hard to measure in numbers and models, and are thus often let out of the equation altogether – just represented by the demand function. The solution for this is usually to assume perfect markets, which, if they exist at all, mainly describe commodity markets. This is the source of our propensity to think that price is the only thing that matters. If the market leader in an industry is about to launch a product that competes with mine, the instinct is to lower price or increase quantity. This is often the wrong thing to do.

Economic theory has however also created useful tools. One of the best ideas, in my opinion, is the concept of utility. In all simplicity utility is a measure of the relative satisfaction from, or desirability of the consumption of various goods and services, and can as such contain whatever criteria consumers (or businesses) use to decide on which product to buy. In this view utility is the only reason people buy products, and the explanation why people buy something is simply that it yielded the best utility for the price.

Though many would disagree with me, utility is in my mind what sets commodities apart from products. By this I’m not saying that commodities don’t have utility, of course they do, or people wouldn’t buy them. What I’m saying is that it’s the very nature of the utility that sets them apart. For commodities the utility is given, there’s no added value, just “real” value. For products utility is made up, it’s socially constructed; it’s whatever you think it is. This is where you can charge more for your products than they cost to produce.

So what do you sell? Do you sell a product or a commodity? If you sell a commodity you would want to switch to a product at once. Cotton can be de-commoditized by adding socially constructed value, “It’s organic!”  The same applies to other commodities. If, on the other hand, you sell a product then you should understand what “utility” constitutes in your marketplace. The utility of clothing is certainly not only that they cover up parts of our bodies we don’t want others to see, or keeping us warm – if that was true, clothes would be commodities and priced close to production price.

So ask yourself - and don’t settle for the first answer – "What do I sell, and what should I do about it?" It may be the first step to really understanding branding at it’s core.

16 One-liner lessons about entrepreneurship

I came over this post where Pam Moore (@pammktgnut) asks entrepreneurs to share their most important lesson in less than 140 signs. There certainly were a lot of great answers, but I have selected 16 one-liners that I thought was the best. So in descending order, building up to the best quotes, I give you 16 one-liner lessons about entrepreneurship:

#16

“Cash flow, cash flow, cash flow – never as much or as quick as needed; and, the more successful your company is, the more critical cash is.”

(Marshall Maglothin - Owner of Blue Oak Consulting)

#15

"Only buy from manufacturers that treat customers like you treat your customers. (...) find manufacturers that appreciate your business.”

(Julie Walbrun - Owner of YellowBearShop.com)

#14

“Most of your initial business will not come from where you expected. Have alternatives for those who promise to deliver – they often let you down.“

(Diarmuid Sexton - Director at Adroit People  )

#13

"Your principal competitor is typically not another company like yours; it's often your client deciding to do it themselves without you."

(Bob Kenney - President at Kenney Marketing & Advertising)

#12

“Persistence is the key to longevity, and I have learned quickly not to take ‘No’ personally.“

(Ned Van Riper – Director at Finetooth Consulting)

#11

“The simple stuff is so important.
Answer your phone when it rings.
Be early to every appointment.
Always be positive... even when it’s a bad day.“

(Paul Gruenther - Senior Real Estate Consultant)

#10

"Have passion! It's contagious."

(Lisa Chang - Director at Yenius Interactive Marketing and at inTouch Broadcast)

#9

"Networking is not about selling - it's about contributing to others, building relationships and being authentic at all times."

(Debra Brown - Director at Mastery Path Community Interest Company and at Global Hugs Ltd)

#8

"Identify what critically needs to be done and get on with it without delay."

(Mark Ridgwell - Business Strategist at Knowledge Genes)

#7

“Realize what you think is your business could possibly change, don't be afraid to adjust the mold. It's your mold so bend it as you please.”

(Lisa Cash Hanson - President / Owner at  Blueberry Baboon  )

#6

"Never take Business advice from a lawyer - Take legal advice from a lawyer."

(Tony Robinson - President/CTO at Pioneer Technology)

#5

“Take responsibility for failures just as you do successes.”

(Thomas Rees - Founding Manager at Rees Networks, LLC and SoberLivingSearch.com)

#4

"I've learned to add in a fudge factor to estimates so I can under promise and over deliver."

(John Gilbert - Consulting Entrepreneur and Owner at Add-Options)

#3

"Be ready to shift your position and stance. Rigidity is equivalent to rigor mortis."

(Kalpesh Desai - Advisor to the Board at Columbus IT Middle East and Chief Executive Officer at Agile Financial Technologies)

#2

“The most important factor in any business is connecting with customers. Without customers, you don't run a business, you have a hobby.”

(Donnie Bryant - Owner and Direct Response Copywriter at Donnie Bryant)

#1

"Be humble and patient, but bold and aggressive, know your plan always and update daily."

(Kyle G. Porter - Founder at Sports Bar Digital and Principal at KGP Consulting)

So there it is! If you liked this post or any other post feel free to click the “follow” button to the right to stay tuned to new posts when they appear. You can also follow me on Twitter as @vetleen.

Killer apps and USP’s – find them, use them!

New products need to provide value. We all know that. But further than that it needs to be clear what the product does and why people should care. This will let your product escape the trap Google Buzz, New Coke (or even better Crystal Pepsi), Cosmopolitan Yogurt, Palm, other PDA’s, and countless other products that no one in the world could understand what were good for went right into. Products need to have a clear intrinsic purpose, and they need a company around them that clearly explains externally what the product is, what it does, and why we should care.

New products should have a killer application. For example Twitter’s killer app was status messages that fit into a text message. Now it’s important to note that a killer app isn’t necessarily what you will end up doing. The killer app is what you start out doing! Today I don’t care if Twitter updates fit into a text, now I use it because I already am. Killer apps allow you to find a niche that’s big enough for you to start growing your business. For example I think that in [insert random number here] years there will be a big company that deals in robots, kind of like a Microsoft of robots. If I wanted to start that company today, I wouldn’t care what robots would be in 20 years, I would find a small niche in which to start making robots today that could provide me a basis for new niches and eventually a world leadership in robots. Maybe I would start with toy robots? Certainly I could make a lot of fun stuff without requiring too much AI at the offset? Nevertheless a killer application is something more specific. It’s something that makes my robots intrinsically better than other robots. Maybe my toy robots could play board games? Certainly the technology to allow robots to play the games already exist, the only technological challenge left would be to get the robot to recognize the game, the location of the pieces and give it the ability to move the pieces autonomously.

USP’s are something else, they’re extrinsic, but they are very much related to killer apps. A USP is a Unique Selling Proposition, to understand it fully you should go to your local supermarket, locate the aisle that has toothpaste and read the tag lines. Every brand will have toothpaste for whiter teeth, cleaner teeth, anti-bacterial, anti-bad breath and a few that attempt to do it all. Think about it, do you really think there’s a lot of difference? Most of the toothpaste is just filler anyway, the parts that differentiate the products are measured in parts per million, so it likely wouldn’t be all that difficult to put all the good stuff in a single ultimate toothpaste. Continuing the robot example above, we could for example use “A friend for life”, or “Playmates forever” as a USP. This is how people understand your product. Notice that the USP don’t only separate the product from other robots, but other toys as well.

The difference between the two is that the killer application is the use of your product; the USP is what separates your product from all those others in the mind of the consumer. For start-ups however you often find yourself being so original that your product will be mentally sorted in a new category. In these cases, it pays to use the killer app to create a USP because you fortify your position as the one that provides that application. Combining a clear view of killer apps, niche markets, product positioning and business strategy will align different interests in your company so that product designers, business strategists, marketers, finance people, sales people and so on all understand what the company is setting out to do, and can agree on it.

If you liked this post or any other post feel free to click the “follow” button to the right to stay tuned to new posts when they appear. You can also follow me on Twitter as @vetleen.