When developing new products or making improvements to existing ones many marketers struggle to determine the amount of customer value. To help you develop highly differentiated products or services I have created a new product development benefits model.
Stage 1: Add everyday benefits that put you on parity with the competition
You identify a target segment of the market, size up the competition and create product benefits based on your customer needs. However many companies offer the same value proposition and just change the packaging, design or branding. Product development limited to stage 1 creates commoditization and price-led competition. Since everyday benefits are easy to visualize and valuate but customers are often reluctant to pay extra for them. To differentiate your products you need to move further along the customer value curve to stage 2.
Stage 2: Develop special benefits centered on your customers' passion areas
Products in stage 2 engage with peoples passions by establishing an emotional connection and deeper relationship. By adding special benefits to your product - focused on a unique passion area that your customers value - you maximize differentiation of your product. Product benefits created around passion areas have powerful effects on the customer buying process because they offer significantly more value. Customers are also more emotional and less price-sensitive when it comes to their passions, so they will to pay more to access to quality benefits that enhance their experiences.
Research is critical to uncover unmet customer needs, deep emotional insights and the idiosyncrasies surrounding the passions in their lives. Any special benefits you develop and add to your products should offer real value and empower your customers to live their passions.
Example passion areas: Theater, Sports, Dining, Home, Garden, Travel, Entertainment, Motoring, Technology.
Stage 3: Create highly differentiated buzz-benefits
Great products end up as dinner party conversations because they have extraordinary benefits that create buzz and excitement. Stage 3 benefits are easy for your customers to visualize while also being difficult to quantify the value. These product benefits must be available to all customers, however are only attainable by a select few so they remain exclusive. Unique buzz-benefits create excitement, emotional appeal and generate viral PR, reducing marketing costs and making it hard for competitors to replicate your product. It’s really important for you to determine if your brand has permission to play in your customers’ passion areas before you start.
Example buzz-benefits: A day on the set with an Academy Award winning film director, automatic first class flight upgrades, cooking classes with a celebrity chef, a free test drive and lesson from a top race driver.
You need a mix of rational and emotional benefits to achieve true differentiation, so design product benefits that appeal to both sides of your customer psyche. When you move along the customer value curve and develop special benefits - focused on your customers passion areas - you create products that provide customers more value. Adding extraordinary benefits to your product creates buzz and excitement that will send your product viral.