Want to make a bullet train faster? Consider making the trip more comfortable.
This note is about defining, creating and improving products. The terminology around products, goods and services is confusing to say the least but here is how I will be using them.
- Product: Product is a marketable entity that exist to satisfy a need or desire.
- Good/Asset: Item or information that is owned. Items are tangible products which can be touched. Information is an intangible product which cannot be touched.
- Service: Reservable time of a being or an automaton that is rented. Services are always intangible products, they cannot be touched.
- Paper sheet is a good, an item you can touch and own. - Newspaper is a good, information that is using paper as the medium. - Reading newspaper to a blind person is a service. - Machine that reads newspaper is a good if the ownership of the machine changes. If the ownership of the reading machine is rental, it's a service. - All of the previous cases are products.
Goods have these of common characteristics.
- Ownership: goods can be owned.
- Copyable: goods can be copied whereas copying an exact service experience instance is impossible. Intangible (immaterial) goods are even easier to be copied. This is why only tangible goods can be copyrighted.
Services have these of common characteristics.
- Heterogeneous: experienced and customized differently for each customer. Even each time they receive the same service from the same provider.
- Intangibility: you cannot touch a service. You only experience the process and the result.
- Inseparability: production and consumption of a service are one and the same activity.
- Pershableness: services cannot be stocked or held over.
- Lack of Ownership: service is owned only for a certain period of time.
1. A hotel has many different rooms and the time you decide to stay in one affects the experience you are going to get. 2. When the cleaning crew comes into your hotel room while you are still there, it's usually bad service. 3. The experience of staying in a hotel room is the thing you are going to receive. 4. Empty hotel rooms cannot be utilized for tomorrow's capacity. 5. You don't get a hotel room, you only rent it for some time.
Product Development: Initial product development phase in a nutshell.
- Figure out your own resources. What can we do, how much money we have to spend, how can we get the money we need and how much time do we have?
- Choose a marketing segment. To who do we sell it to?
- Design a good or service for that marketing segment. Optionally seek funding.
- Create a minimum viable product and start marketing it. Implementation that satisfies the need with the bare minimum resource.
- Collect concrete proof for your product-market fit hypothesis. Are people really going to pay for this?
- If you are not pleased with the validation, modify either the product or the marketing segment and proceed back to step 4.
- The product is officially alive.
There is always lead time before a products gets into the market. When you get the idea for a product, it can take up to several years before you can launch it. The market may have changed a lot by them. Product development requires a leap of faith backed up by research and intuition.
Product Life Cycle: All products have have a life cycle with the following phases. No product is eternal.
- Introduction: product starts with no market share.
- Growth: products starts to gain market share.
- Maturity: product market share stays reasonably consistent.
- Decline: product market share starts to decline.
- Petrification: product ends with no market share.
Grow the Business: When a product enters late growth or early maturity phase, you should already be planning expanding your operations. Expanding is done by bringing the product to new a market, extending product to fit for a new market, creating a new product for the same market or creating a new product for a new market.
Users want more choices and features but are happier with fewer. Always think what is the real need behind a customer request. Show how to fulfill the need with pre-existing features or offer an alternative approach to the problem. You must evaluate if users are going to leave if you are not fulfilling the request.
Illusion of Choice: Offering additional options always introduces a cost. But creating the illusion of choice has its benefits in many cases.
When a couple is thinking about a place to go for a coffee, they will prefer going to the coffee shop that offers latte, macchiatto and all other special drinks. These facade terms no significant difference to a regular coffee but this is sadly how human mind works in reality. Choices are seen as freedom to try out new things. People like to be in control, experience new things and have their freedom.
Buyer Motivation: Find out what is the most important part of your target markets buying motivation.
- Why a person buy it in the first place e.g. hunger, taste or cheapness.
- Heavily relies on past experiences. Humans are subconsciously brand loyal beings, we want to relive good experiences so we buy products from the same company.
- Buying builds loyalty. Every buy makes the next deal more probable.
- Commodity, Wikipedia
- Basic Marketing - Principles and Practice, Tom Cannon