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Competitors are improving the product by emphasizing the customer’s purchase process

Symptom: The industry has initiated innovations which ease the purchase process for customers.

Implications for the market:

  • Successful innovations will be those that derive from a detailed understanding of the customer's costs. These costs include the customer's time, money, and resources spent not just in using the product but also in acquiring, maintaining, and disposing of it.

  • Competitors that offer higher levels of convenience may have an opportunity for share gain. Innovations can be used to gain share or to justify price hikes, but only if the net impact on the customer's total costs is favorable and if competitors do not copy the innovation.

    • Feature innovations are usually the most effective at reducing customer costs, but they are easily copied as soon as they begin to move share. Once copied, the innovation is no longer a distinguishing point among competitors and therefore is no longer the basis for a customer buying decision.

    • In many hostile industries, innovations that improve a product's reliability and convenience are the most valuable because they are the most difficult to copy. They can produce a share shift that is difficult to reverse.

Recommended Reading
For a greater overall perspective on this subject, we recommend the following related items:

Analyses:

Perspectives: Conclusions we have reached as a result of our long-term study and observations.

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    Overcapacity is a problem that occurs in service, as well as manufacturing industries. When it strikes, the problem affects most functions in a company, and astute managements in a wide range of industries have found common formulas to outperform competition in markets with overcapacity.

  • "Convenience: Much Tougher Than it Looks"
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  • "How Customers Buy"
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  • "The Tallest Dwarf"
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