The consumer goods industry is where arguably the most sophisticated product development takes place. It is a highly competitive environment that thrives off of innovation, differentiation, and branding. Consumer goods companies have what many technology companies lack: sophisticated marketing departments that are experts in marketing analysis, positioning, and consumer research. Many technology companies devote themselves to research and development, engineering and invention, but neglect market analysis and consumer value determination. This can lead to a company shooting themselves in the foot by spending on features that customers don’t want or developing pricing models built on faulty assumptions. Both types of mistakes can cut deeply into product profitability.
Sometimes there is a tendency for highly technical and niche product companies to “adopt a religion”, or put faith in internal ideas that don’t necessarily have a real basis in market needs. An “I know better than they (the customers) do” attitude, or similarly, “I know what the customers will pay for” without conducting the proper intelligence and investigation.
What are some ways that companies in niche markets can improve by adopting the tenets of the consumer goods giants? Here are a few:
- Invest in the customer: find out what your customers value most and what they will pay for
- Value is what the customer says it is
- Know absolutely, positively everything you can about your competition
- Build long-term profit instead of short-term gains
- Maximum profitability is a result of defining maximum product value to the consumer
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