Product Strategies for Entrepreneurs

A start-up could sell unique (aka differentiated) products or it could sell products that are sold by others:

  • Differentiated product. Almost every start-up offers products and services that are unique in some way when compared to its competitors. These unique characteristics are called differen­tiators, and when selected appro­priately become order winners (i.e., they may encourage customers to pur­chase your product instead of a competitor’s). Infinite ways exist to dif­feren­tiate a product:  new taste, totally new category of product, more prestige, more convenient, faster service, better quality results, newer technology, safer, smaller, and so on.Porter [POR80] captured this concept in his broad differentiated category of strategy, although Porter’s broad differentiation includes aspects of both product (“differentiation”) as well as target market (“broad”). Treacy and Wiersema [TRE93]’s concept of product leadership represents a specific example of differentiation in which a company aggressively pursues new solutions that obsolete all existing products, even its own. Companies like 3M, Apple, Hewlett-Packard, Intel, and Newell Rubbermaid are all well known as companies that follow this product strategy. Because start-ups have no history of products, it is hard for them to endeavor to obsolete their own past products. However, they can certainly embark on a path with that as a plan.
  • Same product as competitors. Start-ups that sell products identical to or very similar to the competition will usually fail unless they have some other way to differentiate themselves. They will need something; for example, better marketing (to create more market pull), better distri­bution (to reach more of the market), lower price (to cause more price-con­scious customers to buy), better customer service (to encour­age return customers), or lower cost (to increase your margins or to enable you to lower your prices). I will discuss all of these in subsequent blog entries. Although start-ups rarely have the ability to execute on many of these approaches (i.e., they tend to stick to being differentiated), exceptions exist: Amazon started selling undifferen­tiated products online in 1995 with better marketing, better distribution, lower infra­struc­ture costs, and lower prices than the competition.

The above is extracted from [DAV14].