Competitive Differentiation

material minds

material minds 2

Why Should a Buyer of Innovation Pick You?

Even if there are strong triggers that are acting on people to get them to innovate and low barriers from hindering them, you must be substantially better than your competitors to get buyers to choose you.

You Must Do Something

Radically Different

material minds 3

Sure you can build a company where everyone is doing the same thing. To be competitive then you’ll need to be better at execution or better at selling. Those types of businesses though don’t have the potential as ones that are doing something radically different.

Competitive differentiation

There are only three dimensions upon which you can compete. Those are Quality, Cost and Speed.

material minds 4

Quality

material minds 5

The best dimension upon which to base your competition is Quality. Quality is complex as there are multiple factors on which you can judge quality.

Performance

Performance relates to how a product operates. This dimension of quality involves measurable attributes and different competitors can be ranked objectively on individual aspects of performance.

material minds 6

Features

Features are product components that enable the user to complete tasks that may or may not be essential to accomplishing the user’s objectives.

material minds 7

Reliability

Reliability is the likelihood that a product will not fail within a specific time period.

material minds 8

Conformance

Conformance is the precision with which a product or service meets specified standards.

material minds 9

Durability

Durability measures the length of a product’s life.

material minds 10

Service

Service relates to the competence, behavior, installation, maintenance, repair and support of the buyer through all phases of the buying process including after sales service.

material minds 11

Design

Design is a subjective measure of quality indicating the kind of emotional response a user has to a product. It represents the individual’s personal preference.

material minds 12

Vendor experience

Vendor experience is another dimension of quality as it reduces a buyer’s perceived risk.

material minds 13

Vendor knowledge

Like experience, a buyer can differentiate based on vendor knowledge as this forms another dimension of perceived quality.

material minds 14

Speed

The second dimension upon which to base competitive differentiation is speed.

material minds 15

Speed of delivery

material minds 16

Speed as a differentiator means time to market or customer cycle time, the amount of time from order to delivery.

Speed of service

material minds 17

This is the speed with which the product can be put into service when it breaks down.

Cost

material minds 18

You can also compete on cost by being the lowest cost product or service. Cost can be measured as total cost of ownership or broken down into a number of variables for more targeted competitive differentiation.

Transaction cost

material minds 19

The first cost element is transaction cost, that is the cost to purchase the solution or service .

Fixed product costs

material minds 20

Fixed product costs are those costs that do not change with the volume of use.

Variable product costs

Variable product costs are those that relate to product or service usage.

material minds 21

Learning costs

Learning costs cover the time and cost to learn a new product as well as the efficiencies that are temporarily lost when transitioning from one product to another.

material minds 22

Obsolescence costs

Obsolescence costs include costs to dispose of the old solution and any supplies associated with it as well as the costs to convert old items to a new format.

material minds 23

Disposal costs

Disposal costs are the final life cycle costs associating with disposing of the new solution at the end of its useful life.

material minds 24

If there are strong competitive forces

material minds 25

People will buy the competitor’s solution and not yours. You will end up with a product in search of a market.

Before you build a product, find out what elements of quality, speed and cost are important to the buyer and establish the basis on which you will compete.

material minds 26

In addition to costs

There are triggers to innovation you must align yourself with and barriers to innovation you must overcome to succeed. But more of those issues in other slide decks.

material minds 27

material minds

We help technology entrepreneurs innovate, communicate and execute. We focus on helping improve business processes that require an in-depth understanding of human behavior for them to be effective. We provide Business Advisory Services, Workshops and speak at events. Charles Plant cplant (at) materialminds.com @cplant 416.458.4850

material minds 28