Editor's note: A "marketbuster" is a game changer. In a nutshell, it can be defined as a powerful strategic move that changes the competitive landscape and, if you are a lucky buster, puts your company on the road to markedly higher growth. In this excerpt from the new book MarketBusters: 40 Strategic Moves that Drive Exceptional Business Growth, management professors Rita Gunther McGrath and Ian C. MacMillanshe of Columbia, he of Whartondescribe how to learn what your product or service actually means to your customers.
A critical question is how the attributes (features or characteristics) of your offerings are positioned relative to your customers' view of other offerings and to your customers' expectations. It's as if you're charting your position on a map, because essentially you are trying to develop insight about your relative position.
The tool we use to get at this insight is what we call an attribute map. Attribute mapping simplifies the complexity of your proposition to your customers and your position with respect to competitors. In this way, attribute mapping lets you clearly see how a move might have an impact and also gives you objective information about the likely consequences of a move.1
Let's begin with the bad news. There will always be things about your offering that some customer segments dislike. Further, a lot of what you take time and effort to deliver is either not visible to the customer or not a factor that differentiates your product or service from the competition. Finally, the whole process of creating value for customers is dynamic: Yesterday's major differentiators become tomorrow's taken-for-granted attributes. Not fair. Not nice. But that's how it goes in open, competitive markets.
The good news is that by developing a fine-grained view of how specific segments react to specific attributes, you can develop offerings that maximize the value customers perceive, while optimizing your investment. The idea is not to offer attributes that cost you money to create but which customers don't value; you do want to seek those rare attributes that can make a huge competitive difference, even if they aren't that expensive. An attribute map, shown in table 3-1, gives you a tool that helps you understand and respond to our customers' real needs and desires.
Table 3-1: The Attribute Map
|Neutral||So-whats||Parallel differentiators||No such beast|
An attribute map describes your offering in terms of what it does to please, or displease, key customer segments. Along the rows are the reactions of a target customer segment to the features and attributes the customers regard positively; these attributes might prompt them to purchase and stay loyal to your products and services. The features in the second row are the negatives; these are things that customers dislike and would prefer to do without. In the third row are attributes about which customers are neutral. They don't care, or don't know, about these features.
The labels of the columns try to capture how your offering stacks up relative to other ways customers might meet their needs. If customers judge that a feature is basic, it means that they take it for granted that all competing products have that feature. The middle column lists discriminating featuresthose attributes that cause customers to judge one offering to be superior or inferior to another. The third column shows energizing features. These are attributes that, as far as customers are concerned, dominate the decision to buy and use the product or to contract for the service. They typically evoke a powerful emotional response that can overwhelm everything else you do.
A positive feature that is regarded as basic is one that the target segment expects to receive. We call these nonnegotiables. You need to be realistic about nonnegotiables; although you may spend enormous amounts of time and energy on them, as far as the customer is concerned they are taken for granted. Not having this basic characteristic means that this segment will simply not buy from you. Having this feature does not mean that people buy any more, pay any more, or value what you do any more. The frustrating thing about the nonnegotiable category is that it tends to be where companies spend the bulk of their time, investment, and infrastructure, but sadly, most of that effort is taken completely for granted by their target segments.
In the middle category of the top row in table 3-1 are differentiators. These are attributes that distinguish your offering from competitors' in a positive way and give you a favorable competitive position. (Similarly, your competitors' differentiators are what attract their customer segments to their offerings and not to yours.) Having differentiating features is great, and it can form the basis for competitively differentiated pricing and positioning.
Even more powerful are a class of attributes we call exciter features. Exciters are so overwhelmingly attractive to a particular customer segment that they not only distinguish you from competitors but also so delight the customer that they can constitute the basis for buying and using your offering. Exciter features plant the seeds of considerable competitive advantage.
Fascinating misconceptions abound regarding exciter features. Managers tend to believe that there is a correlation between the expense and difficulty of including a feature and the resulting excitement on the part of customers. Often this is simply not so. Exciters can be, and often are, technically simple changes that add to the convenience or ease of using the product. Hewlett-Packard, for example, is currently receiving rave reviews for designing ink-jet printers that not only produce high-quality printed photographs (a nonnegotiable) but also use photo memory cards from many manufacturers directly as inputs, thereby eliminating the need to use a computer and greatly enhancing the ease of use of the printers.
Incorporating exciter features can help you overcome drawbacks in your offering. The original success of the PalmPilot handheld device has often been attributed to its ability to overcome the weight and size limitations that plagued previous personal digital assistant (PDA) devices, although admittedly its display was not very attractive and having to learn its Graffiti writing method was awkward for many customer segments.
All products have negative attributes, so it's important to be explicit about them. First come tolerables. These are attributes that customers put up with to get the positives you offer. As with nonnegotiables, customers assume that tolerables come with the product and that buying from a competitor will not eliminate them.
When you think about it, most industries have many tolerables. Airlines require you to suffer security searches. Credit card companies charge interest on revolving debt. American movie theaters have sticky floors and smell like popcorn. At a minimum, all companies want you to pay for what they provide whenlet's face itwe'd all rather get what is being offered for free.
The key issue here is that if a competitor can figure out how to eliminate tolerables when you still force them on customers, you can suddenly find yourself at a competitive disadvantage. A great many entrepreneurs have enjoyed big wins by recognizing attributes that customers simply tolerate because no one has yet invented a better way to remove the problem attribute at an acceptable cost. If you invent a way around tolerables, the whole product value equation can change.
When customers believe that a negative attribute of your offering could be avoided by buying a competitive offering, it becomes a dissatisfier. Dissatisfier features differentiate you from competitors, but in the wrong direction. Thus, cars that are perceived to require excessive service, fees perceived to be too high, technical departments thought of as unresponsive, and the like can all drive your customers away.
Even more deadly to your competitive position is a class of attributes that are energizing but negative. We call these enragers, although they may inspire many negative emotions, ranging from anger to fear to disgust. Obviously these features are never the result of a conscious decision; rather, they emerge as the result of misjudgment or even outright misfortune. When Monsanto attempted to launch genetically modified agricultural products in Europe, the company seriously underestimated the negative emotions such products would engender. As it turns out, Europeans are far more aware than their American counterparts of issues surrounding genetic modification, and a vocal, emotional constituency mobilized almost instantly to oppose the launch. Interestingly, it turns out that American consumers, whom Monsanto executives assumed accepted genetically modified foods, are spectacularly unaware of how many of these products they actually consume.
If you are unfortunate enough that an attribute becomes an enrager, a terrifier, or a disguster, it is critical to eliminate it before it busts your market. The reputation of once-dominant Perrier, for example, was so sullied by a highly publicized case of contamination that Perrier has never recovered its former market share. If you cannot eliminate an enrager, you may have to exit the enraged target market.
Negatives are a rich source of marketbusting opportunities, particularly because many firms tend to focus all their attention on working the positive line. Adding value, creating more features, and bulking up the product with enhancements all seem to be popular, but they overlook opportunities created by negatives. Apple Computer's "switch" campaign, for example, is targeted at customer segments who are enraged by the unreliable performance and lack of usability of their "Wintel" computers. Apple is betting that there is a large group of customers who might be willing to pay more and endure the negative of a conversion hassle to own a computer that doesn't crash, boots up quickly, and handles routine chores with aplomb. The devices look good, too.
If you want to gain great insights into negatives as your customers see them, the best source is to talk to the people who come into direct contact with customers or distributors. Sales, service, complaint handling, returns processing, call center, and accounts receivable staff are all likely to be exposed to customers who experience your offering, often in its worst possible light.
Target customer segments are indifferent to neutral attributes, so in general they are not sources of marketbusting ideas. However, products can have features that are neutral from the perspective of one customer set but are basic or differentiating for a different customer set. Because neutral attributes add cost without enhancing value, one major marketbusting opportunity is to ruthlessly eliminate the culprits and thereby drive down cost and hence price. Be careful, though; for some customers, things you might think are neutral are actually nonnegotiable. For example, replacing a live person with a voice-mail system may be perfectly fine under some circumstances and deeply upsetting to customers in others.
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1. MacMillan, I. C. and R. McGrath (1997). Discovering new points of differentiation. Harvard Business Review 75: 133145.