In the last blog, we talked about a fairly rigorous way to understand competitive capabilities when designing a new product. The punch line was… you need to truly understand your customers’ needs before you can measure your competitors’ capabilities. When you do this well, three very good things happen.
First, you avoid being blind-sided. I’ll bet you’ve run across your fair share of new products that didn’t fare well against competitors when launched. If you could rewind the product development tape, you’d probably hear someone somewhere in a conference room say, "Oh, Competitive Product A is really lousy at _______". Unless you perform solid competitive side-by-side testing, you can expect to continue hearing these assumptions and having these results.
Second, you learn where the competitors have weak spots… so you can attack these. Don’t just stumble on competitive advantages. Exploit them in your design and keep doing so in your new product literature!
Finally, two conditions must be present to make a lot of money with any new product. Condition 1: You deliver significant new value to your customer. Condition 2: The customer is not able to get this value anywhere else. It’s important to interview customers; but doing so just helps you learn about Condition 1. You need to perform side-by-side competitive testing to learn how to achieve Condition 2. This is what allows you to know how to price your product. Skip this step and you may deliver a lot of value… but leave a lot of money on the table in your pricing.