Tuesday, October 28, 2008

Understanding "pain" in the marketplace.

It’s always easier to sell an established concept that's been around for a while, one that people understand because it’s very, very expensive to educate a market.

Different levels of innovation please different people.
- Satisfied customers, who already feel well served, accept small, incremental improvements and resent major changes.
- Potential customers who are satisfied but not delighted by a competitor’s product are attracted by a distinctive innovation that shows clear advantage but remains reassuringly familiar.
- Revolutionary changes appeal to potential customers who reject or ignore all the options currently being offered to meet their needs. Innovation that’s too radical won’t be widely accepted.

It’s not such a serious problem to have a lot of competitors. You need to be different from them, but the more people who are making money in an industry, the better you should feel about going into that industry. Some people develop a business from their hobbies and interests. Others start by listening to problems that their friends and acquaintances are having. Many of the most valuable companies, products, brands and industries have been built around pain. For example, the Macintosh meant that you no longer had to know DOS to use a computer. FedEx made it easy, reliable and relatively inexpensive to send a package from one side of the country to the other, overnight. Saturn took the haggle out of buying a car. Jiffy Lube turned a daylong hassle of changing your car’s oil into a 20-minute errand. The common thread tying all these products and services together is that they addressed a pain felt by large numbers of people.

To increase the chances of succeeding when starting a business using these ideas, here are a few things to bear in mind (excerpted from “What a Pain in the Ass!” by Chris O'Leary).

1. Pain isn't an all or nothing thing but a continuum that ranges from minor inconvenience to life threatening. Some things, like being able to pay for gasoline at the pump, can save people a few seconds, while others, like Microsoft Excel, can save hours or days of work.

2. One person's pain can be another person's pleasure. For example, the earliest personal computers were sold to hobbyists who enjoyed putting them together. For them, the assembly process was a pleasure, not a pain.

3. There’s a difference between buying a gadget because it's cool and buying a product because it gets rid of someone’s pain. While the pet rock was probably useful as a personal security device, most people bought one for other reasons.

4. Pain depends on the circumstances. Abraham Maslow said we have a hierarchy of needs and we only worry about higher-level needs, such as finding expression for our talents, when our more basic needs like food, shelter and safety are already met.

5. Generally, a great idea eliminates a significant source of pain for a large number of people. However, it’s possible to make an excellent living by solving a big pain for a small group of people. Just make sure that they’re willing and able to spend a significant amount of money in the process.

6. A new product or service requires that people change, and changing is always hard. One of the best ways to convince someone to change is to point out how much less pain they would feel if they bought this product or used this service.

7. You need to relieve more pain than you cause. An idea that’s built around solving a pain and that doesn't introduce its own pain will have a much greater chance of succeeding. One reason that Lotus Notes had only limited success is because it was so complex to use.

8. Engineering-driven organizations are notorious for developing and selling products that are technically cool but fail because they don’t solve any real pain. Marketing’s job is to align the efforts of engineering with the pain being felt in the marketplace.

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