Developing Your Product-Service Matrix
By Tom Cramer
In our first discussion of competition, we focused on understanding that competition is a reality that comes in many forms. It is vital that you take the time to understand where your company is most vulnerable to those threats to your success. Our third item in this topic, Incorporating the Porter Five Model in Your Business Planning, provides a more strategic review of those many sources of competitive forces.
We drill down here on the more traditional issue of competition. That involves looking at who is directly fighting for their share of market in your specific niche. This process starts with a focus on the core issues of price, quality, and service. It then moves to the full Product-Service Matrix.
Cheaper, Better, Faster
First-year marketing or MBA students are often presented with the thought-provoking concept of the “Unattainable Triangle.” This is the idea that any product or service can compete with two, but never three, of the components of “Cheaper, Better, Faster.” You can see this visualized in the Venn Diagram below.
This concept has driven many thousands of hours of debate and discussion. However, the main point we want to convey here is that you must know your market, and you must know what makes your specific offering competitive in your niche.
This is an extension of the idea that any company trying to sell to everybody is actually selling to nobody. Likewise, trying to make your product or service better than every other product in every one of those three attributes is almost always a failed strategy.
Just think about hamburgers for a moment. Your average fast food burger is both cheap and fast. While it must also be reasonably good, no one will argue that it is as good as the gourmet burger you will find at classy restaurants. In fact, any of those fast food chains that tried to match that quality would, well, it wouldn’t be fast food and it wouldn’t be around very long.
The second step in visualizing your competitive environment is often called a competitive landscape. That simply takes the leading players and brands in any market segment and provides a visual layout of how those brands relate to each other in a simple quadrant. The example below shows a simple view of the personnel placement market.
If you took the above hamburger example and created a simple matrix with the hamburger as part of the overall fast food industry, you might come up with something such as this diagram. This type of graph is often called a “perceptual map.”
The value of these types of graphical representations of a market is obvious. The role of branding also helps shape these charts and provides you with valuable insights into what elements of those competitive brands fit into your branding strategy.
The Matrix
Once you have done the top-level analysis of competing brands, the heavy lifting begins. A true product-service matrix will create a detailed spreadsheet that details every significant characteristic of your known competitors. This goes beyond the standard “features and benefits” analysis.
The granularity and specifics of your matrix will depend on your market and your niche. However, you should know the key characteristics, pricing, packaging, advertising budgets, support standards, and a myriad of other details of every product or service your prospect may use to select between your offering and that of those competitors.
The more you know, the easier you can make wise decisions about how to position your offering and your company against those players. Large companies make large investments in creating and maintaining their competitive matrix as detailed as possible. Legends exist around how large companies buy the latest versions of their lead competitors’ products and reverse engineer them down to the smallest “nuts and bolts.”
Of course, you won’t have the resources to do such intensive analysis on your own. However, this is an ideal project for a freelancer or local community college intern that will produce quality work at a reasonable price.
Dive as deep as your situation allows, but don’t ignore a comprehensive product-service matrix as part of your business planning.
