Designing marketable products and services is tricky business. Product failure is common and hits all types of companies. Well capitalized, global businesses, middle market players and niche market entrepreneurs have all funneled resources into product ideas that have little chance of survival.

There are two essential questions of product/service development: What problem does this product solve? Who exactly has this problem? The answers will be the foundation for refinement of the product concept and development of marketing strategies. In order to sell a product or service, you have to know who is going to buy it and why. Seemingly obvious, these questions are often overlooked by enthusiastic entrepreneurs.

A product idea has a way of blinding those involved in it. Our faith in its marketability is so strong that we overlook contrary evidence or fail to examine the meaningful details. Business owners and executives may spend hundreds of hours analyzing the wrong things, only to be faced with disappointing sales when the product or service is launched. This is often the result of focusing on the product itself and overlooking the customer.

A strong emphasis on the needs-based aspects of the product/service, from conception through launch and beyond, is critical to avoiding this pitfall. Marketable product and service ideas must address a specific customer need. This need may be existing in the marketplace, or it may be created by the advent of the product. The fax machine, for example, was developed to address a need for faster document transmission. On the other hand, the range of new-generation digital products available today - DVRs, iPODs and the like - have created a new set of needs, based on more general desires for convenience and mobility.

The answers to "What problem does this product solve?" and "Who exactly has this problem?" should form the basis for your core product/service concept. If you can't define a specific need and customer associated with your product, consider it a red flag. Go back to the drawing board and fine tune the concept with your customer's needs in mind.

Customer Focus vs. Product Focus

Remember New Coke? New Coke was a massive failure for Coca-Cola, one of the world's most capable marketers. The failure resulted in part from a product-oriented focus. Millions of dollars spent on consumer research told Coke that the new formula tasted better. As Coke soon realized, the critical factor was not the taste, but whether Coke drinkers wanted/needed a new formula.

There is nothing revolutionary in stating that marketable products and services should be based on specific customer needs. Most businesspeople believe they've already asked and answered this question about their products and services. Coke had answers too, but only after asking the wrong questions.

To test where your focus is, ask yourself this: Why would people buy my product or service? The best answer identifies a customer group and its needs. Any answer that sounds like a product description - it tastes better, it works faster, it fits in your pocket, it uses revolutionary technology, it saves time - indicates a product-oriented focus. Those product features may be valid, but they won't sell unless they are relevant and necessary in the marketplace.

The following two examples should help clarify the difference between product focus and customer focus.

Product Focus: Imagine a company that manufacturers light bulbs. In the effort to stimulate the mature light bulb industry, the company appoints a new product development team. After much research, the team proposes a new light bulb product concept. The bulb is less resistant to shattering than other products on the market. Its energy use and life characteristics are similar to other premium products available. The manufacturing technique is extremely advanced and even wins awards from a leading industry group. The light bulb retails for $10.

Will anyone buy it? Doubtful. Consumers don't care much about technological advances or trade awards, nor is there an epidemic of shattered light bulbs. The high price point isn't justified by the weak differentiating factors. The concept was based on the company's need to show off its technical capabilities, nothing more.

Customer/Needs Focus: The owner of a medical billing service has been operating within a small geographic area for several years. She is well regarded in the community and has the majority of private practices in the area as clients. She is reluctant to grow her business beyond its existing size, because new clients will be further away and therefore less profitable. After routinely hearing her customers complain about the poor service of their message-taking vendors, she does some research. She finds that the local answering services are poorly equipped and staffed, which directly impacts the quality of the service they provide. She decides to offer an alternative to the marketplace: a premium answering service that uses top-of-the-line equipment and highly trained, professional staff to provide best-in-class customer service. She positions the business as a reliable partner in direct support of her clients' daily activities. By comparison, her competitors were simply thought of as message-takers.

In this example, the entrepreneur found a hole in the market - a place where customers needed a type of service that currently wasn't available. The answering service quickly took off and became a long-term, viable enterprise.

How Focus Affects Development and Launch Planning

If your core product concept identifies insight into your customer, you've taken the first step towards success. The strength and focus of your core concept will dictate decisions made in the development and launch planning processes.

Consider this service idea: Families with school-age children need online, kid-friendly research tools. They are willing to pay for these tools on a subscription basis if regular use saves time spent on homework and/or raises grades measurably. Compare that to a similar concept: Kids in school want to be able to search dynamic databases by key words to locate full text articles online. These two descriptions are based on the same general service. The first emphasizes needs; the second emphasizes product features. Development of these concepts will likely go in different directions:

1. The Service 1 development team will emphasize relevancy of information, ease of use and design of a kid/family-friendly workspace.
2. The Service 2 development team will implement the most advanced search technology available.

I would venture to say that kids doing their homework don't care much about the technology behind the search. If they can't figure out how to do a search, they'll look elsewhere. The money spent on the technology would be better spent on the needs-based aspects of the product. Focusing on consumer needs at the beginning of the process streamlines development in the most effective direction.

The same is true with launch planning and marketing strategy. Nearly every strategic decision, including product positioning, distribution, advertising and promotions strategies, should consider your customer's lifestyle and preferences. If you've defined a customer need that your product serves, your marketing role is to tell that customer that your product offers a necessary solution. When you don't have a defined need or customer, the decisions on how to market a product/service can be unmanageable. The result is often a weak product and an unfocused marketing strategy.

Defining the Customer/Need for an Existing Product/Service

Product-focused offerings are based on your capabilities, resources, access to supply, current position in the marketplace, brand equity, or any other factor that isn't related to your target customer. When you are the only certified widget cleaner in the country, you're inclined to sell a widget-cleaning service. While it's natural to structure your business around the products or services you know, you can't always expect to be successful. Practically speaking, your business will be limited if no one wants a clean widget. To turn a profit, you have to find a way to make your customer think he needs a clean widget.

Start by listing the consequences of having a dirty widget (or the consequences of not buying your service or product). If your service isn't considered necessary on a wide scale basis, there probably are few consequences. But there may be certain groups that are affected with, say, allergic reactions, greater occurrence of illness, whatever. Your job is to identify these groups and determine if they are large enough to be profitable to your business. Then, find out where these consumers spend their time and use those channels to market to them.

Alternatively, there may be wide scale consequences to having a dirty widget, but no one knows about them. Here, another strategy is available. Consider using the press to inform the public about the dangers of dirty widgets. This is an effective approach, but only if your claims are valid. The press is quick to pick up on self-promotion without substance, so don't bother making empty claims.

If you specialize in a general service or commodity product, like freelance writing, the options are more limited. Because there is an abundance of freelance talent in the marketplace, it is very difficult to establish these services into a viable business. Stimulating customer need for a commodity requires loads of creativity as well as advertising dollars. An example would be Arm & Hammer advertising the many uses of baking soda. Most of us do not have access to resources of that scale.

An alternative is product/service differentiation. Your goal will be to make your customers believe that your service is different and better than the rest, in ways that are relevant to them. To say, for example, that you have the neatest handwriting of any freelancer is irrelevant in today's business world. As in the example used above, the medical billing entrepreneur who started an answering service developed service features (high-end technology and professionally trained staff) in order to meet specific, relevant customer needs: complete service and reliability. Analyzing relevancy objectively keeps you focused on the customer, thus protecting you from falling into a product-focused orientation.

Defining the differentiating features of your product or service is easier when you focus on a specific target customer. Writers, for example, can specialize in correspondence writing, technical writing, marketing communications, journalism, etc. Each of these would sell to a slightly different customer. To get even more specific, identify the geographical region you're going after. Although the Internet opens up a huge market, it also forces you to compete with many more professionals like you.

Think from your customer's perspective about what you would require from a freelance writer, outside of the quality of the work. Don't try to differentiate yourself on quality; presumably every writer will tout the quality of his work. Is there anything you can add to your service that would make you more valuable than your competitors? Is there anything that your competitors don't do that your customers would value?

Assume you have direct sales experience as well as experience writing sales training manuals. Use that to your advantage. Approach local sales organizations and find out if they produce their training manuals in-house. If the answer is yes, you can explain why it makes more sense to have them produced by an independent contractor (for example, the benefit of objectivity). If the answer is no, find out who your competitor is and what you have to do to compete.

Creating products and services that sell takes inspiration and perseverance. There is no formula to ensure success, only strategies that will push you in the right direction. Knowing your customer and her needs grounds your thinking and focuses your decision-making. This analysis is essential; without it, the viability of your product or service offering is questionable.