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The Importance of Needs-Based Products and Services 
 
by Catherine Brock May 23, 2005

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.

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