Business Opportunities Weblog

September 26, 2004 by Dane Carlson | 1 Comment

HBS Working Knowledge:

A new product or service will be successful if it does a better job than existing products at satisfying the needs of a targeted customer group. But “doing a better job” actually has four dimensions. If a new product or service can exceed existing offerings across all four of these dimensions at once, then we can guarantee that the targeted customer group will purchase it.

The four dimensions fall into two categories, purchase motivators and purchase barriers. The new product has to excel at:

1. Providing high purchase motivators
   1. It must be less expensive than existing products (lower price).
   2. It must provide better features than existing products (greater benefits)
2. Eliminating purchase barriers
1. It must not have any switching or adoption costs (easy to use).
2. It must be readily available (easy to buy).

Customers for whom all four conditions apply will purchase the product or service because there are only benefits and no barriers. The closer any new product comes to succeeding in all four dimensions, the greater the chance that the product will be a winner. And, of course, the innovation will be a financial success if these conditions can be met at a profit.

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