Does product differentiation really matter?
A question I’ve been thinking a lot about recently is: So what if the product isn’t significantly different?
I mean, the market benefits from having a few more choices. It gives consumer another choice and that’s good for everyone. It also gives everyone an incentive to keep innovating.
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I’ve stopped asking people “How is your product different from X?” a long time ago. Seems like the answer is obvious: “To give you, the customer, more choice. Duh...”
Does anyone else feel like over-emphasizing product differentiation is like a set up to make people (Eg. Entrepreneurs) not even try?
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It helps for sure, but I do agree it tends to be over emphasized, generally speaking. I still ask the question, but I ask it after I ask, "How are you getting customers?" and "How is your retention?"
Great points! I really like refocusing on the "How are you getting customers?" part, because even with a great product (with nothing but unique features), founders still need one or more ways of acquiring users (with a low customer acquisition cost, I hope).
I guess it boils down to how are you getting customers. You could have an almost identical product as long as you are having some unique marketing channels where you are competitive and get leads in you will also get some customers.
Most people won't do perfect market research and find all your competitors before choosing one product.
I think there are many paths to success, differentiating your product is one of them, also another one is simplifying, let's say you have a big competitor that offers like 500 service, you simplify that and only offer one of those services and improve that.
Because me as a customer, If I get 100 services and only use 1, why should I pay for the rest? or bloated documentation and fatty ui with lots of staff that makes things harder.
That's an interesting way to look at it.
These are just different "paths". Features can be a point of differentiation, but so can things like:
You can build a small side hustle with a product that has no differentiation. That's 100% possible.
To scale to a big startup, you HAVE to differentiate your product. Especially when there is an incumbent in that market. There has to be a reason that everyone chooses a specific product that becomes the leader in that space and it is not a random thing.
Really good point. Creating a startup for super masses will likely require either something unique or a lot of money for marketing.