Most companies are going through very intense redesigns. At the strategic level, they are working to prepare themselves to meet market expectations that were restructured by COVID-19. In most places, significant strategic shifts are needed, causing serious headaches for decision-makers in several areas of business development. Perhaps the most sensitive and least understood area is the world of product concepts.
What is a product concept?
For a traditional, tangible product, the answer may seem very simple: the physical manifestation of the product itself. But this statement is woefully incomplete, as the product concept, in this case, means not only the physical product, but also the related message, status, image, and belief with which professionals influence customers during the purchasing phase. And that does not even include various communication and sales techniques.
But the whole conceptual environment — the price itself, the packaging, etc. — leads us to the final purchase, and eventually to the coveted re-purchase. If the situation is so complex among tangible products, then a well-defined and structured product concept is even more important for an intangible, knowledge-based product. In the case of the business development of a knowledge-based company, the construction of the product concept is always one of the first tasks. In my experience, perhaps the most challenging task is to articulate the product/service and then make it marketable in the right way, which is something our firm deals with every day, especially if we create the given product or service.
It is not possible to perform this task in a truly professional way without the proper vision of an external, objective, expert view. Nothing substantiates this more than the fact that business development companies bring in external resources to define their own products, or at least to finalise their concepts.
The Target Group-Focused Direction
As in all strategic work, there are different doctrines and directions for the construction of product concepts. The “target group-focused” solution is a fundamental, traditional method; it is where professionals use market research to determine which target groups may be the most solvent or, in many cases, the most profitable, and then assign a future product to these target groups. We can say that until roughly ten years ago, this one-way direction existed. Companies paid huge sums of money for all kinds of research. In many cases, however, despite the perfect target group, the company itself was incompatible with the desired product. Or there were simply mistakes on the knowledge front, or the presence and retention of an existing core business product made it impossible to produce and market a new, research-proven product.
In many cases, there was no chance for the product concept to be accomplished from an organisational perspective. Let’s look at a straightforward example: a multinational company with products that are top sellers in many countries. The company determines that it wants to produce a truly premium product, one that exudes exclusivity and uniqueness, so the company wants a small, but very demanding and status-oriented group to be their customers. For this type of customer, any product must be expensive and difficult to obtain. Branding is critical to them, as it represents the status of the product and thus, the status of the buyer. They cannot stand it if the products in their possession are also available to the masses, even if the product they bought is a much more expensive version of the same brand. They clearly like to define the boundaries between the “less fortunate” and themselves. A prime example of this is Toyota’s “product concept” known as Lexus. They completely separate the two brands, and yes, Lexus owners are proud to have a Lexus and not a Toyota. What if Toyota debuted Lexus under the Toyota brand name? Should you try to elevate the car brand for the masses to the premium level and target exclusive buyers? Volkswagen attempted such a solution by releasing a luxury sedan called the “Phaeton” under the Volkswagen name, and it proved to be perhaps one of the biggest strategic failures in the automotive industry.
This example highlights the main flaw with target group-focused solutions: just because market research finds a solvent target group, that does not mean that the company understands the marked target group and knows how to serve this group. For example, suppose a company has always focused on mass production. In that case, its main measure of success is high sales volume, so the thought processes of the company’s managers, decision-makers, and professionals are on the same page. Their personalities also further this purpose. There are many business development projects where stable, confident managers with volume-focused personalities fail to introduce a new status-oriented, exclusive product. On the psychological circle, the personalities that focus on volume are on the opposite pole from those that focus on status; we are talking about the two most distant points. Not only do they not understand each other, but they do not even accept the other side’s thinking. What one considers to be “unnecessary introspection” is the number one priority for the other. What one considers cheap and “something to be looked down upon” is the product’s biggest benefit for the other. That’s why it is naïve to think that a product concept built for one side can be perfect for the other side as well.
Of course, this is when we come to the “professional managers can handle it” solution. But being a professional manager does not mean that their decision-making mechanisms and personality do not change. That’s why they are professionals: because they are self-harmonious! Examined by several sides, this kind of target group-focused solution has serious risk factors.
It is no big surprise that the modern direction is increasingly crowding out its traditional counterpart as far as strategy goes. The knowledge-focused solution emphasises the capabilities and potential of a particular business. It builds on knowledge and skills that are more accessible to the organisation, owner, managers, and professionals. In addition, it takes the personalities of the organisation’s members very seriously, especially those of the decision-makers and leading professionals.
Based on the complex personality analysis of key people in the organisation, this method defines which personality types of consumers the company and its products will be most sympathetic to, where they will create a real experience for the consumer. This ensures that there will not be just willing buyers, but rather a real customer base. The organisation can remain self-harmonious, as they can work within their wheelhouse, with product features they consider good, there is no need for them to put on an act.
General solutions are not appropriate; the developer needs to look at the personality bonds between the client and the given target group. An Expert team that is logical, objective, professionally strong, and factual — one that is always looking for solutions without dazzling customers and concentrates on puritan solutions in terms of appearance — will definitely be right for customers with similar mindsets. So, during the product concept process, the person creating the product concept follows the personality of the company directly to the customers. This path also governs communication and sales.
Of course, it is important to move along the path of the main personality for the sake of increasing target group access and potential revenue. But one guiding principle is that one can never go down a new personality path that is too far away from the existing corporate path. For example, in the case of the aforementioned Expert team, they should never target a group that is interesting, sometimes useless, but has spectacular, exciting solutions (the Individual). This is because the features that are valuable to the Expert company are just “extras” for their Individual target group. Likewise, the product features that the company adamantly avoid are the top priority for the Individual target group. Forcing an Expert to compromise their self-harmony for extra income? Good luck with that!
Product Concepts 2020-2022
A major transformation of product concepts will take place in the coming months. New aspects are coming into the picture that were not worth mentioning before. Also, we are in the midst of a psychology-based crisis, that’s why it is so important (to have an opportunity) to look inside the minds of the customers in the fields of business development. Traditional clichés will not work and will be replaced by conscious planning. It is also noteworthy, by the way, that there are companies that have been able to stay afloat or develop even in the industries most damaged by the crisis. Where conscious preparation and strategic work have been going on for years, this is not surprising. Most of all, in the B2B area, we like to say that we want to buy “self-harmonious products”. And it doesn’t really work if, in addition to defining an affluent target group, we don’t define ourselves: our business, our employees, our top decision-makers. We cannot constantly play a role, and we cannot believe in two different products that are completely different from a psychological perspective. If we do not believe in our product, we will not be able to sell it within the organisation during such a crisis. And if people don’t buy it within our own company, what do we expect from an “outsider”?