Does there always have to be a value skew?

[College Dropout]

Hello all,

I'm sure this has been addressed before but I could not seem to find any threads answering my specific question(s). MJ preaches that successful businesses need to improve upon what is already available in the eyes of the consumer, thus delivering more value. For example, if I want to start a company that manufactures watches, my watches need to address notable complaints that other company's watches receive. Somewhere, somehow, value needs to be skewed, putting my hypothetical watch company ahead of the competition.

My overarching question is: Is this always true?

All around me, I see companies that seem to sell products delivering marginal value when compared to one another. Nobody seems to be doing anything outside of the box or unique, yet they still manage to be successful. Mind you, they are still selling quality products with good branding. Why is this? Under what circumstances is it okay to just say screw it and create something valuable that people want without trying to be overly novel?

The first examples that come to mind are small, eCommerce-based clothing brands but instances like this can be found in just about any industry. Do you have to skew value and create a unique value proposition, or come up with something game-changing for your industry? Or can you just open up a store with good products that people want/need, good customer service, etc. and get to work promoting it?

Also, assuming a value skew is a must, how many competitors are you trying "out-value" before you can compete? It seems that in most of the instances I see in which people find a way to skew the value of a product, they are basing their skew off of specific products they have seen from competitors and not necessarily every variation of that product ever brought to market.

It just seems like there has been so much emphasis put on the process of shopping around for unique solutions to problems or products which can be improved to further address problems right from the get go, resulting in substantial "analysis paralysis" (at least for me). But for many businesses it almost seems as though the value skew is happening on the back end, or at least to a fairly small extent on the front end. I could be completely wrong about this but here's an example: A guy decides he wants to start a boot store because he thinks he can provide a better customer experience than the place where he buys his boots. So, he opens one up and then identifies other areas where his competition can improve to create more value for customers such as a money-back gaurantee or nicer materials. He doesn't start the company by asking himself "What problems do people have with boots and how can I invent a revolutionary new boot that will fix it?" You look around all day for problems like that and try to brainstorm viable solutions, and many people do it (Elon Musk, etc.) But it seems to me that many businesses are started just by people who get an idea for what sort of business they want to open, and then improve upon what their competitors are doing. Is this just me?

Maybe I'm missing something here and I need to do some re-reading. Maybe I'm just way overthinking this? I am still learning.



Thanks!

 

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[ZF Lee]

All around me, I see companies that seem to sell products delivering marginal value when compared to one another. Nobody seems to be doing anything outside of the box or unique, yet they still manage to be successful. Mind you, they are still selling quality products with good branding. Why is this? Under what circumstances is it okay to just say screw it and create something valuable that people want without trying to be overly novel?

Reread UNSCRIPTED .

We all ain't Elon Musks to create fresh new things out of a unicorn's horn, so we can start with improvements. Much improvements can lead to a completely new industry or tool.

Consider the computer industry. A regular PC has all kinds of materials like metal, plastics, semicons, circuitry, hardware and all the like. Each of its own is an industry in each of their own right. Each industry has to improve bit by bit, be it in industrial efficiency or quality, to be accepted into supplying materials for manufacturing PCs.

Once you combine the improved materials together to create a new thing, then you come up with a 'novel' thing.

The first examples that come to mind are small, eCommerce-based clothing brands but instances like this can be found in just about any industry. Do you have to skew value and create a unique value proposition, or come up with something game-changing for your industry? Or can you just open up a store with good products that people want/need, good customer service, etc. and get to work promoting it?

Both are needed. A good basic business system with good products and customer service combined with excellent products ARE needed.
Anything that the customer meets, and interacts with, to decide whether you won the value game and you can make a sale, is to be considered in the value skew.

For example, recently I had to sell off some old textbooks after college.
Some value skews to consider (although this route is no Fastlane)
1. Good copywriting. People need to know how the books can help them out.
2. Markings or note in the books. They can slash time off from studying. You know kids LOVE to wait till the final hour to study for exams lol.
3. Notes or trial exams as either a freebie or a side package, if you wanna charge more. Ditto benefit for above.
4. Face-to-face contact plus regular comm channels availability. People need to know that they can reach you, and that you can help get them what they want QUICKLY.

Also, assuming a value skew is a must, how many competitors are you trying "out-value" before you can compete? It seems that in most of the instances I see in which people find a way to skew the value of a product, they are basing their skew off of specific products they have seen from competitors and not necessarily every variation of that product ever brought to market.

You won't know what's going on in the battlefield until you come in as a combatant lol.
But considering how FEW people actually come here to this Forum, I must say that most operate on a lack of awareness of value skews or merely on too few value attributes, such as price or connections.

The key is relative value. Can you provide better value than the others, even if they should clash?

I think that following other value attributes of competitors to emulate is not wrong, but it shouldn't be the only thing you do. There are lots of other ways to get sales such as referrals, return customers and of course, roping in new ones.

I'm going to say that 'there's no straight answer', whether you choose to rely on your present pool of customers to assess and adapt, or you go and win the hearts of your competitors' customers. They all work. But one thing is certain, and it is that you must answer your customers' needs. Period.

It just seems like there has been so much emphasis put on the process of shopping around for unique solutions to problems or products which can be improved to further address problems right from the get go, resulting in substantial "analysis paralysis" (at least for me). But for many businesses it almost seems as though the value skew is happening on the back end, or at least to a fairly small extent on the front end. I could be completely wrong about this but here's an example: A guy decides he wants to start a boot store because he thinks he can provide a better customer experience than the place where he buys his boots. So, he opens one up and then identifies other areas where his competition can improve to create more value for customers such as a money-back gaurantee or nicer materials. He doesn't start the company by asking himself "What problems do people have with boots and how can I invent a revolutionary new boot that will fix it?" You look around all day for problems like that and try to brainstorm viable solutions, and many people do it (Elon Musk, etc.) But it seems to me that many businesses are started just by people who get an idea for what sort of business they want to open, and then improve upon what their competitors are doing. Is this just me?

Sure, as long as you improve relative value and have multiple value attributes, you can do well.

'Revolutionary' might come if either you have a good marketing campaign with tons of testimonials and endorsements, or you use cutting-edge tech lol. But of course, it takes work for these to happen.

Small improvements CAN matter if the customer decides that it wins the value game. No stone left unturned lol.

 

[MidwestLandlord]

here's an example: A guy decides he wants to start a boot store because he thinks he can provide a better customer experience than the place where he buys his boots. So, he opens one up and then identifies other areas where his competition can improve to create more value for customers such as a money-back gaurantee or nicer materials. He doesn't start the company by asking himself "What problems do people have with boots and how can I invent a revolutionary new boot that will fix it?"

There is a service gap in your example. That is a need.

In your example, he didn't ask himself how he could improve the product, but he DID decide that he could provide value with better service.

That is still a value add. Still filling a need.

That's still an improvement, especially in brick and mortar where you can "out service" your competition.

I sell a generic commodity in my brick and mortars. Trust me, it's possible to sell identical generic products with value adds on the service side.

Several problems with only adding value through service though (in the brick and mortar space):

1) It isn't really unique. Usually a company gives shit service because they can. If you compete, then you raise the bar for service standards in that area, and a lot of companies will raise their level of service to maintain sales.

2) It's very hard to do with scale. Good employee's are hard to find and all that. The less you are interacting with customers, the further towards mediocre or worse your company's service goes. It's a constant battle.

3) At the end of the day, you sell the same thing as everyone else, so there is no customer loyalty. That's when convenience and price start weighing heavy on your customer's minds. Your service has to not only be better than elsewhere, but also good enough to compete with convenience and price concerns. Ever see companies with shit service give out coupons like candy on Halloween? That's because their service is not bad enough to out-weigh saving money in the customer's mind.

4) Price wars are common. It's a lot easier to give a discount, a sale, or a coupon than it is for your competitor to give stellar service. What do you think happens at that point? (usually a competition to see who has deeper pockets. Whoever can spend the most to get a customer [in both advertising costs and negative margins] wins that battle. Will that be you?)

 

[MJ DeMarco]

For example, if I want to start a company that manufactures watches, my watches need to address notable complaints that other company's watches receive.

Not necessarily since you're speaking about a luxury item.

What is the value skew of a Lamborghini that justifies someone paying $300,000 more for it than a Corvette?

 

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