Imagine your product or service is the market leader. For years you have sustained a significant competitive advantage, whether that be inimitable technologies, processes, or scale, etc. Now imagine new competitors begin nipping at your heels. You still have a superior product but your price is 20% higher. You believe you command a higher premium and leadership demands higher margins. Now imagine we’re not talking about basic packaged goods where that equates to an extra buck. Imagine that instead we’re talking price tags with one or two commas in them. So the price difference is now hundreds or even thousands of dollars different.
At what point does your customer say you’re not worth the premium? At what point does a customer walk or cease to entertain you as a viable option? The answer is when the cheaper product or service becomes “Good Enough”.
Ever heard of a company call Vizio? Probably not until a few years ago. But today they are the #2 player in Televisions. Why? Because the technology curve and product lifecycle of flat screen TVs has plateaued such that, while Vizio may not be perceived as “good” as competitors Sony or Pioneer, Vizio’s product is viewed as “good enough” when priced significantly lower.
EDIT: I discovered that Vizio is actually now #1 in the US for flat-panel TV marketshare. The top five market leaders, according to iSuppli, are Vizio, with a 21.6% share; Samsung, 19.9%; Sony, 16.6%; LG Electronics, 10.7%; and Sharp, 9.4%.
Now ask yourselves how many of your competitors have assumed a lower cost position with a value proposition of “Good Enough”. Surprisingly there are probably more out there than you think (you may even work for one of them). The reality is that Good Enough players will continue to thrive until we innovate and change the game, and refresh the product lifecycle curve. That will not happen by simply bolting on added features (see PC industry). Each little feature, unless truly a delighter, simply promotes the notion that your space has become commoditized.
I’m not going to tell you how to move that curve, because frankly if I had the answers, I wouldn’t be writing this on a public access blog. I will say that the first step must be recognition that your market is being encroached upon by good enough competitors. Next, determine what your customers want and translate that to a need(s). Finally, make a candid assessment of your value proposition. Does it still hold true or are you delivering (relatively) less customer value than you delivered years ago. Like I said, easier said than done…but if it were easy, none of us would ever have to be just “Good Enough”.