For products to win in the market, they need to win over prospects and win against competitors. Products need to win over existing customers too in a recurring revenue SaaS business model. Products may also need to win against substitutes—alternative products or services that also meet the market’s need e.g. video calls vs in-person, or software system vs in-house manual process. 

Achieving this requires clarity on the market’s needs or jobs to be done, a unique value proposition to this market relative to competitors, attractive size of this addressable market, and making hard choices during strategic planning.  

1. Draw the value curve—and make choices!

W. Chan Kim and Renée Mauborgne wrote about value curves and gave this example of Southwest Airlines’ offering in 2002 compared to the offerings of other airlines (competitors), and cars (substitutes). To connect this to product folks, an illustration from their article is highlighted with the unique benefits, also known as differentiated value, that Southwest Airlines delivered. 

Use this value curve spreadsheet template to chart this easily. 

• X-axis: This contains the needs of the target market segment. For B2B SaaS, you can start with the feature categories and individual features that G2 and TrustRadius provide. Here’s an example from G2 that compares product analytics tools. Or even better, use your insights from your first-hand market research interviews to identify the benefits that the target market values. 
• Y-axis: This contains the scores of how well the needs are met. You can start with a subjective score, say 0 through 5, of how well the benefits are met by our product, by competitors, and by substitutes. Add representative competitors and substitutes only so that the chart is easy to understand. 

Differentiated value of the product results from making thoughtful choices in the value curve. Value helps to win over customers and prospects. You also have to think about your competition because they talk to your customers. Differentiation in the product helps to win against competitors and substitutes. This comes together in the unique value proposition to the target market segment in the form of a positioning statement. Check out this positioning template.  

2. Assess the business impact of the choices

Selecting the appropriate target market segment and a unique value proposition impacts various aspects of your business: revenue potential of your product; cost to build the product, cost to serve, and the opportunity cost; and risk inherent in those choices. 

A risk that the value curve reveals is the product’s inability to deliver a benefit that the target customer segment values. It’s crucial to assess the business impact of these product limitations, for example, in terms of lost revenue or growth, lower penetration or market share, or higher cost to serve. 

Ask: How greatly do customers value this benefit vs your product’s other benefits? Does your choice enable your product to excel in delivering its unique benefits? Could this decision introduce additional competitive advantages?

In short, it’s about assessing whether the product limitations are bugs or features. 

Ask: What do customers and prospects value more—a bundled or an unbundled product, aggregation or disaggregation? Should the product be positioned as a comprehensive solution (aka, all-in-one, one-stop shop, or Swiss Army knife) or as a best-of-breed product, specializing in one particular area.

3. Iterate

Choices need to be made, but not all choices need to be made all at once. Iterations are expected as we learn broader and deeper about the needs of the market and its segments.  These iterations are both creative and analytical in nature. Choices need to be made strategically—this is hard, so check out this working definition of strategy.

All the best on winning, unless your product competes with mine 😛. Just kidding, competition makes for better products.

PS: Check out more articles on building products. I write to pay it forward and to clarify my thinking.