What specific problem or deficiency exists with the state-of-the-art technology, and who are the competing companies currently serving the market segment you are targeting?
You must become very familiar with the “best-in-class” technology and products that are currently being used by your targeted customer base. As part of this information gathering, you will seek to discover why customers prefer a particular product. This information will help you construct a “Competitive Matrix” for comparing the important features (including price) of competing products.
Once you have captured this information, you should be able to discern why the leading product(s) have achieved their particular level of success in the market, and you will have the template for comparing all competitors against the set of features you intend to design into your product.
Involving a few key prospective customers early in this information-gathering exercise will help you first to confirm you are on the right development path...
This information will also provide third-party assurance that the product ”features” you’ve chosen for comparison are, in fact, those that are most important.
For the next several content sections relating to Commercial Opportunity Assessment, examples are provided utilizing this theoretical product:
New Medical Diagnostic System (NewDx™)
A battery-operated, hand-held diagnostic device capable of detecting multiple blood analytes in batch or random access mode, with wireless communication of test results from remote locations.
Scoring can be used in a Competitive Matrix to demonstrate the value differential you project will exist between your product and your top competition.
|Competitive Matrix||NewDx™||Competitor A||Competitor B|
|# Assays Available||8||6||6|
|Batch Analysis Mode||6||8||5|
|Random Test Mode||10||n/a||n/a|
|Cost Per Test||5||8||10|
Customers are actually driven to buy products based on their perception of the relative “advantages and benefits” that are associated with product features — not necessarily the features themselves.
And, it is the sum of these benefits that reflect your “competitive advantage “in the marketplace. These are all concepts and terms frequently utilized by professional investors, and will be explored in greater depth in the following sections as we develop the tools and information required for you to become reasonably informed of your business opportunity.
Can you differentiate a product “Feature” from its “Advantage” or “Benefit” to your future customer?
Features, Advantages & Benefits (FAB) Analysis
You should consider any potential future source of funding (SBIR Program Manager) or investment (wealthy friend) as a “customer” who will need to be sold.
You will be competing for capital, and this is one area where you can differentiate yourself by demonstrating to potential investors that you are not only knowledgeable of the technology behind your product concept, and that you are able to cite the meaningful features that will differentiate it from its leading competitors — but that you are also educated enough about its future utility to be able to translate those product differences to a tangible benefit for those customers who need it, and will purchase it.
An FAB analysis is more typically associated with a sales training exercise, to teach sales representatives how to translate the key features of their products to a personal benefit for their prospective customer.
FAB analysis is utilized here as a learning tool, and reminder that...
Innovation is about solving problems, not just developing technology.
The following are definitions for these FAB terms:
Description of the key components of your product that you want most to emphasize. The elements you choose to highlight may evolve over time as you obtain more feedback from your future customer base.
Positive differentiation you want to make about each highlighted feature when comparing to something else – e.g., the product your target customers consider to be your major competition.
Translation of the features and advantages of your product concept to a tangible, measureable, and presumably favorable impact on the person who will make the purchasing decision.
EXAMPLE: New Medical Diagnostic System (NewDx™)
FEATURES: Battery-operated, hand-held, multi-analyte, random access diagnostic test system
ADVANTAGES: Ease-of-use, greater flexibility for unexpected patient testing needs in remote environments
BENEFITS: Lesser-trained personnel can provide better care for broader range of patients
Again, the recommended use of an FAB analysis (at this stage) is not to support a marketing campaign, but rather to produce powerful support for your product pricing estimates and market penetration rate projections, which are key components of the revenue projections that you will eventually be discussing with potential investors. And, all such underlying support comes into play during downstream negotiations regarding your company’s “valuation”, and the price per share you will seek from investors for ownership participation in the company.
The FAB analysis may also be helpful in constructing your Value Proposition statement.