Competition, Positioning and Pricing
the Trifecta
#28 (Another longish post- sorry)
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I didn’t explain PMF and BMF yesterday. And the joke was too elite for most of you to get it, so I was hit with a bunch of “does BMF mean Business Model Framework” type questions. 🤔😂. Anyway, what I was trying to say is— if you don’t reach PMF (Product Market Fit), you’d BMF (Blow Money Fast). Because you’re essentially wasting money on a product no one wants/ a product that can’t hit a critical mass of people. PMF should be the first stop on your products journey…and it may take some time to get there. Continue iterating and talking to your customers.
I try to help people as I can whenever I can with thinking through their businesses. I had a very good conversation with a team I met on Twitter on their VR/AR startup and I agreed to be an informal advisor to them. We chatted a bit one time and I crafted the below message to them to help the team think through their competitors, positioning and pricing. Kind of comes after getting PMF.
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I'd like to see this business grow organically (through referrals). In my opinion, that's the best way to prove market demand and traction with your current customers i.e. my current customers love this product so much that they recommend it to their peers in the industry. Here's some frameworks that I've found to be particularly helpful for companies like yours that are starting out. Of course, we need to keep them pretty loose to account for agility but they're good starting points nonetheless.
1. Understand the layout of the competitive environment (who are incumbents and what business models do they run?)
2. Come up with positioning (who are your customers and whats the VP to them?)
3. Develop your pricing (how much are you charging and why?)
1. Understand the layout of the competitive environment (who are incumbents and what business models do they run?)
I'd say because you're pretty early, you want to focus on maybe just hospitality, luxury real estate and construction (inclusive of architecture?), dominate those sectors and then move into different verticals. Maybe workforce training if you can get banks to bite and the airport AR gig would double as marketing. But based on what you told me regarding YOLO, Kwarleyz and Devtraco Plus, those would be the sweet spots you should capitalize on especially as there are newer, more upward mobile type buildings popping up across the continent.
Focus, focus, focus should be the mantra right now. You don't want to spread yourself too thin with operational costs too early. They could be your leads into countries and developments + they are complementary industries so there's a domino effect if you can close a particularly big player in even one space (like Micheletti or so and get access to Akka Kappa in Ghana/ Mobus architecture/ Villagio for example). Knowing that the retention rate (which you should measure) and the possibility of recurring business is high for your clients is also a good sign.
2. Come up with positioning (who are your customers and whats the VP to them?)
I think it'll be good to work on your company's positioning-- "for a target customer who has a need or opportunity, my product/service is in this category and this key benefit, unlike some other competitive product/service will create this primary differentiation." This is a simple sentence that talks about what your company does and how it's differentiated in the market. So for example, not sure if you've heard of Superhuman, but this was their early positioning statement: "for founders, CEOs and managers of high growth tech companies, who feel like their work is mostly email, Superhuman is the fastest email experience ever made. It's what gmail could be if it was made today, instead of 12 years ago. Unlike gmail, Superhuman is meticulously crafted so that everything happens in 100 milliseconds or less." This is very narrow and you have to start with something like this, then we expand down the line. I believe if you nail the positioning for a core group, then later you can find more room around the edges.
May want to take a look at this book- Crossing the Chasm and here's a summary of it Summary of Crossing the Chasm. Also, read more on positioning here and here.
3. Develop your pricing (how much are you charging and why?)
For pricing- to make sure you have the pricing right, and since you're still in your early stages and this industry is pretty new, you may want to run a quick survey on your next couple of potential clients to make sure we're not leaving any money on the table/ not charging too much for a service like this. I suggest the Van Westendorp Price Sensitivity Model. Open the link to read more about it and you can download an Excel that helps with formulas already inbuilt.
As the CEO, while you're thinking of strategy, your team is still working so you're not losing anything here. Let me know if you have any more questions and see you tomorrow.
Also, since you're in the space, you may want to take a close read of these articles. I found them earlier last week and they're pretty mind-blowing -- AI Revolution (Part 1) and AI Revolution (Part 2).
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