I can hear you now, “two types of products, nonsense!”, but alas it is true. Of course you could make a list of soft products, hard products, consumer, b2b and keep going. Paper, metal, plastic – on and on right. In so many places and so many sectors you can go down list after list and I have the arrogance to tell you there are only two types of products? You are damn right and I will prove it to you too.
When you want to master something as complex as marketing it is more about how you think than what you do. Thinking lets you create campaigns, cease opportunities and find success when your competitors are falling on their asses! To think effectively, you must first get rid of clutter and evaluate your world in the most simple terms possible. Complexity comes later as needed and only as needed. The fact most people don’t get this is why so many really smart people can’t seem to find their own asses in a dark room.
So what are the two types of products as far as a marketer is concerned, they are….
1. Needed
or
2. Desired
Needs are the market most people think they want to be in but it is the worst market in the world for the small player. Needs (in our modern world anyway) are food, water, electricity, gas, phone service, etc. These markets can make you money but only as a cog in the machine you can never really own them as a small player. The cost of entry into the “food market” (note I mean the general food market) is so steep and margins so thin as to be a playground for the rich kids where you are not welcome nor can you afford the tuition the school anyway.
Desired products are things people “want” vs. “need” and while you are smart to not focus on wants in your home when balancing a budget it isn’t what most consumers do. In the middle of a recession people buy custom surf boards, fancy running shoes, the latest fashions and movie tickets. No one needs these things, they want them. Hence margins are higher, niches more defined and opportunity much larger than in the needs market.
Understanding this lets you even play in the “needed” world while selling to the wants. Take food for instance, try to compete with a new grocery store selling random crap from Kraft, Heinz, etc and you will get steam rolled. The best you can hope for is killing yourself to set up one or two “successful stores” in towns so small the big chains ignore them. If you want to try it in Jacksonville, Dallas, Atlanta or LA, you better have a billion dollars and you still an go broke if you don’t get it right.
Now turn it around though and sell a food (need) that is specialized to a desire (want) like say locally produced honey. No one needs it, no one, seriously it has benefits but I don’t need it and neither do you. Yet because people WANT it they will pay 2-3 times more than they will for SueBee’s honey on the shelf of a Kroger or Albertson’s supermarket.
The lesson here is bigger than just sticking to selling what people want vs. need, it is also about what I call “selling to the want” vs. trying to convince your customer that he needs what you are selling. In the end I will put it this way; people blow money on what they want, they are cheapest when it comes to filling a need. Most will drive an extra block for 3 cents off a gallon of gas but not bat an eye at a well made late or nice glass of red wine. So always sell to the want.
Tune in next time when I reveal the only three classifications of desired products.
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