December 19, 2017 Launching muzammil-kamran

Product Centric or customer centric? Unwinding the paradox for Pakistani startups!

By Eza Zaheer

Situation of Pakistan – A developing country with roughly 163 universities and thousands of graduates from all walks of life sounds quite stirring until we crunch the numbers further and talk about the entrepreneurs ascending from these places of knowledge. The situation then turns pretty grim pretty quick. Per year influx of start-ups in our economy is not enough. What makes the situation even worse is that many of them never take off; they sink despite having the potential to swim.

One of the many reasons leading to the failure of our startups is the lack of ability of young entrepreneurs to understand the basic approach to develop and market the product. An excruciating confusion tends to rise up when young entrepreneurs begin; they often end up asking questions like

“Which is better, Product centric or customer centric? What if both of them are equally important? Can both co exist or do we really have to pick one over the other?”

The best method to understand both of them is to break these approaches down understanding them by relation, examples and evaluation of their pros and cons.

What exactly is Product centric thinking?

In product centric thinking, maximum focus is on product that you will take to the market. It involves creating something innovative or new irrespective of the demand. Companies working with this approach believe that customers often don’t know what their need is unless they are made to realize that a need exists. This is done by presenting a stellar product in front of them with which they have never had a previous encounter. Product centric approach if implemented successfully leads to the creation of cutting edge products. Hence, a new segment is formed which begins to expand and grow exponentially (but not always, this success can be short lived).

The focus of product centered companies is to have the best product in the industry with the latest features. These companies live and die with their products. Technology plays an important role in these companies.

Pros of Product centric thinking

  • Since the focus is entirely on product, quality never is an issue with this approach
  • Chances of making huge amount of money real quick are great but keep in mind costumers often tend to lose interest as quickly as they build interest.
  • You have a control over your product. You’ll create what you want to create not what others tell you too.

Cons of product centric thinking

  • You will not know if the product is a success or a failure unless it gets to the market. Brands like Nike and Apple (with product centric approach) have to wait to see if their innovative product with cutting edge technology hits the bull’s eye or blows up in their face.
  • Market trends change dynamically. New products might not last longer with the changing consumer trends, and market influences. E.g. Pokémon Go.
  • Due to technological progress, product life cycles are getting much shorter and it is just a matter of a little bit time until someone else overpowers you and gets all your costumers.
  • As soon as you launch something new, you should have the next new thing on the roll. This rigorous cycle never ends if you only focus on innovation.

An Example worth sharing

Apple is more inclined towards product centric approach

Why companies adapt Customer centric thinking?

Neil Patel at Forbes writes “Nine out of ten startups will fail”. Naming the reason a “Hard and Bleak truth”, Neil narrates

““They make products no one wants.” A careful survey of failed startups determined that 42% of them identified the “lack of a market need for their product” as the single biggest reason for their failure.”

This is where customer thinking comes in. A customer is the heart of this approach, everything related to product revolves around the needs and wants of the customers. This approach makes sure the product is designed the way customer wants it.

Everything is seen and evaluated from a customer’s perspective. Is it easy for them to use the product? Are they having any problem getting a hang of the product? Whether or not they have complaints? How could the product be improved for them? How happy are the buyers? What can we do to make them stick along forever? What kind of customers are most beneficially to us? How can we add up their number? Etc…

Customer centric companies create the best solution for the customers not just the best product.

Pros of consumer centric thinking

  • It creates brand loyalty and keeps the customers satisfied
  • Loyal customers will create a lot of referrals and will create positive word of mouth
  • Improves the overall reputation of the company
  • Consumer centric companies are more resistant to fluctuations in the market

 Cons of consumer centric thinking

  • Customers are going to stick to you only as long as you keep your end of the bargain
  • Customers might switch without a second thought if a competitor offers something better than you
  • Ever changing customer needs make it very difficult to keep up with them
  • It affects the innovation and creativity within a company as the focus is entirely on what the customers want
  • Cost associated with this approach is great if “customers bringing in less profit and complaining more” and larger in number than “customers bringing in more profit and complaining less”.

An Example worth sharing

Amazon is more inclined towards consumer centric approach.

The Paradox!

Steve Jobs once said “Customers don’t know what they want until you show it to themwhich favors the product centric approach but another industry icon Jeff Bezos says “We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better” clearly favouring the costumer centric approach.

We have also discussed the pros and cons of both approaches which kind of makes things more confusing.

Finding A Balance Is They Key!

Finding the balance between both approaches is the key for startups. The examples in this article e.g. Amazon or Apple also use both the approaches to remain top of mind with their customers. For example, Apple has been branded as a product centric company due to its innovative products since long but Apple does a lot of work on the costumers as well.

Hence, whether your business is small or big maintaining a balance is the ultimate key.

Also, ask yourself following questions after reading the article and then decide which one you should go for as a startup:

  1. What is the industry you wish to enter?
  2. Is there a scope of new product development in this industry?
  3. How much capital do you have?
  4. Would you be able to afford the product centric approach or not?
  5. What is your vision and mission?
  6. Which strategy aligns best to your vision and mission?
  7. Do you have a clear and concrete big idea in your mind?
  8. Are you clear about the competitive advantage you will have over others?

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