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On defining a competitive difference.

"Whenever you're selling a product," says Tony morris, "customers always ask two questions. The easy question is whether your product solves their problem. The much harder question is why you're significantly better than every other product that also solves that same problem."

Morris, a former corporate reseller who now works as a financial and strategic consultant, argues that software companies rarely pay enough attention to defining a "compelling competitive difference" for their products. "It's not enough to get a few favorable product reviews," he says. "If you're going to make real sales, you absolutely have to communicate a clear position in the whole spectrum of products that a customer considers."

Morris Bays there are three primary questions to ask when analyzing a product's competitive position:

* What turns on the customer? 'Ultimately, a product's

compelling difference is defined in some mysterious way at the customer level, not by wishful thinking in a marketing plan," says Morris. Frequently, he notes, customers are won over by some aspect of the product--such as price, support policies, availability, reputation, or low risk--that has little to do with features or performance. "If you don't understand what motivates your customers, you're probably in trouble."

* Who are the other players? It's also important, says Morris,

to identify "the two or three reasons why customers buy other products--or don't buy them." A realistic view of the competitive environment should include more than just the current software best-sellers, he adds. "Often, the most important competitor is a pencil-and-paper system or a new entrant that hasn't yet established a strong market presence."

* Can you win over resellers? Taking shelf space away from an

entrenched competitor is often tougher than competing for end users, says Morris. "For dealers, the number one competitive edge is your ability to create demand. They want to see ads, good sales materials, promotions, seminars, and mailings." Another way to gain a toehold, he adds, is to lower the dealer's cost of sales. "If you can reduce the cost associated with evaluation, sales training, and inventory overhead, your product becomes just a little more attractive than the competition."
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Date:Jul 1, 1989
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