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Big MooLowering prices usually means more average and less engaging products. And selling less for less is rarely a strategy for growth. But here’s a paraphrased lesson on positioning from the The Big Moo:

“Steve Jobs had a problem. His iPod was dominating the market, but was threatened by cheaper music players—players with far fewer features but much lower prices… A Flash MP3 player uses a computer memory chip instead of a hard drive—so it’s cheaper to make, but holds less music. Every day, more consumers were making a compromise and opting for the cheaper alternative. Apple could have launched its own Flash player in response, but everything about it would have been a compromise in order to offer a lower price. A smaller, cheaper screen. A flimsier, cheaper body. A smaller, cheaper capacity.

The key is to capitalize on what your audience really wants and deliver just that
So Apple did something different. They figured out how giving people less than what a Flash player offered could actually create a better product. Apple removed the screen altogether. They made the player less than a third the size of the iPod and smaller than all of its competitors (the Shuffle weighs as much as a few sticks of gum)… Getting rid of the screen cut a huge piece out of Apple’s costs, but it also allowed them to make a product that was not a compromise. If you’re an athlete or a commuter, this smaller, lighter, non-repetitive, no-skip player is actually better than the more expensive iPod…

ING Direct uses the same strategy as Apple but in a very different business: banking. In three years, they’ve signed up more than a million new customers for their bank, largely based on what they don’t do. They don’t offer checking, they don’t have ATMs, and they don’t handle cash. They have no minimums and no fees. They don’t have branches or tellers, either… Instead, ING Direct puts the money they save into two things: 1. actual human beings who will talk to you instead of requiring you to go through a computer 2. higher interest rates ING doesn’t compromise in order to pay higher rates. They don’t choose to give slightly less service, or to have people wait a little longer on hold… Instead, they invented a bank where giving people less is actually better.”

LEARNINGS

Less Can Be More. The key is to capitalize on what your audience really wants and deliver just that.

The Big Moo: Stop Trying to Be Perfect and Start Being Remarkable is a book by Seth Godin and The Group of 33. It’s truly a great read. Check it out.

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