Monday, July 23, 2007
Aspirin or Penicillin?
Is your business selling aspirin or penicillin?
Is it aspirin? Does your customer have a headache, and if he would just take your product/service, he'd get rid of it? Does your customer have achy muscles, and a few pills would put him at ease? Or is it penicillin? Does your customer have a life threatening illness? Is he more than uncomfortable, more than achy? Is he truly sick, and in trouble? Without your product, how in trouble is he? I'm sure it is obvious by now, you want to sell the anti-biotic, not the analgesic. If you avoid taking aspirin, you can get through the day. It's optional. If you avoid taking your penicillin, you might not have another day.
So, let's take that filter against today's whipping boy, Ooma. Is there any customer in the world to whom Ooma will be penicillin? (Not from where I sit.) And if so, would the medicine be generic? (Yup).
Ok - that's the easy part. Why is this so? I firmly believe that Ooma is aspirin because they have a horizontal product in an unregulated space, and it's really hard to differentiate the service to create any sort of brand loyalty. Outside of branding, horizontal products and services very, very rarely have points of competitive advantage other than price. In an unregulated space, businesses and consumers have choice. Although every business or home needs phones, they don't need Ooma phones. In phones, it's hard to make a brand. Apple is going to have the best shot of anybody, ever, of doing this, and the jury is still out.
Simply put, Ooma, and every company like it, sells aspirin, because it's an aspirin market. The basic issue with Ooma, and the cap on their success, isn't the team, or funding, or even their feature set. The basic issue is in the market they pursue.
Is your business selling aspirin or penicillin? Here's a hint - the first step is to find the market where the customers have a fever.