Saturday, September 01, 2007

Commodity and Differentiation feature

Mainly, we can divide product features set into 2 category: Commodity and Differentiation. Commodity is the set of core features that every product that play in that market space must have. For example, if you are developing a word processor, content formatting capability is a must; If you are developing a CRM product, ability to track contact and opportunity is a must. Customer always expects the feature will be there in the product. It is not compelling to have them, but surprise of not to have them.

Differentiation, as its spelled, is product feature that differentiate one product from another. Differentiation feature is what that give a product market advantage or to serve a niche in the market space. It is the type of feature that:
a) Nice to have but not essential to product of that class.
b) Allow the product company to charge more for their product.
c) If implemented correctly and used to maximum advantage, it can redefine the game, become a commodity and possibly turn the company to become the market leader.

For example, in a word processing product, it is nice but not essential to have a full drawing and diagramming capability. User who write article or book need to have both content formatting capability and graphics drawing capability within the same product because they need to have illustration for their content. Usually, they don't mind to pay a little more to get the extra feature that they want. But for majority of user, they might not need this capability to be included.

Commodity feature can also be implemented in different product in different ways to include different functions and capabilities which in turn can become a differentiation fact. For example, in automobile industry, airbag is a commodity feature because it is an essential safety feature. You can't sell a car if you don't have airbag. However, while most cars have only one airbag at the driver seat, having the second airbag at front passenger seat is a compelling safety feature (This is just a hypothetical example. This is true many years ago, but today most car have two airbag as standard).



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