March 1, 2021

Product / Market Fit, Product Development
The Importance of Product Market Fit and Competitive Differentiation

In part 3 of our Masterclass Series on Building a Strategic Marketing Plan for Your Business, The Five Echelon Group's Founder/CMO Eric Dickmann talks with MAKO Design + Invent Founder- Kevin Mako about the importance of product-market fit and competitive differentiation.

Kevin is the Founder and President of MAKO Design + Invent, the pioneer firm for providing world-class end-to-end physical consumer product development tailored to inventors, product startups, and small manufacturers.  Est 1999, Mako Design is a 30-person team with offices in Austin, Miami, San Francisco, & Toronto, has developed over 1,000 products for customers, and has earned over 20 awards including Red Dot, Inc5000, Entrepreneur360, Indigo Gold, Creative Pool Gold, Best Places to Work, Lux Magazine Best Design Firm in North America, and many others.

Kevin lectures at the Masters of Engineering program at Ryerson University, is the host of the Product Startup podcast, and is a keynote for The Make48 TV Show on PBS & Amazon Prime. He sits on a number of entrepreneurship and education boards, invests in small service-based businesses, and holds the Duke of Edinburgh Gold Award designation.  

The Product Startup Podcast is the product development industry’s #1 podcast. From invention idea to getting onto store shelves, and everything in between. Hear how inventors, product startups, & small manufacturers created their inventions and launched their physical product businesses. Learn from the industry’s top industrial designers, mechanical engineers, PCB designers, consumer product managers, manufacturers, patent attorneys, hardware investors, and more. Learn about industrial design / product design, prototyping, 3d printing, additive manufacturing, product manufacturing, marketing, selling, patenting, logistics, and product business scaling. 


The Common Theme of Successful Products 

Mako explains that people and the product or service are the two critical factors when setting up a successful business. A good product can go a long way with a motivated team, an effective marketing strategy, and proper timing. To differentiate your product in the market, it should have a simple and elegant theme. Often, the greatest reason for product failure is that businesses try to become too many things to too many people at once. A successful product should focus on solving a specific problem or addressing a specific want or need rather than trying to address every pain point at once.

A common mistake that businesses make is that they tend to cast a wide net and look at everyone as a potential customer. Unfortunately, not everyone is a prospect and is interested in your goods or services. To minimize your marketing spend and wasted effort, consider narrowing your focus and being more intentional and personal with your targeted market approach. As the adage goes - "The more niche you are, the bigger your business will actually be."

When targeting a specific niche, the goal is to relieve a specific pain point for your ideal customer. As the business grows, you can address the needs of a broader audience. However, it is imperative to build momentum with a narrow target first. If you take the time to understand your customers better, it will be easier to create products or services to satisfy their needs and secure them as customers.

Design Thinking Helps Companies Help Companies become more competitive and have competitive differentiation

The Importance of Feedback

According to Kevin, when creating your product, it is essential to solicit customer feedback and reflect on the input you receive from trusted advisors. Over time, you can use feedback and reviews to develop a "Ferrari version" by enhancing the original product by including additional features to the product or service. But all of those features don't have to be there day 1. Having lots of features may differentiate you from a competitor but end up being too costly and time consuming to develop or support. It's better to get a basic, but reliable product to market and start building from there rather than spending years developing a product that is overly complicated and costly. A poorly executed product can destroy a brand's credibility. What you want is competitive differentiation based on good design, value, and reliability, not an endless list of features.

Chron lists the four benefits of having competitive differentiation with your products:

  1. Product differentiation creates value
  2. A strong competitive differentiation strategy creates an unmatched non-price competition
  3. Being successful in creating unique products or services promotes brand loyalty among customers
  4. If your services are unique, your customers will most likely stick with your brand because there is no perceived substitute for your products.
Authenticity is Important for Brands

Creating a Minimally Viable Product 

A minimum viable product or MVP is a product with enough features that can attract early-adopter customers and validate a product idea early in the product development cycle. In industries such as software, the MVP can help the product team receive user feedback as quickly as possible to iterate and improve the product. Because the agile methodology is built on both validating and iterating products based on user input, the MVP plays a central role in agile development.

What is the Purpose of a Minimum Viable Product?

Eric Ries, who introduced the concept of the minimum viable product as part of his Lean Startup methodology, describes the purpose of an MVP this way: It is the version of a new product that allows a team to collect the maximum amount of validated learning about customers with the least amount of effort. A company might choose to develop and release a minimum viable product because its product team wants to:

  • Release a product to the market as quickly as possible
  • Test an idea with real users before committing a large budget to the product’s full development
  • Learn what resonates with the company’s target market and what doesn’t

In addition to allowing your company to validate an idea for a product without having to build the entire product, an MVP can also help minimize the time and resources you might otherwise commit to building a product that won’t succeed.

A great example of a minimally viable product is Apple's yearly iPhone launch. They may be considered the best designers in the tech industry, but they are careful on how they roll out new features each year. Apple tends to be conservative in putting all the best features in one model and not overwhelming it with new things at once. Compare that to PC's from days gone by. How many were reluctant to give up floppy drives, parallel ports, or added new technologies that weren't yet ready for prime time. The focused on spec sheets, not real customer needs or usability.

What Do Customers Want Most?

When creating a product or updating the current version of your service, it is crucial to have a defined scope and implement the features that will provide the most value. Mako points out that hardware technologies are rapidly changing, and tech companies must spend millions of dollars creating prototypes, developing software upgrades, and drafting design concepts. That means it can be expensive to make a mistake! But manufacturing is becoming much more fluid. Companies can build products that have custom parts or design a limited run of a specifically tailored design. Atomic Object shares the other benefits of starting with a minimally viable product (MVP).

  • A minimally viable product brings value to your core value proposition
  • An MVP reduces rework time and costs
  • A minimally viable product builds better relationships with customers
  • An MVP brings focus to critical business decisions

Finding Your Place in a Competitive Market

It's not always easy finding those key differentiators that will help your brand stand apart from your competitors. Keep in mind that a focus on product or customer service innovation can turn the tables and give your business that needed competitive differentiation. By focusing on ways to sell your products better, market your services more consistently, and being more responsive with your customers, you can gain an edge over the competition.

Also, by isolating one or two significant improvements you can make to your product or service, you can narrow your efforts to strategically improve your offering over time without wasting resources on enhancements that won't move the needle. Do not expect success overnight. Be patient with the process and focus on consistency. Finding your place in a crowded and competitive marketplace can be challenging and time consuming. But having the right niche and focusing on satisfying the needs of the prospects in that target market can create the momentum your business needs. shares how the competitive advantage can be broken down into distinct building blocks. There are 9 brand differentiators:

  • Market Responsiveness- Your company is able to respond to consumer demands quickly, or even anticipate their needs. H&M is the second largest clothing retailer in the world, and they bring designs from the runway to its stores with remarkable speed
  • Product or Service Superiority- Your products and services are definitively better than the competition. Your company sets the standard of quality in its industry
  • Production Efficiency- Your company is a well oiled machine. It invests in production, distribution, and total quality management/
  • Natural or Human Resources- A natural advantage could be a prime retail location. A human resource advantage might be a celebrity CEO or an irreplaceable member of your team. Apple had Steve Jobs, for instance.
  • Market Dominance- Being #1 or #2 in a category is a competitive advantage. Unseating brands like Coca-Cola or McDonalds would take Herculean effort, and even that may not be enough. Size provides credibility, but also forces competitors to invest disproportionately more in sales and marketing to get similar levels of brand awareness.
  • Short Term Profit- Cash in the bank gives your company options. You may not be able to count on a surge in profits for ever, but if you can capture it, take it.
  • Method of Sale- Dell transformed the PC industry by cutting out the middlemen. It invested in direct sales channels to increase consumer preference and undercut its competitors with lower prices. Innovations in sales techniques can open up new markets while cutting costs.
  • Distribution Methods- Distribution is your company’s ability to get products to your customers. One of Apple’s core advantages is its supply chain. Tesla skipped the need for expensive dealerships, and opened showrooms in malls.
  • Technological Advantage- Netflix and Amazon know what you like. Their data scientist have developed remarkable algorithms to give you the content and products you want when you want it. Technological advantage can take many forms, but it’s fundamentally the application of software, hardware, and other intellectual property to improve the efficiency, effectiveness, or reach of the business.

The Impact of Design on the Success of a Product 

Design is one of the most important factors that influence a customer's purchase decision. If you're creating a product in 2021, and it looks like it was made in 1995, you're definitely going to have a rough ride. Customers buy things with a focus on how they fit in their lives. It's important to consider that items are not purchased in isolation; in most instances, we purchase things that work in conjunction with related products. For example, if you are building out a home office and you love the color black, you'd most like want everything from the power cables to hardware setup to have a touch of black. Accordingly, if you manufacture computer monitors designed to work with a specific computer, it would make sense that you'd try to match the machine's design aesthetic to make an appealing combination.

When creating products, visualize how they will integrate and blend with other items. For example, how many times have you purchased a piece of electronic gear only to discover it has a huge power supply brick that covers the other outlets? While the power supply may have been an off-the-shelf component that reduced cost, it completely disregarded other equipment that it may be used in conjunction with, and by doing so, frustrated the customer. We all know how annoying it is when that customer at the grocery store takes up two parking spaces. It's the same idea. They are thinking solely of themselves and the end result is they end up annoying others.

Good Product Design Principles

Kevin explains how accelerated the pace of design has become compared to a decade ago. Businesses now frequently participate in firm design libraries, product collaborations, and the application of new marketing design techniques. He emphasizes how even tiny evolutions help relieve customer pain points. Even when products are successful in terms of sales and competitive differentiation, the reality is your product needs to evolve with changing times and rapidly-shifting trends. Many large companies have shown that great design and powerful functionality can go hand-in-hand.

Coming up with your first product may be difficult because you're learning everything on the fly. Kevin suggests three simple steps to consider to help your product have strong competitive differentiation:

  1. Keep your product as simple, clean, direct, and modern as possible- You don't need lots of fancy colors or other complicated add-ons. Keep it simple and clean. Design your product to fit the cultural expectations of your target market.
  2. Ensure the product integrates well with other products- Conceptualize the product to work with other products in the same environment. Your product will be more attractive when partnered with existing goods or services the customer already likes.
  3. Gather consumer reviews and feedback- This can help you better understand the strengths and weaknesses of your product. Your business should always listen to feedback and use it to improve your product and enhance competitive differentiation.

Design as a Tool For Competitive Differentiation

Brand continuity is essential for every business. Whether it's the design color, language, or logo, people should be able to identify your products immediately. Your brand should possess a distinguishing quality that sets you apart from competitors. Kevin shares that establishing your design aesthetics is a fairly simple process - modernizing your product line, enhancing the weakest features of your product, making sure your brand and product speaks the same language.

Consistent branding increases revenue

What if My Business Can't Afford Good Design?

It may be challenging, but it's possible to get good design without spending a lot. Mako points out that there are many talented and experienced people that can help you put things together and make your brand look great. One positive aspect of a simple launch is that your audience is relatively small, making it much easier for you to reach out to them and transform them into brand advocates. Keep in mind that a quality product doesn't have to be full-featured, but it does have to be top-grade in terms of effectiveness and quality. For physical products, there are many different ways to enhance and market your product that can save money and you don't have to spend millions to achieve competitive differentiation; you just need to have a good concept!

The Hack Approach

Kevin introduces us to The Hack Approach. This method rarely works, but when it does, it can turn out to be a real game-changer for your business. The Hack Approach starts with not publicly launching your product. Instead, you build a prototype and try to pre-sell it to some people, such as friends and family. After that, you get their honest feedback and use their suggestions to improve the product features. As much as possible, keep your product launch off social media and other online platforms. Mako adds that this method may be a far more complicated process because not all people have enough connections to get meaningful sales. Generally, you're going to be far more successful in your product creation and marketing if you find the right investor that believes in your vision. But, if an investor is not yet within reach, consider this other approach.

kevin mako

No size fits all. Start with one demographic, one quality class, and one feature. Begin by enhancing all these things combined together right. Try to keep it really simple, really niche."

How Much Attention Should You Put in Your Competitor's Products?

One of the biggest problems many businesses face is that they put too much attention on their competitors and think that they need to keep matching their product developments. This mentality hurts many companies because they fail to focus on their own product development and innovation. Mako explains that it's unwise to look at a competitor and attempt to do whatever they are doing at a cheaper price. A price cut should never be considered as an improvement or competitive differentiator. If you want your product to be better than your competitor, consider a reduction of unnecessary features, improvement in quality or design, or target a different group of people.

If you think that a lower price is your competitive differentiation, wait until your competitors decide to lower the price to match your new price. They may literally be able to run you out of the market before having to raise their prices again. Instead of going the easy route of lowering the price, find the weak aspect of their product or service and make that  particular feature the highlight of your next product launch. Once you have identified what area you want to enhance in, you can focus your marketing efforts to win target customers based on the enhancements you've made.

How to Increase Your Margins and Have a Premium Product

In business, margins are key. Businesses need to make a reasonable margin to have enough room to create and enhance future products. When you sell your product or service, don't settle for less than the margin required. Ensure that you are still earning the expected margin. Build and price your products with that margin in mind from the start.

Once you start to get some scale, little tweaks can be made which can create a chain reaction of positive effects. For example, the iPhone 12 no longer comes with a charger in the box. Many people think that this is just Apple's strategy to save a few dollars on the charger. But what some people fail to realize is that because of the charger's absence, the iPhone's box is now significantly smaller. This in turn allows Apple to stack more phones on pallets and reduce their shipping costs. The absence of the charging brick saved money in parts and manufacturing cost. Along with those changes, the new packaging lessened Apple’s shipping expenses. This is exactly how you start increasing margins on products.

Look for little things that you can tweak to maximize your efficiency and earn bigger gains!

Live Stream Replay


Kevin Mako

Kevin Mako

Kevin is the Founder and President of MAKO Design + Invent, the pioneer firm for providing world-class end-to-end physical consumer product development tailored to inventors, product startups, and small manufacturers.  Est 1999, Mako Design is a 30-person team with offices in Austin, Miami, San Francisco, & Toronto, has developed over 1,000 products for customers, and has earned over 20 awards including Red Dot, Inc5000, Entrepreneur360, Indigo Gold, Creative Pool Gold, Best Places to Work, Lux Magazine Best Design Firm in North America, and many others.

Eric Dickmann

About the author

Eric Dickmann is the Founder / CMO of The Five Echelon Group, host of the weekly podcast "The Virtual CMO" and YouTube series "Work-Life" and a fractional CMO for a variety of small and midsize companies. An executive leader with over 30 years of experience in marketing, product development, and digital transformation, he has worked with large, global companies and small startups to develop and execute marketing strategies to bring innovative products to the market.

Follow Us


Sign up for the latest podcast news!


The Virtual CMO podcast is hosted on Buzzsprout!

Podcast hosting and a whole lot more! Buzzsprout has helped over 100,000 people start their own podcast. It is the easiest way to host, promote, and track your podcast. I love it and highly recommend it to anyone thinking of starting a podcast.

Interested in learning more? Click the button below to save $20 and also help support our show!