About eight years ago I was a co-founder for a startup called Cathedral Leasing. You can see the founder, Doug Speight, pitching the concept here. The mission was to be the go-to online platform for connecting lenders to companies looking to lease equipment. My role as a co-founder came to be because I had previously developed a loan underwriting algorithm that Cathedral wanted to use as part of its approval process. What our team realized was that as part of our product design process we needed to leverage utility marketing best practices.
If you have not heard of utility marketing then allow me to educate you on what it is and how it should play a role in your product design efforts.
Defining Utility Marketing
Utility Marketing, by definition, implies creating a product that is so useful to potential customers that they become convinced they should buy the product. But, let’s shorten that a bit. Here is a simpler definition of utility marketing - it is about creating value.
There are five major components that comprise utility marketing. Most companies only leverage one or two of them. They are Form, Place, Possession, Time, and Information.
Those components might sound like they are similar to the Four Ps of a marketing mix - Product, Place, Price, and Promotion. The distinction is that the Four Ps are what comprise your marketing mix. For example, I will sell this coffee from a retail store for $4 per mug and I will entice consumers by offering a rewards program. Utility Marketing is how you create value for your customers. It is more focused on the product design aspects.
Let me give you some examples of the five components.
Form - you can create value by taking whole coffee beans and grinding them up.
Place - this is all about convenience. Is your product placed such that it is more convenient than the competitors? For example, maybe you have a better location in the grocery store than your competitors. Perhaps instead of driving to your coffee shop, your coffee shop comes to the consumer via a food, or coffee, truck that drives around like the old ice cream trucks use to do.
Possession - instead of your consumers having to go to a coffee shop to buy your coffee you cut out the middle man and sell it to them direct.
Time - if the normal process is slow can you make it faster? This is one place where Cathedral stood out. The algorithm I had designed makes approvals much faster than how lenders normally processed equipment leases.
Information - some companies do not provide as much information as others. For example, does your website clearly state the price of your products so that customers aren’t left wondering what your product costs? Or, maybe you have a whole catalog of white papers on how coffee beans should be handled, that just happens to be how you handle beans, to ensure freshness.
The key here is that the more of these components you can leverage the better. Each component adds value to the product. Adding value allows you to differentiate your product which is critical for the success of your venture.
I recommend spending some time thinking through how your product design efforts can take into account as many of these utility marketing components as possible. If you find that you are only able to leverage one then go back to the drawing board.
One more thing, I’ve talked about products this whole time. The same “product design” thought process can be leveraged with service-based businesses. It might take some extra creativeness but you can do it.
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