Several visual models, insight into the essence of differentiation

This article comes from WeChat WeChat official account:Lida Becca (ID: caca Insight), Author: Lida Becca, the title map is from vision china.

There are two kinds of people I admire in my work. The first kind can write and draw on the whiteboard with a pen to explain a complicated situation clearly. The second kind of person can explain the abstract concepts in the business field clearly and make people feel suddenly enlightened.

I also want to be such a person. So I have been thinking about what abilities I need to improve to get closer to them. After disassembling its thinking and behavior patterns, I found that the most crucial thing is the ability to digest and understand abstract concepts.

The ability to understand abstract concepts is particularly important in the business world. I have been engaged in strategic management and business analysis, and I am exposed to many abstract concepts every day, such as market segmentation, differentiation, sales efficiency, leadership, customer loyalty, private domain traffic pool and so on. I believe these words are familiar to everyone, but after careful consideration of these concepts, I think there are several phenomena worthy of our vigilance:

• Phenomenon 1: Show that you know a lot by piling up words.

• Phenomenon 2: I feel I understand, but I can’t explain it to others.

• Phenomenon 3: I seem to understand it, but I don’t know how to apply it, and I haven’t used it.

• Phenomenon 4: I feel that some concepts have been overused, and I disdain to mention or use them in my work.

The essence of the above four phenomena is that the understanding of abstract concepts is not deep.

But it is difficult to understand abstract concepts. There is no only correct definition of each concept, which can be said to be a matter of opinion; At the same time, our brains are not good at dealing with abstract affairs, especially abstract concepts that are invisible and intangible. It is precisely because of difficulties that those who have conquered abstract concepts can stand out from the crowd.

First, the three-step method of visualizing abstract concepts

Recently, I read a book, Diary of the Flavor Mixer, which was very enlightening. Compared with concept, smell is more abstract. How did the perfumer conquer or even pass on the "smell"? The answer is to convey images through language.

For example, a perfume of Hermes, "Mr. Li’s Garden", how did the perfumer express the smell in words? "Remember the smell of the pond, the fragrance of jasmine, and the smell of wet stones, plum trees, kumquat and giant bamboo. Just there, there are carp with a long life of 100 years in the pond. "

Even the abstract concept of "smell" can be presented in front of us so vividly when the perfumer presents such vivid images as pond, jasmine, stone, bamboo and centenarian carp.

If you want to understand business concepts in depth, the principle is the same. The secret is to visualize abstract concepts. Specifically, it is divided into three steps:

• Step 1: Find a suitable model for the concept and present it visually.

• Step 2: Form your own insights based on this model.

• Step 3: Establish the relationship between concepts and find the limitations of the model.

In the next part, I will take "differentiation" as an example to introduce in detail how to build a visual model, and then deeply understand abstract concepts, and deeply explain the specific meaning and operation methods of each step.

Second, everyone is talking about "differentiation". How many people really understand it?

differentiation strategy（Differentiation Strategy）Or product differentiation marketing is often mentioned in enterprise strategy and product marketing, especially in this stage of stock competition, almost all companies are proposing differentiation and want to win in differentiation.

I take the concept of "differentiation" as an example, precisely because there is almost a shadow of "differentiation" in the major chaos I mentioned earlier. Many people talk about differentiation every day, but you have to let them talk about what differentiation is. What is not differentiation? When should we differentiate? When can’t it be differentiated? They may not understand.

We might as well take this concept to do a self-test:

• If you are asked to answer the above questions now, how do you answer them?

• If you were to tell your mother the concept of differentiation now, how would you say it?

• Have you ever applied the concept of differentiation in your work?

• As far as a project you are dealing with now, how to do it better through "differentiation"?

• Can your company adopt differentiated strategies to further enhance its competitive advantage?

Next, let’s look at how to use the visual model to deeply understand the abstract concept of "differentiation".

3. Wien Model-Visualize product differentiation

The Wayne diagram above is a particularly good model, which can let us understand what differentiation is very intuitively. The three circles represent the functions that our own products can achieve.(top left), competing products can achieve the function.(below)And the needs of customers(top right). Through the intersection of three circles, the picture is divided into seven modules from a to g.

In order to make the description more intuitive, let’s assume that we are the product manager of Yuanqi Forest, our competitor is Coca-Cola, and our target customers are white-collar workers.

(1) Differentiation = the part of customer demand that only we can meet = Area A in the figure.

The most critical areas in the diagram, which need to be deeply understood by us, are ABC three areas.

• Satisfied customer needs: A+B+C b+c. Together, these three areas constitute a part of customer needs that our products and competing products can meet together. Among them, Area B is a demand that both sides can meet. For example, Yuanqi Forest and Coca-Cola can quench people’s thirst, while Yuanqi Forest and Diet Coke can reduce the intake of carbohydrate.

• Customer demand that only we can meet: Area A.(Our Differentiated Competitive Point)This is a point that competitors can’t meet, but only we can do it. For example, because of the erythritol used in the sugar-free drinks of Yuanqi Forest, the taste of Yuanqi Forest is the best among the sugar-free drinks, which meets the taste requirements. For example, Yuanqi Forest provides many delicious new flavors, such as grapes and cucumbers, which meet the needs of white-collar workers to try and exchange new flavors.

• Customer demand that only competing products can meet: Area C.(Differentiated competitive points of competing products)This is the part of customers’ needs that competitors’ products can meet, but our products can’t do it at present. For example, Coca-Cola’s channel and retail coverage are very strong. When users want to buy a bottle of soft drinks immediately in hot summer in various cities, they can easily buy Coca-Cola in the supermarket on the street. Another example is the price. Although the Abbas sweet used by Coca-Cola tastes bad, it is cheap, so people who want to buy brand soft drinks at a cheap price will still choose Coca-Cola.

Strategic point 1: For the marketing department, Area A is a must-win. Have we effectively passed on the unique value of our products to our customers? Have we clearly and effectively defined our differentiated competitive points? Do our customers know enough about our value?

(2) What is invalid differentiation? What are the risks and opportunities in Area E?

Many people simply understand differentiation as "doing differently from competitors", and this strategy of pursuing differentiation out of customer needs is undoubtedly a waste of resources. We can find many cases of failure, all because of ineffective differentiation.

In the 1990s, Motorola’s Iridium satellite system can provide all-round coverage that cellular systems can’t. For this reason, Motorola invested 2.6 billion US dollars, and Motorola estimated that when the number of users reached 500,000, the project could be profitable.

The biggest advantage of Iridium phone is that it can communicate in harsh environment, climate and other conditions. Ordinary consumer users don’t buy this function, and the maximum number of users is only 55,000. Eventually, the project was declared bankrupt in 1999 because it could not make ends meet. The bankruptcy of the Iridium project is recognized as the starting point of Motorola’s decline from prosperity.

Strategic point 2: Ineffective and differentiated region E is an opportunity to reduce costs and increase efficiency. From the perspective of product management, what functions can be cut off or lowered? From the perspective of investment, where should we cut investment? From the perspective of cost, what measures should we take to reduce the cost in this area?

(3) How to do benchmarking research? How to make a move that hurts competitors the most? Look at area b and area C.

Know yourself and know yourself. To do the analysis or benchmarking of competitors, area B and area C are the key. But we must think, what is the purpose of benchmarking analysis?

Benchmarking analysis is definitely not to copy the practices of competitors. We made a clear study of our competitors’ operations in Area C, and made a set of imitation. What was the result? As a result of copying competitors’ practices, the area of area B has expanded. Fighting in Area B is a protracted war, a war of attrition, and even more a competition in the Red Sea. Such an operation is not cost-effective.

The purpose of benchmarking analysis is to actually reduce the dimension of competitors. When we thoroughly study the differentiated competitive points of our competitors, we must think about whether we have the ability to achieve the same customer value at a lower cost. If we can, it is worth doing.

Coca-Cola has been deeply cultivated in China for many years, and its broad channel coverage is its accumulated differentiation advantage for many years. So is Yuanqi Forest confident to build a channel network of the same scale at a lower cost? For example, by combining online sales platforms or changing the traditional channel system to reduce costs? If not, then we should carefully expand the scale of offline channels.

Another purpose of benchmarking analysis is to adjust the competitive strategy. In area B, fight if you can, run if you can’t, and there is no need to fight. In area B, if we can crush our competitors with lower cost or business model, then we must stick to this field; If you are not sure of winning, you must transfer your business center and strategic resources to find Area A or upgrade and transform the existing functions of Area B..

Let’s compare Naixue’s tea with Starbucks. Naixue’s tea claims to be a Starbucks in the field of tea drinks. However, comparing the financial reports of the two companies, we can see that Starbucks has a high cost advantage in rent negotiation because of its brand effect and effect, so it can rent shops in high-end business districts at a very low cost; At this point, Naixue’s tea does not have this cost advantage for the time being, so will Naixue’s tea continue to take the route of opening high-end flagship stores in high-end business districts? Let’s wait and see.

Strategic point 3: Implement precise dimension reduction attack on competitors’ differentiation strategies. Can you provide the same value as your competitors at a lower cost? Can we completely destroy the competitive differences of customers by changing the business model? Can you find new differences faster than your competitors?

In the above space, I introduced how to find a visual model for an abstract concept and form insight according to this visual model; These are the first two steps in the three-step method. Let me introduce the third step, which is also a particularly critical step, to establish the relationship between concepts.

V. Thinking: What is the connection between differentiation strategy and five forces model?

Five forces model, I believe everyone is familiar with the five forces: supplier, buyer, competitor, potential entrant and substitute.

In order to further deepen our understanding of the differentiation strategy, we can try to understand the "substitutes" in Porter’s five forces with the differentiated Wayne diagram. If you want to present a substitute on this diagram, how will it be presented?

A classic case of substitutes is the original iPhone, which was shocked the world after it was born. Since then, the market that was originally divided by cameras, radios and walkmen can all be satisfied by one product. Consumers don’t need to buy multiple devices, but they can meet all their needs on one device. How attractive it is for consumers.

As shown in the figure below, we can use another new circle to indicate the position of "substitute" in the map, which is very clear at a glance. At the same time, we can also find the limitation of Wayne diagram, that is, it can’t show the situation of the supplier, that is, the upstream supply chain.

6. Thinking: How to understand the blue ocean strategy with Wayne diagram?

Blue Ocean Strategy is a typical differentiation strategy. However, I think Wayne diagram has limitations in explaining the blue ocean strategy, and the main limitation is that the low dimension cannot explain the high dimension.

Wayne diagram is a plane two-dimensional model, which shows the intensity through the area in the two-dimensional map. We can use Wayne diagram to understand "what difference?" "What is not differentiation?" However, when we further ask how to make differentiation, we can’t do it.

The blue ocean strategy is a multidimensional model, which realizes differentiation through multivariate clustering and manipulation, so it is more vivid to understand and show it with the track diagram shown in the following figure. Therefore, we can use Wayne diagram to find out where differentiation is needed first, and then use orbit diagram to lay out how to differentiate.

Through the above two thoughts, we have completed the third step: establishing the relationship between concepts and finding the limitations of the model. The limitations of Wayne diagram are: 1. It can’t show the multi-dimensional differentiated layout, and 2. It lacks the perspective of upstream suppliers.

But in this way, I believe that our understanding of the concept of "differentiation" has gone far beyond the general level.

This article comes from WeChat WeChat official account:Lida Becca (ID: caca Insight), by: Lida Becca

This content is the author’s independent opinion and does not represent the tiger sniffing position. It may not be reproduced without permission. Please contact hezuo@huxiu.com for authorization.

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