The Simple Guide to Product Design (for Small Businesses)

1. What is Product / Service Design?

What is Product / Service Design?

We are not only talking about physical products only here. It could be a physical product, it could be a service, it could be something digital, or a bit of them all.

It’s also planning the whole product experience the customer gets - the product, the packaging, the in-store experience.

The restaurant walls, the waiter and the food are all equally part of the product.

There are always options and decisions

Should the product be expensive and top quality, or value and basic?

What should be included, what’s an added extra?

Are there any up-sells or complimentary products I should be targeting?

What about market segmentation - which niche should I design my product for? Can I go for broad appeal or should I just target one corner of the market?

It doesn’t matter if your product is a cup of coffee, accountancy services, clothes or holidays - there are countless decisions and options to consider. It’s never as simple as a first glance would lead you to believe.

Testing your Assumptions

It’s easy to start with some big fat assumptions when it comes to turning your business idea into a product offering. Things so obvious that they don’t even need thinking about:

Our product needs to be different and unique to stand out

If we make it cheaper, we’ll sell more

Broader market appeal means more sales

As it turns out, none of the above are true.

Assumptions need to be tested and questioned. They might be spot-on correct, they might not. But, until the logic is properly tested, you’ll never know.

This is perhaps the main aim of this simple guide to product design - to look at the assumptions that are easy to make, and then look at alternative ideas that might just be worth considering.

2. What Product Type are you?

A new great idea vs existing product?

The first question we always ask when looking at a new product offering:

Is it a brand-new product type, unknown to the world? Brand-new product types have no current market. No one knows the option exists so no one is out looking for it.

Or is it an improved version of a current product? Something that already has an established market and client expectations?

A brand-new product type – is hugely expensive to start up and very risky…

If you invent a brand-new product, then it is both difficult and expensive to sell it. Nobody knows your product exists, no one is looking to buy it.

So, you have to create the market - to create the need in people’s lives and then fill that need by selling the product to them.

This is difficult and takes a huge marketing budget.

Don’t get me wrong - when a brand-new product type takes off, you have a glorious honeymoon period before competition jump in. It can be the goose that lays the golden egg, for a while at least. But don’t assume that people will suddenly decide on their own that they’ve a need for a product that they’ve never needed before. That will take some serious marketing planning & investment.

Whereas improving a current product is much easier.

Open a new coffee shop near an existing one. Make it just a little better. You’ve a working business.

Coffee shops have an existing market already, you don’t need to create the need in people’s lives. People are already looking to buy the product, you just have to present yourself.

Perhaps this is less entrepreneurial, maybe less glorious and exciting? It is also, however, far less risky and much easier to get off the ground within a reasonable budget.

Look out for the “New Great Idea” trap

Start-up businesses sometimes think you need a great new idea, something new. An innovative invention that’ll transform the world. It certainly sounds a lot more exciting and even entrepreneurial.

It turns out, in fact, those great new idea businesses are a lot harder and more expensive to get off the ground. Some do succeed and make huge amounts of money. A lot more though lose money and fail.

The vast majority of successful businesses are small businesses providing well-known products to an established market. These are easier and cheaper to set up and have a higher chance of success.

Beware the “new great idea” trap - you need a lot more money and expertise to get it off the ground.

3. Who are you designing the product for?

I’ll give you a clue: It’s not you.

A common mistake is designing a product you would love. You are probably not your target market.

You are an entrepreneur. You are a business person. And us entrepreneurs, myself included, tend to be outliers in the personality type scale. Our own subjective tastes rarely match that of the mainstream of the populace.

Your market probably think differently to you. What needs do they have and what convinces them to purchase products like yours?

Focus on your market’s taste, not yours.

4. Study the rivals… and be similar

Your rivals are already running working businesses. Customers like their product offerings and price point enough to buy. They must be doing at least an acceptably good job.

You don’t need to be wildly different or unique. In fact, you shouldn’t.

By creating something wildly different, you are deciding to move away from what the market currently is looking for.

By being wildly different you are creating something that people are not already looking to buy. If you compare your product to the rivals then you want to be similar, but just a little better. People will think it scratches the same itch, but a bit more effectively, so be happy to buy your product instead. Make it too different and people will think it doesn’t scratch their itch at all.

Do what the rivals do, only a little better.

And you don’t need to beat your rivals at everything. Pick your thing - the main sales point, the one big reason someone should pick your product - and make sure you beat your rivals at that. By a country mile.

For everything else, you only need to make sure you are acceptably comparable.

For example, my new cinema is going to market itself on having the comfiest seats in the history of cinema. That’s my USP, my one big marketing message.

My prices & my popcorn just need to be comparable. Indeed claiming to be the best at everything can be bad for your brand. The best Seat and prices and popcorn in the world - as a marketing slogan that is just a mess. Too much noise means no one point cuts through.

You do not need to beat them at everything. Pick your thing, and make sure you are the best at that.

5. Your product: a collection of benefits to the customer

The nuts and bolts are irrelevant. What you are selling is a pile of benefits to the customer. Benefits from their perspective, too.

When buying a Ferrari, the customer is buying an image, not a transportation method

A Premier League football shirt gives the customer membership to a club, not clothing.

You are not buying a drill, you are buying holes in a wall.

For example - a cup of coffee

When a consumer buys a cup of coffee, they are not just after a drink. A cup of coffee is the cheapest luxury available. A way someone can give themselves a small treat with a clean conscience.

The taste of the coffee is just one small part of the whole benefit the customer is looking for, be it consciously or subconsciously. It is as much about the treat, about taking a break, about the feeling of putting yourself first even for just a few minutes.

Designing the full product experience involves thinking about a lot more than the taste of the coffee itself, as that’s likely only part of what the consumer is looking for.

Focus on the benefits the customer is looking for.

6. Market Segmentation

Some people would like a simple cheap laptop for work. And some want a powerful expensive laptop for gaming.

So I make mid-ground laptops that cover both bases reasonably. Who buys them? No one.

My laptops are too expensive and confusing for those who want just a simple laptop for work. And they are not powerful enough to keep up with those who want a gaming powerhouse. I’ve fallen between two stools.

My main rivals though, the Simple Laptop Company, and the Gaming Laptop Company, are clearing up.

Hitting the nail on the head, just for your niche

Marketing segmentation is about identifying one subset of customers and really scratching their itch completely. Scratching it so well, that no one-size-fits-all product could ever compete.

It’s also about completely ignoring the needs of the other niches - we’ll never sell to them, anyway.

The Gaming Laptop Company even put a big red skull and crossbones on the back of their laptops - you might as well hang a sign saying “if you are a businessman, go away”. All things to all people, they are not. But super attractive to just their niche, they most definitely are.

Is the market already segmented? Or could it be?

If the market is segmented, you need to make a product to target just your one segment and target that very effectively. Otherwise, the rivals will match the user’s needs better than your one-size-fits-all product offering.

If it’s not already segmented, then perhaps there’s a golden opportunity just waiting to segment it?

Market segmentation is about small steps. It’s splitting shampoo into shampoo for greasy hair and shampoo for dry hair. And then into shampoo for greasy roots with dry ends. It’s not turning a car into a motorbike. That’s a new product (even though both serve the same purpose).

Trying to appeal to multiple market segments means being second best to everyone. Pick your niche, and go all-in just on them.

7. Making it marketable

People buy the marketing, not the product

People don’t know what your product is like until they’ve already bought it, by which time it’s too late.

There’s no point in having an amazing product that would look bad in the market. No one will buy it to find out how good it really is.

So your product design should focus on what will help you sell the product. Small details that you cannot use to sell your product should be at the bottom of the list.

Think of cars with electric windows in the front and manual windows in the back. The person buying the car is unlikely to ever sit in the back, so there’s no point in spending money making the back any better than necessary.

Or, when we are working with our travel clients. Having fancy plates will not help sell holidays in a B&B. However, a hot tub out the back, I can put that all over the website and that’ll get the phone ringing off the hook.

Focus on the product details that will help you market the product

Product design and marketing plan design go hand-in-hand

No, if you build it they will not come. Sorry.

Products are never so good that they “sell themselves”. It doesn’t matter how good your product is, it needs to be tied to a great marketing plan – is this product sellable?

Product design and marketing plan design go hand-in-hand. The product design should help the marketing plan, and the marketing plan informs the product design.

8. Matching customer decisions that are already made

At what point do people decide what they would like to buy? Often, it’s long before they see your product. You will very rarely change their minds.

A car and a people carrier offer very similar benefits. But, not many people turn up to the car showroom yet to decide how many rows of seats they want their next vehicle to have. That decision is already made, and generally, it is set in stone.

How customer decisions are made.

A product is a way to fulfil a need. And there are often many ways to fulfil a need.

The customer’s decision process commonly goes like this:

1. Identify the need - I’m hungry

2. Select a product type that’ll fulfil that need - takeaway would be great

3. Go and find a product of that type - pick a takeaway

Getting a takeaway has morphed into the aim. All other types of food will be ignored.

Even though the product is really only a way to fulfil the original aim, the product itself has become the aim.

If us humans bought things logically, we’d be open to anything that fulfils the original aim. But, us humans do not buy things logically.

For example, in the business world:

A small business wants to find more clients online - this is the original aim.

They’ve decided they want an advertising agency to run some social media campaigns for them - this starts as the means of fulfilling the aim.

But then, it changes. As they start looking for a social media advertising agency, that becomes the aim. They are no longer looking for a way to find more clients online; they are looking for a social media advertising agency.

And you can offer them everything under the sun that will get them more clients online. But, if it’s not a social media advertising agency, they won’t even look at it.

After all, when it’s takeaway night, you could offer me a meal in your restaurant for 50 cents, I won’t be coming in. It’s takeaway night.

Your products need to match the decisions the customer has already made. You won’t get people to change their minds, even if you offer them something better than they were looking for.

9. Final Thoughts

Product design is a complex area. Most of the sections above are a full topic in their own right.

Thankfully, there are countless resources across the internet to help you investigate how to design and refine your product offerings. The above, though, should get you started. We’ve formed countless successful businesses using just the simple principles above.

If we could leave you with one final thought it would be this:

There’s no point in having a perfect product you cannot sell. And there’s no point in having great sales for a product you cannot provide.

Your product design should go hand-in-hand with your marketing plan.