Discover your products

hidden potential

Group 3

Background

A successful strategy for selling your products or services depends on your ability to
get into the minds of your targeted customers. But sometimes the customers
themselves do not know what is in their mind.
However good your product or service is, the truth is that no-one will buy it if they
don't want it. Every business needs areasonfor their customers to buy from them and
not their competitors.
Companies that UNDERINVEST in attributes that customers value will lose customers;
companies that OVERINVEST in attributes that customers dont value will lose money.
Organizations, therefore, must find the best fit between a products bundle of
attributes and their customers needs and doing so is an endlessly iterative process
because not only competitors innovate but the customers needs also change.

ACE Framework

ACE: Attribute Categorization and Evaluation)

A simple matrix that help managers understand customers' behavior and bring hidden
product attributes to the surface. It helps companies see that a product may have
different attributes for different customer segments.
The matrix gives companies an iterative process for validating assumptions about
product attributes and for monitoring changes that occur because of competition. It
shows what action a company must take in response to each attribute.
Uncover the salient
features of the
product

Map the attributes

to the matrix

Validate

#1 Uncover attributes
Observing customers as they buy and use a product is the first step in discovering its
salient attributes.
Pepsi took a look at how consumers behaved when they bought and drank Pepsi-Cola.
The company conducted a consumer research study, giving 350 families the chance to
order Pepsi. No matter how many bottles of Pepsi were purchased, consumers emptied
them. Furthermore, the total amount of soda purchased was limited not by consumers
taste preferences but by their ability to bring the product home. Customers bought as
much as they could comfortably carry and no more.
That insight led Pepsi to focus on packaging. Pepsi-Cola was able to identify
a hidden product attributeweightthat drove purchasing behavior for a
subsegment of the market.

4 Steps
Identifying parallel needs,
Identifying purchasing patterns,
Observing customer and
identifying customers perception of risk

#2 Map the attributes

BASIC
One that is expected from all the companies, taken for granted
If it positively evaluated, it is non-negotiable (Atleast 2 weeks of vacation)
If it negatively evaluated, it is tolerable as long as the company is not performing worse than
the competitors (5 days a week on job)

DISCRIMINATOR
Distinguishes a company from its competitor
If customers are positive about it, it becomes differentiator (excellent cafeteria, gym etc)
If customers are positive about it, it becomes dissatisfier (poor website etc)

ENERGIZER
It becomes the key driver in decision making
If customers are positive about it, it becomes exciter (team building, peer programming etc)
If customers are positive about it, it becomes enrager

Signal, how a company must

perform
Basic

Positive

Negative

Neutral

Discriminator
Differentiator
Nonnegotiable
Perform better than
Perform atleast as well
competitors if attribute is
as competitors but not
salient to target
much better
customers
Tolerable
Dissatisfier
Perform no worse than
Perform better than
competitors but not
competitors and correct
much better
problem soon
So What?
Retain only those
attributes needed for
Not applicable
other target segments
or other justifiable
reasons

Energizer
Exciter
Perform better than
competitors
Enrager
Correct problem at any
cost; capitalize on
competitors enragers

Not applicable

#3 Validate Validate Validate

Once a company has mapped out its assumptions about how its customers react to
the product, it must validate those assumptions.
A variety of focused market research techniques can test the accuracy of the initial
mapping: focus groups, discussions with lead customers and distributors, and test
markets
For example, the many food manufacturers who have flopped with new products
designed around their belief that a promise of low fat would be an energizer. What
they failed to consider was that customers might say they wanted low fat but, in fact,
wouldnt want it at the expense of taste and texture.

Key Learnings
ACE matrix is a simple but potentially powerful tool. It imposes a discipline that helps
managers match their product offerings to customers needs.
Attributes are dynamic in nature. Over the time, exciters can become basic (health
insurance).
Closely monitor negative attributes that threaten to become dissatisfiers
Convert your competitors tolerables into dissatisfiers
Thus the ACE matrix leads from product strategy to customer strategy: Have we
targeted the right customer segments? Or are there other segments that value
attributes we can supply more readily than our competitors?
ACE Matrix provides a way to get everyone in the company thinking about why the
customer will buy what we are selling. That, after all, is what competitive advantage is
all about.

How it relate to Product Management