Ep 35: How to Differentiate Your Product

[00:00:03] Aaron: In business, I believe fundamentally your job is to bring something to people that they do not have, right? You wanna fill a need, fill a void that's in the market. There’s millions and millions of products, and literally over a million sellers, how are we gonna do something that will stand out in that market?

[00:00:22] Host: Hi, This is Small Business, a podcast brought to you by Amazon. I’m your host, Andrea Marquez. On This is Small Business we cover all things small business that will help you start, build, and scale your business. We will hear from guests with diverse backgrounds, point of views, and stories, with the hope of hearing from many types of small business entrepreneurs. And by the end of each episode, I'll point out key takeaways that you can use on your business journey.

In today's competitive marketplace, product differentiation has become an essential strategy that every business needs to know to stand out and thrive. Seems pretty obvious right? So then, how can you effectively differentiate your product from the hundreds of other products out there? [00:01:00] Especially if you're in a saturated market?  

Coming up -- I'll talk to Rita Gunther McGrath, a best-selling author and professor at Columbia University Business School, about how you can differentiate your product from your competitors. But first -- I want you to meet Aaron and Whitney Cordovez, Cofounders of Zulay Kitchen, a brand that sells kitchen tools and appliances. You can find their products in the Amazon store along with most of the small businesses we feature on This is Small Business. One of the reasons I was excited to talk to them about product differentiation is because they're doing business in a saturated market and still thriving and reinventing themselves to stand out. As you might know, there are tons of brands that sell kitchen appliances so, I wanted to find out what Aaron and Whitney did to differentiate their products from the hundreds of others out there in the market. So, if you're passionate about starting a business and are trying to figure out how to stand out, then this episode is for you.  

[00:02:00] Also, don't forget that if you want to hear your story on This is Small Business, we have a voicemail line where you can ask questions or share your entrepreneurial story. We want to hear from you! Find the link to the voicemail line in the episode description.

[00:02:15] Aaron: The name comes after my mama. Her name is actually Ingrid Zulay Martinez. But she doesn't like her first name, so she always go by Zulay. She likes Zulay. It sounds cool and fun. And she's a cool and fun person. And she basically, dedicated her life to me and my brother in helping us, and then helping our family as well. And so when it came time to make a business and make a company, make a brand, I thought what represents something that's, to honor my mom for everything she's done, we named it after my mama.  

[00:02:48] Whitney: Nine and a half years ago. We had nothing. We were both working in nonprofits and when we left the nonprofit. She was the only one out of both of our families that had our back. If our crazy plans [00:03:00] and different testing things that we would do, like entrepreneurship didn't work out, she was always there for us. So when we were actually working on a name for this company. She was the one person that always had our back, so I was like, yeah, of course.

[00:03:18] Andrea: How beautiful. And I'm sure having that connection makes it easier to wanna make Zulay kitchen into a successful business. So, tell me more about Zulay Kitchen? How did it start?

[00:03:30] Aaron: A friend had told us, hey, you know, it's possible to sell on Amazon and make your own brand. And we said, uh, I told her, hey, I wanna try this Amazon thing. The course was, we paid it – for a course. Put everything on a credit card. We bought our first product, money credit card.  

[00:03:40] Whitney: We had no money.  

[00:03:41] Aaron: But the concept was, listen, in business, I believe fundamentally your job is to bring something to people that they do not have, right? You wanna fill a need, fill a void that's in the market. There’s millions and millions of products, and literally over a million sellers, How are we gonna do something that will stand out in that market? [00:04:00] And that was what my job was for about a month and a half to two months to find something that would fit in the market. That there was a need and we could bring something of value. And that was the goal from the beginning. And that first product was the lemon squeezer. We have a two in one lemon squeezer. It is actually a patented product. It's not our patent, but we do license it.  

[00:04:18] Whitney: And I wanna say that basically when we, when he went through all the different products and decided to do that one, we ordered probably about 10 different variations of the lemon squeezer and there was rigorous testing against the top competitors to make sure that the one that we chose was gonna be the best and number one.

[00:04:35] Aaron: We wanted the best one cuz the first page had so many different types and models and this, and I said, Which one's the best. And I had, we ordered the top one and it was not the best, it was not very good. And we found and tested this two in one, which is spectacular. And we have people that bought from us the very first year in 2015 that still have it today and understand this is the best, one of the best purchases I've ever made in on Amazon. But we started with a lemon squeezer. Now we have over a thousand different, products. So, it's expanded quite a bit in eight years. [00:05:00] We have spatulas and milk frother, lemon squeezer, garlic, garlic presses. We have cheese boards, cheese slicers, cheese slicers.

[00:05:10] Andrea: So, I want to dive deep into what makes your product different. Let's choose any of the ones you would like as an example. How does that product differ from competition? What are the considerations you made there?

[00:05:20] Aaron: One thing that we started, we, you know, we came early when this product was just kind of emerging in the market called the Milk Frother, right? And we had a very good experience and Amazon does a fantastic job at making sure that every single product is up to speed. I mean, it's up to the quality that the customer wants because the first milk frother that we tried, we had kind of not tested it as much because I couldn't find, it's the only one I could find that I could produce. And we brought it to the market, and it sold very fast. Just, you know, a couple hundred units, that's all we had ordered. And it sold out and the reviews came in and they were pretty bad. But that's feedback that Amazon allowed us to get.  

[00:06:00] And then based on that, we found a much better place to produce them. I actually went all the way to China to find someone who had a better motor and over there I spoke to hundreds and hundreds of different vendors to try to find a place to produce this milk frother that would actually last long, that would address all of the reviews that we got that were negative that would address those problems. And so, we partnered with a factory, and we actually iterated over that product.  

[00:06:26] Whitney: And I wanna say we also started that and obviously the competitors came in.  

[00:06:30] Aaron: Yeah, correct. We were the first in the markets like, and everybody had a black, we came out with five colors, started selling a lot, and we added more and more and more so, we’ve been pioneering in this space to give people more options. And because Amazon, we call it like the unlimited shelf space, right? So we have marble, we have the, the walnut color, we have like wood colored, we have, uh, sparkling, we have UV light ones. We have so many different types of that product and we improve it, and that's not available anywhere else. So that's one thing that makes our products different.

[00:07:00] Andrea: And so would you say then that because of all this research, and because you continued to test out your products and improve them and see what's out there that makes a exponential difference on the success of your business. Do you think that's why you continue to grow and continue to do better?  

[00:07:16] Whitney: I would absolutely say that has a lot to do with the growth and there's no limits on the growth ability of our company.  

[00:07:25] Aaron: And it's really, you do the work because in, in any business, whatever you're doing, you have to do the work that other people are not doing, right? So if there's your peers, whatever competition, other people, if they're doing one thing well, you have to do one thing. The second thing, the third thing, the fourth thing. And so the success comes from going a bit over and beyond just the what's necessary, because we didn't need to add another 10 colors when we already had 50 or whatever. Like it's not required. You don't need to do it, and it's a lot of work and you have to actually design it and test it, and the different packaging. There's a lot of work involved, [00:08:00] but we know that our job is to do the work to make the end experience better for the buyer.  

Just like in any business, in anything you do, you must stand out. So if we don't stand out, then we're not gonna get the sales, right? It's a free market and if you have a better product, then you can get more sales. And if your product is just mediocre, well then you're probably not gonna succeed very well. So we have to do what other people refuse or do not want to do.

[00:08:30] Host: You're listening to This is Small Business, brought to you by Amazon. I’m your host, Andrea Marquez. You just heard from Aaron and Whitney Cordovez, Cofounders of Zulay Kitchen. You can find out more about Zulay Kitchen in our show notes on our website: Thisissmallbusinesspodcast.com.

Aaron and Whitney gave us a lot of insight into how they ensure that their products stand out from the sea of other kitchen gadgets out there. They focus on quality above all else because that's what's going to keep the customers coming back. And they also offer as many colors as possible [00:09:00] because they noticed that not a lot of businesses did that.

Like Zulay Kitchen, the small businesses we feature on This is Small Business are some of the many small businesses selling in the Amazon store who have tapped into some of the tools and resources offered to help them succeed and grow. One of those resources is the Amazon Small Business Academy where you can find the help you need to take your small business from concept to launch and beyond. You can strengthen your skills at no cost with live and on demand trainings, Q&As, events, and even find more This is Small Business content. If you don’t know where to start, you can take the free self-assessment on the Amazon Small Business Academy site at www.smallbusiness.amazon.

So far, we've talked about how Aaron and Whitney differentiated their product from their competition which involved a lot of testing. So let's dig deeper into what else you can do to stand out and if there's other -- perhaps cheaper -- options that can help you achieve that with my next guest: Rita Gunther McGrath, a best-selling author and professor at Columbia University Business School.

[00:10:00] RITA: So, I went to Barnard College, and graduated with a degree in political science, and then intended to go into the political arena. I actually started two small businesses way back when, and I made the kinds of rookie mistakes that you make when you're just getting started. I did a political consultancy, you might think of it as, but this was like a long time ago. And what I forgot was that elections don't happen every year. And so, business kind of morphed into a business that was, you could think of it like a Kinko's, you know, typing and word processing and stuff. And then I realized I wasn't interested in typing and word processing, I was interested in the politics part of it, so I ended up selling that to my partner, and I went on to work in government. After a few years doing that, joined Columbia Business School after a stint at the Wharton School where I did my Phd.

So I teach mostly in our executive programs, I run a one-week course called Leading Strategic Growth and Change. [00:11:00] So my work tends to be at the intersection of strategy and innovation. And those two topics have gotten very much closer than they were perhaps at one point. And so I teach executives how to think about change, how to think about new technologies, how to think about inflection points, strategic inflection points, those kinds of topics.

[00:11:25] Andrea: So excited to have you on This is Small Business Professor. So to jump in, if I may, could you talk to me about what discovery driven planning is?

[00:11:32] RITA: So discovery driven planning had its roots in some studies that absolutely fascinated me back, back in the day of large successful companies that had tried to do something new and failed spectacularly. I call them my flops, and I have a file at home I keep, it's called my flops file, and to get into my flops file you have to lose your parent 50 million dollars. And when I went through these case studies, what I realized was [00:12:00] that they all shared a common set of symptoms. You know, untested assumptions, taken as facts, very few opportunities for low commitment testing, big teams and all the funding up front, oftentimes leaders, sort of heroically committed to a specific course of action.

And what I realized is that what these companies were doing was planning uncertain projects as though they had a solid basis of foundation in fact. And we took a page out of the entrepreneur's playbook, the small business playbook, and said, well, how would you plan if you didn't know what you were planning for? And the result was a technique called discovery driven planning, which has five elements to it.  

So the first is defining success. So before we even start, what, what would good look like? Like, let's get aligned around that. The second thing is that once you've defined success, you think about what's your unit of business, what's your unit of impact. And that allows you to then say, well, am I being realistic? [00:13:00] So if I'm planning to sell, you know, widgets, right, and I want to make 100, 000, in profits, and my profit margin is 20%, that means I've got to sell, 500, 000 worth of widgets. So what starts to happen is you begin to realize that innovation rather than being this weird, unplannable, magical process actually has deep, deep rigor and deep, deep discipline to it. It's just a different discipline than you use when you have more facts to work with.  

So define success, figure out if we're being realistic, then map out what operationally has to happen to get this thing to be a reality in the world. As you're doing that, you're going to be making assumptions. And what I recommend is that you document them. So firstly, you remember them because we tend to forget the assumptions that we made. And secondly, so that you can get evidence that says whether you're being more or less realistic. And then the last piece of the process is you plan, but you plan around checkpoints. And a checkpoint is simply a moment at which you're going to learn something. And so the, The core of the technique is you, you budget using a funding mindset rather than a budget mindset. [00:14:00] So rather than saying, here's my 18-month budget and at the end of it I'm going to have a hockey stick, which we all know is often completely unrealistic. Instead of that, what you're going to do is say, okay, I'm going to do some customer interviews. I think this is a million-dollar opportunity. I want to spend 2,000 to figure out if there seems to be a problem we can solve. So it's a step-by-step planning methodology. And it's very useful for small businesses, very useful for entrepreneurs.

[00:14:25] Andrea: Can you take me through what type of research would have to happen for a small business owner to be in a position where they understand how they stand out among their competition or in the industry that they're in?

[00:14:38] RITA: Well, I think the first thing you have to begin with is something I call the job to be done. Which is content that was created by Tony Ulwick and Clayton Christensen. And they said, customers don't really buy products and services.

As a small business owner, the thing you really want to understand is what is the outcome that customer is trying to drive in their lives? [00:15:00] So what are you being hired to do? What do you get fired for not doing, right? And if I want a particular outcome, there's many, many ways I might get an outcome. As an example, I'm working right now with a small regional theater, and they're trying to figure out what, what's changed about their industry, what's changed about their audience. And I pointed out to them that, you know, 40 years ago, when that whole category was in its hayday, Um, you know, if you had two and a half hours to spend, what was your competition? It was three television channels, you know, appointment TV. It was, you know, other ways you could get out in the community and make yourselves known. I said, today that same two and a half hours is being competed for by everything, from streaming services to, you know, you name it. And Netflix very famously has said it considers its primary competition to be sleep. You've got to think about differentiating yourself around something that really matters to getting a customer an outcome that they deserve.

[00:15:52] Andrea: In application, how would I go about finding this?

[00:15:55] RITA: Well, you can do interviews, but I think you have to do them in a very specific way. [00:16:00] So a mistake a lot of entrepreneurs make is they'll have a concept, right? And they'll say, Hey, would you buy this thing? People are pleasant and they're nice and they say, sure, I would buy this thing. But what they don't, what they're not able to articulate to you is, well, I would buy it. But not if it meant I wasn't going to be able to buy lunch that day, right? So you you really have to be very very careful about the things that people say.  

So a good sort of needs oriented or or job to be done kind of interview might go something like, hey, you're a vegetarian, right? What are the challenges that you have when you're dining out in a new city, right? So you, you want to really get narratives. You want to see what they do. You want to look at the tradeoffs that they make, right? My friend Alberto Savoia, he wrote a terrific book called The Right It, and he has a concept that he calls the skin in the game caliper. And what this is, is it's a metric of how much is a customer willing to commit to a particular thing. And the way Alberto puts it is, he says, why create something and figure out if somebody will buy it. [00:17:00] Why don't you figure out what it is they want to buy and then create that.  

So for example, if they're willing to come to a half an hour product demo. Maybe you get some points for that because they gave up their time to actually come and find out about this thing. Most compelling of all would be would they place an order, and at this point a lot of entrepreneurs say to me, well, but I haven't created the product yet. It doesn't matter. Tesla advertised their cars and took deposits on them long before they had a working automobile. But what they were able to do was demonstrate that there was real customer desire for this EV, environmentally friendly, very cool car. And so what you want is you want as much demonstrated market desire and acceptance as possible before you spend a lot of money.

[00:17:45] Andrea: Thinking about how to spend money is such an important thing, but also how to set yourself up at the beginning as a small business that in the long run will do more good than harm. What are some of the considerations that a small business owner should make [00:18:00] when they're starting out that can set them up competitively apart from doing all of this very necessary research?

[00:18:10] RITA: Well, you want to make sure that you've got a handle on cash flow. What kills a small business is you run out of money. So you want break evens daily, weekly, monthly, that that would be an excellent best practice. And you want your incoming cash to exceed your outgoing cash. And you want to really be thinking about that over a decent period of time. So, so that's a good best practice. You want that source of differentiation to be relatively durable. So if somebody can easily copy something that customers are finding attractive, that's usually not good. So you want something that is difficult for others to simply replicate. So that could be a brand, that could be an affiliation, that could be personal relationships that differentiate you. Ideally, you want a business model that's somehow sticky, right? So, once somebody's adopted, it's a pain to move. Or, it just is problematic for them to switch to a different competitor. [00:19:00] And so, to do that, you want things like contracts that extend over some period of time or some kind of commitment on the part of the customer that it's not just going to be transactional, right? It's, it's, it's building a relationship. Those kinds of variables can be very helpful in establishing something that's not just going to get instantly copied.

[00:19:20] Andrea: If someone is really passionate about a business idea that's in a really saturated market, should they just go for it? Or would it be better to look for something that they might not be as passionate about but has less competition?  

[00:19:35] RITA: Well, competition signals there's interest, right? I mean, competition, if you think about it, is, is sometimes a good thing. We talk a lot about, oh, blue oceans where nobody is, but there's an awful lot of businesses that don't exist because nobody's interested enough to pay to get a particular kind of problem solved. So I would go with what you're absolutely passionate about. I would also say you want to go with something where you have more than just an external understanding. [00:20:00] Some experience that you've had, or some background that you've had.  

So, as an example, one of my friends is Kirk Carlson. He was the CEO at SRI International when they invented Siri, and they invented HDTV, and just a really, really great guy. But what he would tell you is that part of the way that he ran that company was based on his experiences at learning to play the violin. He was a nationally ranked violinist at one point, not quite good enough to make a living on it, but very, very good. And he said, what you do as a violinist is you, practice with other violinists. And so you play, and then your peers and your teacher coach you. And so when he ran an innovation program, he did the same thing. He brought all of his teams together that were working on different projects. And each of them would present their progress for the week, say in a ten-minute pitch. And then they would have big, really candid conversations about what was good about the thing, what progress have they made, what should they do next, those kinds of things. [00:21:00] So, you want to have some kind of background learning that differentiates you.  

[00:21:06] Host: Great way to end, reminding us that we should probably pursue what we’re passionate about, because that passion could also be part of the way you differentiate your product. That was Professor Rita Gunther McGrath, a best-selling author and professor at Columbia University Business School. As always, here are some key takeaways on product differentiation.

• One. Quality is super important. And you can make sure that your product is great quality through lots and lots of testing. And really listening to customer reviews and figuring out what can make your product better. First start by understanding what problem you’re solving for your customer to make their lives better. Professor McGrath poses the question: what is the outcome that your customer is trying to drive in their lives? And solve backwards from that answer.  
• Two. There’s a technique that Professor McGrath mentioned called discovery driven planning that might help you succeed if you’re planning on trying to do something new. [00:22:00] The tool is defined as planning for a new venture by recognizing that there will be a lot of unknowns and envisioning outcomes. This technique has five steps. One, define success. Two, figure out if you’re being realistic. Three. Map out what operationally has to happen to get this thing to be a reality in the world. This leads us to four. You’re going to be making assumptions as you map out your plan to bring your vision to life, so make sure you document them so you don’t forget them and so you can double check if you’re still being realistic. And five. Plan around checkpoints, aka moments where you're going to learn something.
• Three. Competition signals interest. So just because a market is saturated, it doesn’t necessarily mean you should give up on an idea. That’s where standing out is important and doing what others aren’t like Aaron and Whitney with Zulay Kitchen.  

[00:23:00] Lastly, an important tip that was mentioned was knowing how to manage cash flow. Which is a topic that has come up often and we will actually be talking more in depth about it during upcoming episodes.  

I'm curious – Have you been thinking about how you can differentiate your product? Or maybe you've already successfully done that. I'd love to hear about your journey! Reach out to us at thisissmallbusiness@amazon.com to tell us what you're up to. Or let me know what you think of the episode by leaving a review on Apple Podcasts – it’s easier if you do it through your phone. And if you liked what you heard -- I hope you'll share us with anyone else who needs to hear this!

If you’re an aspiring entrepreneur, and I hope you are if you’re listening to This is Small Business. Or maybe you already have your small business up and running and you’re ready for the next step. A super valuable resource that can help you is the Amazon Small Business Academy where you can find the help you need to take your small business from concept to launch and beyond. Take the free self-assessment on the Amazon Small Business Academy site at www.smallbusiness.amazon.

That's it for today’s episode of This is Small Business, brought to you by Amazon. [00:24:00] Until next week – This is Small Business, I'm your host Andrea Marquez -- Hasta luego -- and thanks for listening!  

CREDITS: This is Small Business is brought to you by Amazon, with technical and story production by JAR Audio. [00:24:20]