Case study: drones and value proposition

CES, a tech showcase where people go to try and pick out the future tech winners and trends. It seems this year was a bit quiet, are people growing wary of all the hype these shows tend to generate I wonder? Reading some analysis on the web, one of the ‘buzz’ products of CES2017 seemed to be drones. Should be noted other ‘big’ plays seemed to be around connected homes and robots and they’ll be good topics to deal with them another time.

In this article I want to discuss drones, how a market develops and value proposition. It’s a great case study to show the pitfalls of the copycat world, the necessity of product differentiation and how a focused vision to stand out from the crowd is vital.

I won’t be looking too much at specific companies, it’s not really relevant to the discussion; but one of the drones that caught my eye while looking at CES analysis was this by Mota. It is supposedly the smallest camera drone in the world and I have to admit, it does look positively tiny. But other than a sort of ‘cool’ factor I struggle to find a real reason to need/want to buy this (if I was in the market for a drone). The drone market is an ultra competitive space so product differentiation is absolutely vital. Is being the smallest a good enough sell? And what’s the outcome of the product when it’s title has been inevitably overtaken?

Market development

Let’s take a step back and take a look at how this product sphere has gotten to where it is. Any ‘new’ industry starts with pioneers and innovators. They create new disruptive products and build companies that probably still remain relevant. As market leaders they’ll likely get well funded too. The next wave of companies try and differentiate and build their own brands (probably the like of Samsung, LG and other conglomerates would enter here). Then you enter the copycat stage where price/quality ratio is driven down dramatically before finally a stage where the market is completely flooded with similar products.

Drone products are definitely in the latter part of the evolution phase. You can find some very interesting and cheap products delivered from China. And that is also a problem if you’re a drone company trying to get funding. Likelihood is Chinese manufacturers have either done what you’ve thought of, or they will sometime soon. Sorry to say, unless you’ve built up brand value already I doubt you’ll stay in business too long. Thus your value proposition needs to be spot on.

Value proposition and brand value

I guess I define this as what makes me want to spend money on your product. I reckon you go about this by trying to elicit an emotional response from your customer. This in turn will help you build up brand value. I’ve talked about this before – focus on making a product that customers want. Where drone makers will end up failing is the inability to recognise this; so once certain technical advantages (if any) have been eroded they will be wiped and overtaken.

A focus on the product and allowing customers to relate to the product is probably the best strategy to take if you’re entering late into a market. That vision will ensure you keep the long term goals clear when you inevitably hit problems. Even that may not be enough, but it’s your best bet.

Let’s go back to our small drone example. One thing you may have noticed is it’s part of a portfolio of a large company. They have a range of drones and clearly have a brand value that allows them to put this product out. Would a startup have been able to do this? I think not. By the time they start manufacturing (assuming they even got funded…), someone would have copied them eventually. Best case they’d have been superseded before building enough brand value.

Next time we’ll look further into product differentiation. To keep your thoughts on the subject have a look at some of the different drones of CES. And as ever I’d like to hear your thoughts!

J

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s