Business Models as a Differentiator

I’m currently in the process of building a business model around a patent I filed a few years ago so this is top of mind. Creating value usually boils down into one of three categories either its the product, a service, or the distribution of a product. If you’re not a manufacturer or creator of the product you’re going to be focused on the service aspects or distribution as your key value add.

Business Models Focused on Distribution
Often this is an overlooked opportunity to differentiate especially by manufacturers as they tend to want to focus on product or services. This could result in failing to see a different channel for the product, or an inability to create product offerings that hit different segments. Especially with software this can be a critical error due to the monetization possibilities licensing unlocks.

Value of Distribution
By no means is this an exhaustive list but just a couple ways you can add value through distribution:

Speed of Delivery: Examples like McDonalds show us the advantage of creating a distribution mechanism that enables fast delivery of a specific good being used as the key differentiator in a business.

Consistency: Being able to deliver a repetitive high quality experience every time like Starbucks. Many would argue there is a better cup of coffee available to you every day, but Starbucks can guarantee the experience due to rigorous training and standardization.

Price Points: Walmart and Costco focus on reducing price by putting price pressures on suppliers. Their  sheer size and willingness to just not carry a product if the cost isn’t favorable enable them to compete on price in ways other businesses can’t.

Licensing: Being able to take one product and deliver it in many different channels hitting new price points and customers. Anti-virus software is a good example of this with the ability to push the same product (sometimes with a couple additional features turned on) via box product, volume licensing, or subscriptions.

Location: This could be anything from shelf space in a supermarket, to having a presence in the mall, or presence on a web property. This is all about opportunity andtraffic. 

Audience Targeting: Enterprise Rent-A-Car is a great example of how location as a pillar of your business model can make your business stand out. While other car rental companies focused on travelers Enterprise focused on people who had disruptions in their everyday commute option due to repairs or auto-accidents.

Conclusion
The phrase “a product so good it sells itself” is a fallacy. A strong business considers its distribution channel at least as seriously as it did its product creation if not more so. A mistake in these areas can make you easily irrelevant even if your product is great.