“When you really care about a relationship, bad news is best delivered in person,” said my boss. As our team’s product manager at the time, that person was me. I traveled to a small city in southern Japan to tell our manufacturing partner to expect a drastic reduction in orders.
After representing GE in a long day of meetings, drinks and dinner, I checked into the “businessman’s hotel” nearby. Entering my room, my sense of scale received a jolt. This was one compact accommodation. In fact it was the smallest, most spartan hotel room I have seen to this day. The low-ceilinged passage was precisely the narrow width of the framed entry doorway. To enter the modular fiberglass mini-bathroom required stepping up a few inches and ducking. Its door opened out into the passage, barely clearing the opposite wall. Three hanger hooks on the wall for clothes. The bed — a single — was narrow and not very long. I’ll bet that a quarter of Japanese guests would find that their feet hung off the end of that bed, never mind taller Westerners.
It was late and I was exhausted. Nothing to do but chuckle and adapt to things as they were. Pulled the chair to the end of the bed to support my feet, conked out and slept enough to get by. In the morning I hunched over to shower, and stepped into the passage to dry off with the skinny bath towel. A standard breakfast of rice, dried fish, assorted pickles, rolls and coffee awaited.
One Size Doesn’t Fit All
I certainly don’t intend this story as a long-ago travel whine. We’ve probably all had worse surprises on one trip or another, and I really like Japan. Rather, it’s a memorable example of a “one-size-fits-all” service offering. Western business travelers — dozens came to the area every week to visit the electronics factories — would gladly have paid more for a longer bed, a different breakfast, and a framed and tiled bathroom. Many domestic guests would no doubt have also paid more to get an enhanced experience.
This is a story about a company not creating all the value that customers would willingly pay for. Couldn’t that hotel have taken the same physical space and reconceived the offering, with options that better matched a broader set of guests and preferences?
For that matter, how might each of us think differently about our own businesses in order to create better matches with the value that our customers and clients want to buy?
Let’s look at three examples of organizations that have recognized that one size doesn’t fit all. They’ve segmented their market spaces and designed offerings and prices to meet heretofore under-served needs and wants.
Air New Zealand
The airline industry faces some tough constraints on delivering a great customer experience. It’s a struggle for players in the airline business to break free of these limits, but Air New Zealand recently managed a small victory. Maybe you saw the recent article in the Wall Street Journal about ANZ’s “cuddle class.”
In Coach Class, middle seats on long international flights often went unsold. Instead of cutting price to sell those seats, ANZ figured out a way to reconfigure and sell a new sub-class of seats at better prices. By redesigning the seats to allow two people to convert three seats into a lie-across mini-sofa, and in effect selling the middle seat to the window and aisle customers on a shared basis, ANZ gives young families and couples on a budget a more comfortable travel option.
Mention “RV” to an American and the image that pops to mind is probably a recreational vehicle the size of a small bus — or maybe a rather large bus. The team at Livin’ Lite Recreational Vehicles in Wakarusa, Indiana, has a smaller picture in mind. Their smart-space, all-aluminum campers are so lightweight that they can be towed by cars or minivans.
During the recession and gasoline price spikes that depressed demand for conventional RVs, the company grew very rapidly. With new product introductions underway, and expanded production facilities, CEO Scott Tuttle projects strong growth again this year.
Katie Kerrigan also spotted an under-served, one-size-doesn’t-fit-all market segment. Through personal experience, Kerrigan knew that it was difficult to find stylish shoes in larger sizes. She reasoned that there must be many other women with the same challenge, and her research confirmed it. Kerrigan, who combines entrepreneurial ability with fashion design talent, founded Kathryn Kerrigan, Inc. in 2005. The company has done well, selling high-style shoes in a wide range of sizes to a global customer base on the Web and in boutique retail stores.
While these examples all have an element of physical size, “one size doesn’t fit all” can apply in a figurative sense, too. It’s all about carefully looking at a market segment — buyers with under-served needs and wants, and similar willingness to pay for a desired bundle of benefits — and offering something meaningfully different than what other suppliers do. If you can structure your delivery system such that you can make good money at what these customers are willing to pay, you’ll experience strong growth and less downward pressure on your offer-to-sell prices.