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Tuesday, November 27, 2007

The “Unattainable Triangle”

The Audio Podcast for this posting is avaliable here (2:40).

The "unattainable triangle" is composed of quality, price, and speed. All products or services have two out of the three sides of the triangle. That is to say, high-quality and fast turnaround but high-price or low-price, fast-turnaround but low-quality and so on.

The triangle is unattainable for two reasons. The first is logistical. Providing high-quality service with faster-than-average turnaround time is going to cost you more money than your competitor who can do the same level of quality at a lower price with slightly slower turnaround. It’s pretty much logistically impossible to maintain a profitable business that has somehow "attained the triangle."

The second reason the triangle is unattainable is the "snake oil" effect. Let's say it was possible for you to design a software solution that was faster and better than any other software solution on the market today and you priced it below market value hoping to make your money back from high-volume selling. Chances are you would fail. You would fail because buyers today are more sophisticated than ever before and their perception of your offering would be that it's simply too good to be true. This is the "snake oil" effect.

Here's the big marketing idea.

If you were able to offer all three sides of the triangle, you shouldn't. It would be in your best interest to maximize your profitability by sacrificing one of the three sides. So if you had something that was better and faster, you can and should increase the price. The strange thing about this strategy is that it might actually sell better with a higher price. This kind of strategy is known as a Price Premium. For more information, on price premiums, check out the Justin Downey Marketing Campaign Strategies Playbook.

Proof of Concept ::

  • Starbucks: High-quality/Fast-turnaround – High-price
  • Whataburger: Low-price/Fast-turnaround—Low-qualit
  • U.S Postal Service: Low-price/High-quality—slow-turnaround

Look around you and every company you see will be leaning on two of the three sides of the "unattainable triangle". The key for your business is choosing the right two sides to promote.

Visit our website to see if you can guess which two sides Justin Downey Marketing leans on. Do you think we should be leaning on a different two?

3 comments:

  1. Untrue. I run a international distributorship for high quality international goods. My turnaround time is faster than other competitors offering the exact same commidity because I carry more stock and choice for users. I carry more stock because I price at parity (or less) to competitors. As a result, I sell higher volume. By selling higher volume I get bigger discounts from my international suppliers.

    ReplyDelete
  2. Anonymous,

    Assuming you're telling the truth, because I don't know why anyone would lie anonymously, the “Unattainable Triangle” also refers to Positioning.

    Your customers need to quickly categorize your service offering. It would be unwise to position yourself as the cheapest, highest quality, and the fastest turnaround. They say, "A jack-of-all-trades is a master of none" and in marketing, that holds water.

    Consider positioning yourself within your space toward one or two of the three values. For example, you could advertise your services as the lower-cost, faster alternative to your competition. The fact that you're also of higher quality, would be a much welcome surprise.

    For more information regarding positioning within a homogenous competitive marketplace, see our post: “Me Too Marketing.”

    ReplyDelete
  3. There's an interesting generalisation of this principle at the Wikipedia:

    http://en.wikipedia.org/wiki/Project_triangle

    With some interesting spinoffs - :-)

    College: Work, Sleep, Play – Pick two.
    Men: Handsome, High-Earner, Faithful – Pick two.
    Women: Single, Sane, Sexy, Smart – Pick any three. (also called The four S's of dating)
    Operating System: Fast, Efficient, Stable - Choose two.
    Bicycle Parts: Strong, Light, Cheap - Pick any two.
    Photographic lenses: Fast, Sharp, Cheap - Pick two.
    Open-source software development:[4] Speed/Time, Inclusiveness/Openness, Quality
    Schedule, Scope, Resources – Pick two.

    ReplyDelete

 
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