Why Would You Buy a Bad Product?

I guess it depends on your definition of bad.

Products that hurt people don’t last — just look at the Ford Pinto.  Certainly truly dreadful products usually don’t survive, but some not so good products do.

Take Starbucks coffee, as an example. The coffee is not good (and this doesn’t just come from me. There’s an article in BusinessWeek citing bad taste and there are lots of other folks who turn up in a websearch who swear Starbucks is bad coffee). But, are you really buying a cup of coffee when you buy Starbucks or are you buying a lifestyle? While many might say the coffee is bad, most agree the lifestyle is to be emulated — after all, you can hardly pick up a celebrity magazine without seeing a star slurping down a cup of the brew.

Consumers buy products for lots of reasons — not only because they’re the best or cheapest.  They buy products because they are:

• They’re novel
• They’re cool
• People they admire own them
• They look good
• They make you look good
• They’re fun
• and lots of other reasons that make sense to them even if they don’t make sense to you

And lots of inferior products drive out superior ones. Take Beta — remember, the big clunking movie cassettes. Now, I’m not an engineer, but I’ve read statements that Beta was superior to VHS in terms of technical performance (in fact, when TV stations record news features its mainly on something much like a Beta cassette). And while VHS has since gone the way of the dinosaur, its survived a lot longer than Beta. Why? Its simply that SONY, which made the Beta machine, didn’t allow cheap imitations to arise because they didn’t allow other firms to see what was inside the machine — called closed architecture. Meanwhile, VHS machines (which used open architecture) were made by a bunch of electronics firms and ran the gambit from very expensive branded machines to cheap unknown brands. This encouraged more folks to buy the VHS format. Once there were more VHS machines, movie makers were encouraged to make more movies available in that format.

Soon, Beta was out of business because its no fun owning a machine with few movies to watch. The same thing almost happened to Apple before they wised up and allowed access to software developers. After learning that hard lesson, Apple mastered it with their iPhone, which gains much of its appeal not from superior technology, but from the fun apps created exclusively for the device.

The 8-track tape is another example of a superior product pushed out by an inferior one — cassettes — for the same reason as Beta.  Microsoft is another example — an inferior product that survives due to the size of its installed base. Similar stories abound.

So, does that mean its OK to product mediocre or bad products?

Of course not.  Bad products leave you vulnerable.  If someone else comes along with a product equally cool, novel, fun … and its better quality, you’ll quickly see your profits begin to slip.  Look at what’s happened to the iPhone.  iPhone, with its spotty technological record, surpassed Blackberry (at least if you adjusted for the fact that iPhone was only available to AT&T customers) because of its extensive apps.  Along came Android (with almost as many apps) and the iPhone starts to slip.  All of a sudden folks start to talk about iPhone’s poor performance.

The take home is that at least 2 factors outside of product quality control product success:

1. Other desirable attributes of the product that outweigh poor performance on its key dimension
2. Availability of compatible and complementary products.

Also, don’t rely on superiority in terms of other attributes or the availability of compatible and complementary products to sustain your profitability — go for improving the quality along the way.