Corporations are spending billions of dollars on advertising just trying to differentiate their products and services from those of their competitors. Is it working? Can you remember any, or even a few, of the commercials you watched on TV last night?

In today's market, to be a commodity is not an oddity; more and more products and services are joining their ranks. When products and services are no longer distinguishable in terms of benefits as and value, far as the customers are concerned, they are commodities.

Unless you can identify a truly distinctive benefit of your product or service, one that differentiates you from all others - and that customers consider of great value, then you are viewed as a commodity.

Don't be offended; nowadays, almost everyone and every product or service is either viewed as a commodity or will soon be. Take a look at your industry and your competitors, and their offerings. Which one is really considered different? And, if so, is that difference really of any special importance to customers?

Let's face it, in the eyes of your customers, what you and your competitors offer is really pretty much the same. So, what happens when products and services are perceived as being much the same? Guess what becomes the deciding factor for the customer. If you guessed "Price", you are right!

Price competition is a no-win situation, unless you have the lowest cost in the market; even then, whatever competitive advantage lower price may offer, it is inevitably short lived. Sooner or later, someone will come up with a lower price, or a product that offers better benefits, in which case price will become irrelevant. Have you noticed that Dell Computer has shifted its strategic emphasis from lowest price to offering the products with the hottest designs?

It all boils down to this:

Innovation is about benefits. Benefits get customers - and benefits keep them! As customers change, however, so do their preferences for some benefits over others. People may say that they want new products, but what they really want is new and more valuable benefits.

By the way, do not confuse features with benefits. Features are characteristics of the product; benefits are what those features do for the customer, and are valued by the customer. For example, ABS (Automatic Braking System) is a feature of many cars today. That's nice, but what does ABS do for the customer? Just make braking safer under almost all conditions: that's what! Is that valued by customers? You bet it is; you'd have to be out of your mind to not value such a life-saving benefit!

Be constantly alert to what represents value for your customers, and do your best to incorporate it into your products and services. If you give your customers today, the same as you gave them yesterday, you are giving them less - and they know it! Just think of how, over the years, you have stopped buying many products simply because you got tired of getting "the same old stuff."

By the way, something that is just new isn't good enough; you may have noticed that you don't see too many ads today that proclaim the product is "New! New! New!" Customers do want new products and services, but as innovation that provides them with greater value.

If you wish to achieve competitive advantage, you must offer a combination of benefits that customers will see as especially valuable. Further, you must do so on a continuing basis because, eventually, someone will always come up with a benefit package that is perceived as more valuable than yours.

You probably saw the TV images of people standing in lines for two days just waiting for Apple's IPhone to become available in stores. I don't know how Steve Jobs came up with the inspiration for the IPhone, but he obviously did something right. Will the IPhone achieve sustainable competitive advantage? Not likely; at least not for long. Nevertheless, Jobs has now launched two hot products, the IPod and the IPhone. In so doing, he has bumped SONY and Motorola out of their leadership positions in their respective markets.

On the other hand, I'll bet that Steve Jobs and every other innovative CEO in the world wish they could equal the success and staying power of J.K. Rowling's Harry Potter. J.K. Rowling came up with a different and innovative fun concept, a school for young wizards. That would have been good enough, but she has kept the ball rolling by constant innovation through new situations and characters.

Starting with customers doesn't necessarily mean just asking them what they would like; they often don't know. It does mean observing them, and walking in their shoes. I have to believe that J.K. Rowling developed a fine eye for her target readers just through her own experience and observations. The key point still is - what benefits mean the most to customers. It is OK to ask customers for their preferences - as long as you compare their answers to what happens in the real world.

• What benefits do you offer with your product or service? Develop a list; there should be one or more benefits for every feature. Quality is more important than quantity, but larger numbers of benefits can often be very persuasive.

• Why do customers buy your product? There may be many more reasons why they buy your product or service than you realize. List as many reasons as you can.

• How do customers actually use your product? It may not be what you think. For example, many people use the CD player in their car for listening to music. So do I, but I use it even more to listen to informational, educational, and training recordings; in essence, I convert my car into a rolling university. (I guess that makes me a true auto-didactic.)

• Which benefits do you rank highest? Which do you think motivate customers the most to prefer your product? Are these benefits indispensable?

• Which benefits do your customers rank highest? This you can only learn by observing customers, and actually asking them what their preferences are. This knowledge is vital to choosing the right benefits to enhance.

• Which do they rank lowest? This is an especially important question because the answers may show you which benefits might be eliminated. But before you act on that information, be sure to also ask customers if they would miss those benefits m to the point of switching to other suppliers.

• Why are your benefits similar (even if better than) to those offered by competitors? Were your product's benefits developed from actual observation of customers, or simply by copying competitors' benefits? It is important to review the origin of each benefit because what may have had value before may no longer have as much, if any.

• Why do these benefits exist? What was the reason for offering each specific benefit in the degree, quality, and quantity that it is offered? How did customers make their needs known?

Be sure to catch Part Two in the next issue of The Innovation Series where we will explore what to do with the answers to the above questions.