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Increase Profits by Removing Value From Your Product

February 7, 2011 38 Comments

We all hear business gurus telling us to jam our products with value. So how come the biggest businesses who employ the best of the gurus are doing the exact opposite? They are building industries entirely based on systematic removal of value from their products and making a killing in the process.

Watch the video to learn more.

Additional Information:

  • Food Inc. (Amazon Affiliate Link) A Must See documentary about the food industry.
  • The New Wellness Revolution (Amazon Affiliate Link) I’ve read countless fitness and nutrition books, but the most I’ve learned was from an economist Paul Zane Pilzer who follows the trail of money left by the food industry to understand how we have been systematically habituated to eat garbage.

Human Generated Related P0sts:

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  • http://www.expatlifecoach.com/blog John Falchetto

    Food Inc is sickening, I couldn’t watch it all. Totally agree with your analysis of the diet craze in the US. Dieting is a huge market in the US, with crazy high obesity numbers, no wonder people end up on the NYT bestseller list with a book which promises a perfect body in a few hours a week.
    I wrote a post about how SM ‘gurus’ are now jumping on the bandwagon of ‘dieting’ and pushing their view of health and weight loss on their thousands of readers. What value are they bringing their readers? Are they suddenly health and fitness experts?
    In a lot of cases on the internet, some gurus and others are selling a ‘value-less’ product. Just like the food industry. People buy it because they want to feel ‘connected’ to that person’s success. It is a bit like going to see a show and buying the t-shirt, their products becomes a souvenir, something that reminds them of the way they felt when they listen to that expert, watch his videos, etc… Olivier Blanchard wrote a great post about this, discussing Jack Scrib.

    Clients come back for more, because the product has little value and they want to get that feeling of being connected and understood by the ‘guru’. I don’t think this only applies to the internet though you can apply it to many other business sectors.

    In any case, I do think it is important to give value to clients. Give them something which helps them grow themselves and their business. It might not be the best business model as you noted but if I wanted to make millions fast I would have gone into the import business from Colombia.

    Thanks your insights Dino.

    P.s Unless you grow and hunt your own food, stick to the outer aisles of the supermarket, notice that is where all the meat, veggies, and fruits are. Don’t go in the aisles.

    • http://diyblogger.net/about Dino Dogan

      To me, it seams that al the SM gurus have gone to the Anthony Robbins school of sales. But I’ll save that analysis for another time.

      I love your P.S. You are absolutely correct. And even meat and fruit is processed to some extent, so it really becomes a matter of degrees. In other words, we are screwed lol

    • http://markharai.com Mark Harai

      Ah yes, however, the fine bottles of wine are typically found in the aisles : )

      • http://diyblogger.net/about Dino Dogan

        I guess we can make exceptions for wine, cant we?

        • http://markharai.com Mark Harai

          @Dino @John — haha, I was just coming back here to make a wise crack about you being in the heart of wine country over there in Avignon, France.

      • http://www.expatlifecoach.com/blog John Falchetto

        Actually we go direct to the winery where they produce and sell it. :) Stay out of the aisles!

        • http://markharai.com Mark Harai

          I’m going to start getting a little more serious with this little website we’ve been playing around with for a while: vinos.com — I think I can get some good traction with it and maybe be bought out or grab some good international market share. We’ve had many inquiries from wineries in France and Italy recently. Let me know if you have any ideas John – we’re just getting started with actually developing a real business model for it : )

          • http://diyblogger.net/about Dino Dogan

            Hey Mark…I want you to consider carefully what keywords you want to rank for in search engines. Or to be specific, what key phrase (2-5 words) you are aiming at. And to do that, consider your audience. If wordwide vs local vs combination, it will affect your overall SEO strategy in a big way.

            hth

          • http://markharai.com Mark Harai

            Hi Dino, I really appreciate you taking the time to leave some suggestions. Up until now we’ve only had one developer on this with no real professional effort yet. He also only speaks Spanish. We’re just getting started really. There’s only been a couple hundred grand invested up to this point, but we’re going to get a bit more serious about it. Our main competitor has had several million dollars invested over the last couple of years and they’re starting to hit some serious black. We think we can get there for much less… We also started out in the Spanish language, so a ways to go on optimizing for US market. We’re actually considering growing it one country at a time, possibly Argentina to start, but nothing in stone yet. There’s a lot to this as you know, much better than I, as I’m on the business side of things and a complete techno neophyte : )

            We have nearly 13,000 domains and many other projects were working on, so all in good time my friend : )

          • http://diyblogger.net/about Dino Dogan

            That sounds like quite an undertaking. If you need a hand with the social marketing and strategy piece, Im here to help.

  • http://twitter.com/web_licht Leon Widrich

    Dude, I had the exact same analogy with products and food recently. I don’t know what it is, but somehow our minds are connected somewhere. Haha. I was thinking, that our body is organic and we can only process a certain amount of food. Like 2 bananas, not 5. However with products somehow the thinking arose that we could do it exponentially. Add more features, more value and people will process it. Wrong, it doesn’t work like that. Give users one thing they will appreciate and you are settled. This is the very focus we want to take with our product. Take one feature/value and optimize it, not giving a damn about “what else we could add”. Many thanks for reinforcing that with your video Dino.
    As for the thought experiment: The core value our product delivers is to save lots of time on twitter, yet remaining entirely genuine.
    Is that too vague for a value? let me know what you think :)

    • http://diyblogger.net/about Dino Dogan

      lol..yeah…its little vague but it makes sense to me. Prob because I already know Buffer App so I know exactly what you mean.

      I like that you extended the analogy to product features. Its important to know if your product is a hammer or swiss army knife.

  • http://www.itinerantentrepreneur.com/journal/ Robert Dempsey

    No fair Dino you knew with a headline like that I would read the post, watch the video, and enjoy the exploitative filled goodness. Here’s my diatribe.

    My background is in software and for a long time adding features was the norm, then people realized “oh shit that’s not a differentiator” and then it was all about minimum viable product because companies were wasting money. Many still are, but I digress.

    I was also in the food industry (used to cook professionally) and luckily worked in restaurants that were awesome with great food. Still, I am eating the same amount here in Thailand and am losing weight. Go figure… 4 hour body can kiss my ass. I can eat 5 bananas BTW, no problem. The ones here in Thailand are much better than those back in the US.

    As for information products (so much to respond to in this freaking video) most suck, it’s sadly true, and most people don’t know what is good for them or not, so those of us who are speaking out and offering serious value are drowned out by the “processed crap” that exists. And it keeps you searching.

    I’ve got two words for everyone out there: direct marketing. Learn it, study it, use it. Done.

    • http://diyblogger.net/about Dino Dogan

      Your diatribes are always welcome here my friend. BTW…thats a pretty varied background..developer, cook, competitive banana eater… :-)

      Is direct marketing something you’re focused on? Do I see an interview in your future?

      • http://www.itinerantentrepreneur.com/journal/ Robert Dempsey

        It is and there are major reasons for it, each a diatribe in of itself. What it comes down to is that I feel most of what we are told to do is a complete waste of time when it comes down to the #1 priority of a business – getting leads. Direct marketing focuses on that, and it isn’t always free, and mostly isn’t. I’d love to talk with you about it more Dino. Let me know.

        • http://diyblogger.net/about Dino Dogan

          Cool…I have a back log of shit to do this week…but carve out some time next week, we’ll hook it up :-) Lets touch base end of week.

          • http://www.itinerantentrepreneur.com/journal/ Robert Dempsey

            Sounds good. I’m on Thailand time so let’s connect on email first to coordinate.

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  • http://www.webguide4u.com Vivek Parmar

    you have chosen a unique way to introduce how to increase profits

    • http://diyblogger.net/about Dino Dogan

      Thnx Vivek, it may be a unique way of presenting but unfortunately this methodology is so pervasive in big business. Im glad you enjoyed the video my friend. Rock on :-)

  • http://elevationlife.com Bryan Thompson

    Dino, I have to be honest – I gotta be careful watching your videos at work. :) (it’s a family work environment, man)

    From what I gather from the additional comments, this is certainly true. Companies often put mediocre work into their products and the corporate beurocracies allow them to thrive. But for every Tyson Chicken out there (per your Food Inc. post), there’s a Trader Joe’s who may not be as fluent throughout the country, but pack quality into their product. For every busted up cheap e-Machine, there’s an Apple iMac that packs in quality design, inspirational creativity, and some of the most popular customer service. (If you’re not an apple fan, I am sorry, but you get where I’m going.)

    Good post. I’ll catch the video later! :)

    • http://diyblogger.net/about Dino Dogan

      May I suggest you invest in some headphones my friend :-p

      Yes, please watch the video and tell me what you think. The point I make in the video is not exactly related to bad product vs good product. It has to do with removing the core value from the product in order to sell more of the product AND keep people dependent on your product. A tricky move for sure but I list two examples where this is clearly the case.

      Im looking fwd to your analysis.

      P.S. Im typing this on my Macbook :-)

      • http://elevationlife.com Bryan Thompson

        Okay, love the bananas v. Pringles analogy. I see where you’re going with this, and I got the Food Inc. reference (5 Major food companies). My wife’s studying to be a nurse and is taking a nutrition class. She was talking about this the other day.

        One other area I see a lot in the blogging world is the eBook phenomenon. Before you call me a hypocrite, I do have an ebook, but it’s the best of my old blog site. I think it’s interesting how many ebooks bloggers GIVE AWAY on their sites that say “The SECRET to _____________.” And then, imagine this, they SELL an eBook for $29.99. I always wonder how many people actually buy the eBook.

        Nothing wrong with selling books, but in my experience, nobody is going to give you the REAL secret of success – and yes, I do believe there are secrets to success. Not shortcuts, necessarily, but secrets. I’ve stumbled onto some of them myself and so have you. The ones Rhonda Byrne sells do have bits and pieces of truth. Religious fundamentalists of all faiths do preach truths – but none have CORNERS on truth. Especially people who KNOW the truth.

        Hmm, I could go all day on this, but I’ll stop here. Thoughts?

        • http://diyblogger.net/about Dino Dogan

          Thoughts I have many my friend. But I think you’ve covered it pretty well here. The “information” products is a bunch of malarkey …well, 99% of it anyways….and that % is based on a study I made up exclusively for this comment :-p

  • http://twitter.com/janetcallaway Janet Callaway

    Dino, WOW! Your mind is twisted or, to put it more eloquently, you have a rare ability to offer a unique perspective. Having watched the documentary and read the book, I understand exactly what you are saying.

    However, I never took the content and applied it as you have to extracting the value to keep people dependent.

    Whether I look at my long time business of teaching people how to build a successful network marketing business or my more recent coaching business of integrating social media to generate leads, I can see exactly what I could withhold. If I withheld the tips, timesavers, connections and things to avoid that I have learned, I could “tease” them with enough info to get them “hooked” yet they would have to keep buying to receive the necessary info to be effective.

    Dino, that gets back to the “man in the mirror” and I would not be able to face myself if I did that. What I do like about the thought process is it makes you look at what you have to offer that is unique.

    Mahalo once again, Dino, for stirring up the old brain cells. Aloha. Janet

    • http://diyblogger.net/about Dino Dogan

      Thnx Janet. Im kinda proud of my twisted mind :-) So you’ve read the book? Paul Pilzer is awesome, aint he? And the documentary ….wow…I had a hard time watching the whole thing.

      And you’re right about Michael Jackson :-p I mean…”the man in the mirror”. The way these big businesses operate is unconscionable…but I’ll save that for my diatribe on thursday (WARNING!!!! 4000 words article :-)

  • http://twitter.com/ElisesReview Elise M

    I’ve eaten 5 bananas in a day, lol.

    I watched a bit of this on YT before you made the blog post lol, but hearing about this is terrifying true. (I want me some Pringles now.)

    Nice analogy with the food industry and info products. And you’re right, a lot of it really is garbage. It’s the way they put the spin on things to make you think stuff like this DOES deliver value. Like, ooh Jenny Craig points help you count your food, but why not just count calories for free? lol.

    Same with diet pills, a lot of them just supress your appetite and have stupid amounts of caffeine of them so you have too much energy and therefore you NEED to go run on a treadmill like a crazy person.

    So, even though the value sucks ass, the marketing has been positioned so well that it just sells. Info products are just the same. I actually bought one a long time ago and it was PURE rehashed content from like 3 other products with maybe like 5 extra videos of bullcrap. For $77. I asked for a refund right away.

    • http://diyblogger.net/about Dino Dogan

      So we could say that you are a competitive banana eater?

      I agree with your analysis…so the question becomes, whats the answer? How do we eradicate this type of marketing/products?

  • http://twitter.com/Faryna Stan Faryna

    Dino:

    If you looked in the flavor industry, you’d get a more complete view of how the food industry tricks our taste buds into believing that we’re getting what we need/want. In fact, we’re not getting much as you’ve figured out. Often, there is no need to remove value/nutrition- because it was never there to begin with.

    Education/awareness level can be a corollary to the perception of value. Likewise, economic means. If the present economic down trend continues for years as seems to be in the cards, value-restricted products and services may lose their seemingly entrenched appeal.

    We all see glimpses of a return to value among some groups as those groups turn to organic, locally produced, and/or seasonal foods.

    But what I really think you’re driving at is the problematic that information-based services and products (intellectual properties, let’s say) tend to be under-valued and yet over-delivered. We know that the less educated and aware the customer is regarding the intellectual property and associated roi/results, the less that customer can appreciate the value of that intellectual property.

    Anyway, we get to the situation where Joe is only going to pay five dollars for a logo, so why the heck would you spend more than ten minutes thinking about and executing a logo for Joe?

    It seems to me that you’re suggesting that we should do that logo in five minutes – if we really want to make a buck in this miserable situation where we are shoveling manure – as opposed to building a foundation of an enduring and sustainable brand identity. In other words, craftsmanship and art are irrelevant in this hip, cool, thank you economy.

    Am I warm? (grin)

    Kind regards,
    Stan Faryna

    • http://diyblogger.net/about Dino Dogan

      Well…you are very hot indeed my friend..not just warm.

      I have a rule. If everyone is saying the same thing (or doing the same thing) that think…is probably wrong.

      So then, you pause and examine the structure of that thing.

      In this case, the thing that everyone is saying is to add value to you product. Clearly, they are full of shit because there are plenty of examples of successful industries (like IP and food) that do the exact opposite and are more successful than a hooker during fleet week :-)

  • http://twitter.com/celya_tay Celya Tay

    Dino,

    I actually bought Isabel Del Los Rios THE DIET SOLUTION book and she teaches the “processed vs non-processed” principle. Basically, she gave the value upfront. I haven’t needed to buy anything else from her since that first purchase. She continues to send me emails on recipes and fitness recommendations and some have affiliate links (cleverly weaved in) but hey..even if I don’t buy anything, I always get aware of something or am reminded of what I need to improve on. This to me is providing value and not just the shell.

    BUT..she used the ‘provide the shell’ tactic in her advertising and marketing. All through her marketing campaign, it was a strip show..but you never got to see the naked banana. That one..you had to pay for. But when you paid, you GOT the full banana..all peeled. And the banana was nutritious because..it was the REAL banana.

    Am I dependant on her? I can pretty much never hear from her again because her initial book is enough to keep me going for a lifetime. But I love having the regular updates on evolving evils in the processed food industry..does that make me dependant on her? Perhaps..only because she’s already an expert in the field and it’s more efficient for her to do all the work and give me a summary. I like to think it’s me outsourcing. I’ve already got my initial value, and now I have a CHOICE of additional value (but isn’t that what everyone is made to feel?)

    I think Increasing Profit by Removing Value is good marketing. But definitely bad economics for actual product delivery. It’s exhausting keeping up a lie and eventually, the house of cards will fall. But then again, with 6 billion people on the planet..the portion who actually accept deception is a way of life will be the ones who continue to keep these companies going. I like to think that similarly, with 6 billion people..there also is a sizable amount of people who prefer honest business and will also sustain each other as consumers/sellers. Wasn’t it Warren Buffet who said that with so many good people around, it’s idiocy to do business with people who are ‘suspect’? Something like that.

    Love your blog and love the point you made here :)

    Rock On,
    Celya

    • http://diyblogger.net/about Dino Dogan

      Awesome comment Celya…great tie in with the banana too…

      I appreciate you taking the time to watch the video and leave such an informative and insightful comment. Rock On, indeed :-)

      • http://twitter.com/celya_tay Celya Tay

        It’s you I appreciate Dino..you have truly inspired me with your blog. I’ve been like Neo..looking…and you’re like the White Rabbit. I’m one step closer to Morpheus with all your great posts ;)

  • http://yogizilla.wordpress.com/ Yomar

    Oh man, DINO – you’d love one of the conversations going on over at LinkedIn.  I’m engaged in a friendly debate with a guy whose stance is “if you build credibility and plan properly, you can pack all the value into core products and sell them as premium offerings”.  YIKES!  Unfortunately, that’s the mainstream belief..  Then again, that’s not TOO unfortunate because it presents more opportunity for the rest of us. ;o)

  • Richard

    The cosmetics and bath and body care industries are doing the exact same thing. Did you know that bar soap is really a bi-product of glycerin manufacturing? It’s sold for bio diesel and food production- and by chance also makes soap. Fragrances useful be made from plants but now 5 fragrance manufacturers have taken authenticity out of our products and replaced it with sytherics which are super cheap to produce. Now the average consumer can no longer tell te difference and pays out the nose for fake junk.

    My business is making authentic versions of the mass produced replicas so I cannot participate in this thought experiment by telling you what I would remove as that IS the current business model for the cosmetics and bath and body care industries.

    I also work in financial services and can tell you that your free checking account is free because it’s a hook to get you a mortgage and a high interest credit card and banks make money off of your overdraft fees and interchange when you use your debit card.

    Nothing is free, nothing is valuable. (few things I suppose still are, but they’re expensive and they should be)

    • http://diyblogger.net/about Dino Dogan

      Speaking of banks -Im sure you are aware of this- for every dollar that we deposit they get to loan it to others 12 times over. So they’re making money out of thin air…what a rip.

  • http://www.SocialMediaForSmartPeople.com/ prosperitygal

    You get extra credit for the John Lennon picture in the background ;) .

    You are funny Dino, never took time to watch you in video until today.

    So, are you saying to operate your business out of integrity if you want to make a profit?

    • http://diyblogger.net/ dino_dogan

      @prosperitygal The truth is, you can make money with, AND without integrity, honesty, and sustainability. It just doesnt make any sense to do it without.