Market Potential & Innovation Product Development

Developing a Broad Vision Market definition: Trap: Emphasize product –focused market definition…

The purpose of a product is to create a customer….

So why would you focus your marketing on the product?!

Customers are not interested in products, they are interested in solutions.

Developing a Broad Vision Market definition: Trap: Narrow product –focused market definition… What business are you in? What is the benefit of your product? What does it do? Who are your customers? What do your customers want? What is the market demand?

Developing a Broad Vision Market definition Advantages 1.Knowing a broader set of customer needs = New opportunities 2. Exposes potential substitutes and threats 3.Forces management to understand fundamental customer needs

Why isn’t market potential recognized? Customer Factors: 1.Awareness (a problem of promotion) 2.Availability ( a problem of distribution) 3.Ability to use 4.Benefits 5.Affordability

Creating market growth by creating NEW products Innovations: To be successful: 1.Relative advantage 2.Compatibility 3.Complexity 4.Divisibility (trailability) 5.Communicability

Creating market growth by creating NEW products Innovations: There are two ways that innovations may be viewed.

Creating market growth by creating NEW products Innovations: There are two ways that innovations may be viewed. 1.By the products influence on customers and users. 2.By the products benefit to customers and users.

Creating market growth by creating NEW products Innovations: By influence: 1.Continuous innovation 2.Dynamically continuous 3.Discontinuous innovation Changes the life of people using it.

Creating market growth by creating NEW products Innovations: By benefits offered: 1.Functional innovations An innovation that has utilitarian benefits that are different or better than those of alternatives.

Creating market growth by creating NEW products Innovations: By benefits offered: 1.Functional innovations 2.Aesthetic (hedonic) innovations An innovation that appeals to our aesthetic or pleasure-seeking, or sensory needs.

Creating market growth by creating new products Innovations: By benefits offered: 1.Functional innovations 2.Aesthetic (hedonic) innovations 3.Symbolic innovations Innovations that have social meanings, conveys meaning about a membership group, etc.

Creating market growth by creating NEW products Type of Customers for Innovations: 1.Innovators: (Venturesome) 2.4% of population Category specific More risk taking Higher education level Higher incomes More socially active

Creating market growth by creating NEW products Type of Customers for Innovations: 1.Innovators: (Venturesome) 2.4% of population 2.Early Adopters (Respectable) 10-14% Like innovators except: Degree of concern for social acceptance (especially with publically consumed products) Attracted to product benefits Willing to pay more

Creating market growth by creating NEW products Type of Customers for Innovations: 1.Innovators: (Venturesome) 2.4% of population 2.Early Adopters (Respectable) 10-14% 3.Early Majority (Deliberate) 34% Quality conscious Well informed Somewhat price sensitive

Creating market growth by creating NEW products Type of Customers for Innovations: 1.Innovators: (Venturesome) 2.4% of population 2.Early Adopters (Respectable) 10-14% 3.Early Majority (Deliberate) 34% 4.Late Majority (Skeptical) 34% More skeptical More price sensitive

Creating market growth by creating NEW products Type of Customers for Innovations: 1.Innovators: (Venturesome) 2.4% of population 2.Early Adopters (Respectable) 10-14% 3.Early Majority (Deliberate) 34% 4.Late Majority (Skeptical) 34% 5.Laggards (Traditional) 16% Price constrained No need for product Lifestyle conflict

There is an important type of customer that may be in any of the following groups, but is most likely an innovator or early adopter… Lead users: Users who extend the boundaries of a product’s application to achieve a more complete customer solution.

Creating market growth by creating NEW products Characteristics of Social System: 1.Modernity Society or group acceptance of change

Creating market growth by creating NEW products Characteristics of Social System: 1.Modernity 2.Homophily Diffusion is faster when consumers are highly similar. Why?

Creating market growth by creating NEW products Characteristics of Social System: 1.Modernity 2.Homophily Diffusion is faster when consumers are highly similar. a.Have same needs b.Share values c.More likely to interact with each other d.Tend to model each other

Creating market growth by creating NEW products Characteristics of Social System: 1.Modernity 2.Homophily 3.Physical distance (proximity)

Creating market growth by creating NEW products Characteristics of Social System: 1.Modernity 2.Homophily 3.Physical distance (proximity) 4.Opinion leadership

“Whereas product-focused businesses are providers of products, Market-based business are providers of solutions.”