Market Potential & InnovationProduct Development

Developing a Broad Vision

Market definition:Trap: Emphasize product –focused market definition…

The purpose of a product is to createa 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 Advantages1.Knowing a broader set of customer needs = New opportunities2. Exposes potential substitutes and threats3.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 use4.Benefits5.Affordability

Creating market growth by creating NEW productsInnovations:To be successful:1.Relative advantage2.Compatibility3.Complexity4.Divisibility (trailability)5.Communicability

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

Creating market growth by creating NEW productsInnovations: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 productsInnovations:By influence:1.Continuous innovation2.Dynamically continuous3.Discontinuous innovationChanges the life of people using it.

Creating market growth by creating NEW productsInnovations:By benefits offered:1.Functional innovationsAn innovation that has utilitarian benefits that aredifferent or better than those of alternatives.

Creating market growth by creating NEW productsInnovations:By benefits offered:1.Functional innovations2.Aesthetic (hedonic) innovationsAn innovation that appeals to our aesthetic orpleasure-seeking, or sensory needs.

Creating market growth by creating new productsInnovations:By benefits offered:1.Functional innovations2.Aesthetic (hedonic) innovations3.Symbolic innovationsInnovations that have social meanings, conveys meaning about a membership group, etc.

Creating market growth by creating NEW productsType of Customers for Innovations:

1.Innovators: (Venturesome) 2.4% of populationCategory specificMore risk takingHigher education levelHigher incomesMore socially active

Creating market growth by creating NEW productsType of Customers for Innovations:

1.Innovators: (Venturesome) 2.4% of population2.Early Adopters (Respectable) 10-14%Like innovators except:Degree of concern for social acceptance(especially with publically consumed products)Attracted to product benefitsWilling to pay more

Creating market growth by creating NEW productsType of Customers for Innovations:

1.Innovators: (Venturesome) 2.4% of population2.Early Adopters (Respectable) 10-14%3.Early Majority (Deliberate) 34%Quality consciousWell informedSomewhat price sensitive

Creating market growth by creating NEW productsType of Customers for Innovations:

1.Innovators: (Venturesome) 2.4% of population2.Early Adopters (Respectable) 10-14%3.Early Majority (Deliberate) 34%4.Late Majority (Skeptical) 34%More skepticalMore price sensitive

Creating market growth by creating NEW productsType of Customers for Innovations:

1.Innovators: (Venturesome) 2.4% of population2.Early Adopters (Respectable) 10-14%3.Early Majority (Deliberate) 34%4.Late Majority (Skeptical) 34%5.Laggards (Traditional) 16%Price constrainedNo need for productLifestyle conflict

There is an important type of customer that may be inany of the following groups, but is most likely aninnovator or early adopter…

Lead users:

Users who extend the boundaries of a product’sapplication to achieve a more complete customer solution.

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

Creating market growth by creating NEW productsCharacteristics of Social System:1.ModernitySociety or group acceptance of change

Creating market growth by creating NEW productsCharacteristics of Social System:1.Modernity2.HomophilyDiffusion is faster when consumers are highly similar.

Why?

Creating market growth by creating NEW productsCharacteristics of Social System:1.Modernity2.HomophilyDiffusion is faster when consumers are highly similar.a.Have same needsb.Share valuesc.More likely to interact with each otherd.Tend to model each other

Creating market growth by creating NEW productsCharacteristics of Social System:1.Modernity2.Homophily3.Physical distance (proximity)

Creating market growth by creating NEW productsCharacteristics of Social System:1.Modernity2.Homophily3.Physical distance (proximity)4.Opinion leadership

http://www.answers.com/topic/opinion-leader

http://www.valuebasedmanagement.net/methods_bcgmatrix.html

http://en.wikipedia.org/wiki/Growth-share_matrix

“Whereas product-focused businesses are providers

of products,

Market-based business are providers of solutions.”