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