Know-How Exchange : Book Club

That is a great question. My own CEO when I worked for Digital Equipment Corporation could not see any need for 'home computers.' You can't ask whether people would like a product that is totally foreign to them, and get reasonable answers.

When Starbucks started I don't think they could describe a niche and then determine whether they would spend $3 for a cup of coffee or even wait in line to get a cup of coffee.

Stepping into unknown territory requires 100% belief in what you are doing without having data to support it. By the way, even with supporting data, there is no guaranty the idea will work. Without taking the gamble you will not know if it will work until someone else does it successfully and you say, "Hey, that was my idea. Why didn't I do it?"

Great insights b9dhzel. I'll have to get Al to chime in on Digital.

You know he sat in a boardroom with Ken Olsen all day and told him he should launch the first PC. Ken said he didn't want to be first. He wanted IBM to go first and then he could beat their specs. Well we all know how that ended up. The IBM PC was a big winner. Named person (well really computer) of the year by Time. (Unfortunately it had the wrong name. IBM was a mainframe name. But they made out better than Digital because at least they were first.)

You can never ask consumers what they might do in the future, especially in regards to a new category. NO Focus group would say they would be happy to spend $3 dollars instead of .50 for coffee. So it is very difficult to prove the potential market for something that does not yet exist. But a market with no consumers offers more possibilities for branding success.

Well, we can look for examples of successful categories abroad. Starbucks borrowed store design from European cafes and pastry shops.

Urban Outfitters frequently sends designers and buyers together on mini shopping trips around the world to see what's new and different. I remember widely opening my eyes at unique products in a Czech DIY retailer that I hadn't seen back in the states. Scented outdoor lamp oil in lavender, rose, lemon, orange, menthol, and some blue mist (?).

I'd like to add something to b9dhzel's comment. I also worked for Digital Equipment, not as an employee but as a consultant.

We spent a day with CEO Ken Olsen and his staff arguing about launching a "business" personal computer before anyone else did so.

Ken said, "I don't want to go first. If somebody else does go first, then we'll beat their specs."

Well, IBM did go first with the PC, perhaps the most significant product launch of the 20th century. And 10 months later, Digital Equipment did launch a line of personal computer which, of course, went nowhere.

My agency has created several new categories for clients that are receptive to new ideas and innovation. Being a small agency, many of these clients are localized, or have just recently started educating their core customers on their new category so I don't think anyone would have heard of them - yet.

One example is a document solutions company (code word: copier company) that is really more of a technology partner. We renamed the sales force "Imaging Architects" and even invented a word for their proprietary process, called "Smarchitecture." The sales force is now armed with Blueprints as sales collateral. It makes a big difference when their competitors visit a potential client with all the traditional sales sheets and then they come in with a rolled up Blueprint that shows exactly how they can impact your business.

We can't always convince a client that creating a new category is the way to go, but more often than not those clients go away quickly. You either get it or you don't and, being a small agency, we can't afford to spend time with clients that don't.

(Still not sure if I have to be in the "book club" to respond - can someone let me know? e-mail is in profile, thanks)

Two things I have generally found missing from this discussion over the years (and maybe they are in the book?):
- having a compelling value proposition to take to market
- having a grounded marketing strategy

Many clients want to throw existing products/services at a new market space and then wonder why they don't take hold. And if you are going to be second-to-market, by only tightening up on the other guy's specs and presenting no discernible differentiation nor value, you'll probably fail (see DEC).

Customers, as they always have, need to understand what value you bring to them (not to you!), and why it is better than any other option - including the DIY option. You can't just create a market - you have to create a market you can add value to.

As to marketing strategy, so many times the "launch" decision is made and THEN Marketing is asked to "make it work." Better that Marketing is involved before launch to present a case for how it will reach the proper targets in the new market - is it a new channel strategy? an innovative Web marketing approach? etc. Doing this kind of strategic work sooner also helps make a business case for the funds marketing needs to make the new market be a success (or at least have a fighting chance!)

I guess this ties in a litte to the "Blue Ocean Strategy" thread, but i'll ask it hear anyway because above Laura says we need to, "find an open hole or opportunity in the marketplace and in the mind on the consumer. Then you develop a brand to exploit that."

I agree with that completely, however how does one go about doing that? Do marketers (or anyone else) have some process or strategy for identifying these gaps? For example, what prompted the creator of Red Bull to say, "Hey the world needs an energy drink and I have just the right one?"

In "Origin...," the authors say opportunities for categories come from changes in technology or cultural environment. Great starting point, but then what?

(or perhaps I'm just asking the billion dollar question?)

I think you have to go even further to bring marketing into the product launch process. Marketing has to drive the product development process. Creating products should be seen, in all cases, as a marketing function. In companies where the engineers and designers take their cue from markeitng, better and more profitable products are created.

I also think you have to be careful about how you go about attempting to 'create markets.' I get the idea behind this, but it can be strategically misleading. Lots of companies have crashed and burned because they had a product looking for a market.

Perhaps a better term is 'creating a category' or 'discovering a market.' It's a fine line, but the demand has to come from the market -- even if the market doesn't know what it really wants (because they can't predict the future).

As to a solution for companies who don't 'get' this concept, the best resolution is to prototype and iterate. Start with a small group of customers and share you ideas with them. If they love it, expand. If not, revise.

Most companies don't have to bet it all on a new idea. They can invest a little to test the market and then scale rapidly.

I think the difference between serving vs. creating markets is an important one. Serving implies risk-average (following past performance) versus creating (which implies more risk).

Fun fact: Scorsese's film, "The Departed", was a huge success. It was a derivation almost exactly on the Asian film, "Internal Affairs". Geography and language aside, was it serving a market or creating one? So does "derivative" lean more to "serving" or to "creating"?