An article from Knowledge@Wharton. A well-established principle of product development holds that a small group of early adopters can spur mass-market acceptance of a new product. What is less well understood is how those early adopters react when that product or its brand is accepted by the mass market. As Wharton marketing professors David Reibstein and John Zhang explain in this video, the company could experience a backlash as early adopters move on to other new products. A case in point: Porsche saw a decline in sports car sales after it entered the SUV mass market. Research by Reibstein and Zhang discusses reasons for the backlash and suggests a strategy for dealing with it. http://knowledge.wharton.upenn.edu/article.cfm?articleid=2189
Using a structured approach to problem solving, always ask yourself:
WHO?
WHAT?
WHEN?
WHERE?
As a case in point, a manufacturer is struggling to grow sales in a particular market. You have been asked to look at the problem and make suggestions. Applying the 4 questions above to analyse the problem, the situation looks as under:
1. WHO is the manufacturer selling to? (helps to define the customer base – high, middle and low – understand the market segmentation)
2. WHAT is the competition doing? (Implicit in this question is what does the manufacturer sell and what does the competition sell?)
3. WHEN are the periods of highest and lowest sales? (gives an idea about cyclic nature of the product/industry or effects of promotions/festivals etc.)
4. WHERE does the manufacturer produce? WHERE does the manufacturer sell his products?
(Try to understand the distribution model and costs of production and transport)
- routes to market
- geographical coverage
- macroeconomic factors affecting production costs
I recently had the opportunity to attend a Marketing class by David Arnold at the London Business School. It was an enlightening experience and certainly threw up new insights for me from the world of marketing management. While the fundamentals of 4Ps (Product, Promotion, Place, Pricing) and 4Cs (Company, Customers, Competitors, Channels) still hold true, some new thought is gaining ground. In a book "Will & Vision: How Latecomers Grow to Dominate Markets" by Tellis and Golder, the First Mover disadvantage is more common than pioneer advantage.
Apparently, the businesses that have moved in first to capture a market have seen themselves being overtaken by the band of followers. The approach suggested is that if you have to move first in the market, it might be wiser to attack the mass market as it will provide a return. Case in point being Apple iPod. For businesses focussed on a profitable niche, the only future lies in becoming a trophy in someone's cupboard. Plenty of examples abound and Ferrari-Fiat relation is a perfect example of this. For any entrepreneur or growing business, you should focus on the ability to offer your product/services to a wider market if you are the first one in the market.
If you are interested in reading the book, it is available from Amazon..
http://www.amazon.com/Will-Vision-Latecomers-Dominate-Markets/dp/007137549X
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