Break through strategy is built on a subtle yet expansive view of market needs. This provides the foundation for creating or maintaining market leadership.

Why?

Because this alternative view of needs provides substantially greater accuracy in understanding and executing future opportunities at lower risk. Innovation can appear more risky than it needs to be, because market development is often misunderstood.

Why is market development so hard to predict?

Market evolution is jerky and so seems hard to second guess. The challenge is that most organisations’ innovation processes work best applying incremental improvement of current products and services. This is how we’d like markets to work. Yet in reality, market development is jerky then smooth, jerky then smooth. In order to lead we have be equipped for both types of market development.

Have a look at this small selection of products and services to get the idea of the jerkiness of market development. Please feel free to add more examples.

• Cars: estates/station wagons models reign for years and then SUVs are all the rage.
• Coffee: drink any coffee as long as it’s instant or filter coffee becomes cafe latte-land ‘to go’ or ‘to stay’
• Water: tap water is all there is available if you drink ‘aqua’ and then it’s bottled, enhanced water everywhere
• Banking: banking is face to face in your branch and then you can choose be totally remote
• Photos: taking and getting pictures was a palaver and then bang – it’s instant
• Telecoms: pay per use and then revolution – it’s free with skype
• Milk: full fat bottled milk as the only choice to drink becomes vitamin enhanced/super trim/smart milk
• Music: your music library at home morphs into a mobile music library anywhere, anytime.

Of course, all the usual suspects help to make market evolution jerky. To name but a few: R&D lead times, regulatory environment and cultural change. Yet we believe this is significantly exacerbated by the majority of organisations focusing on incremental change / gradual improvement as a way of evolving existing needs – quite simply because it’s lower risk. Meanwhile, a minority of enterprises focus on higher risk, radical break throughs, which gives us products like the iPod.

And so there is a see-saw effect in evidence – or the jerky market!

Let’s look at one example…

Before iPod, the market norm for listening to music on the move was by playing a selection of CD’s on your portable CD player. The iPod provided the break through of a mobile music library at your fingertips. Then the mass market kicked in and created an avalanche of competing mp3 players – thereby normalising the portable digital music revolution until the next big thing arrives…

The key to smoothing the future market development curve is to use tools that reduce the risk of catering to tomorrow. At jakepearce.com we have a tried and tested toolkit for short to mid-term future exploration. These can be used by small, medium or large organisations to step into the future with lower downside risk across a managed continuum of innovation. Our toolkit demands that we always start our work in the same place…

Where do you start to predict the future?

We begin by applying our view of marketing needs to your brief. We think of marketing as a cake made up of 4 different needs: overt, latent, covert and created needs – summarised diagrammatically below. Let’s briefly explore this needs framework before we expand it with product examples.

Current marketing applies the majority of technology and resources to understanding the current status quo – namely, overt needs – which typically use traditional insight based tools for identification such as market research. This focus on the status quo means that three other needs/areas of opportunity are usually overlooked entirely because they demand ‘foresight’ techniques to identify and exploit them effectively.

Once you know which type of need you are working with, you can shape opportunities to create or maintain market leadership with a risk managed approach.

So, why not enjoy the whole cake when considering your market developments?

What are the differences between the four types of needs?

Set out below is an expanded view of our needs framework, including product examples for each type of need and their relative expected risk/reward.

Overt needs – we need them, and we know we need them. McDonalds needs healthy choices and the internet has to be quicker…always. We can access the size of these needs via quantitative research and refine them in qualitative research. You get the idea.

Latent needs – we don’t know what we don’t know. Think about milk 20 years ago compared to now. Today we have trim milk, calcium enriched milk, soya milk and so on. Did we need these 20 years ago? Maybe! The key point is that these needs have to be accessed and this is done using different tools to those applied to overt needs. You need to incorporate trend tools to identify the need.

Covert needs – They are the little annoying things in life that we forget. For example, you might spill a bit of coffee in the car and forget about it. It’s not the end of the world, yet someone invents a coffee cup holder for the car and you say ‘that’s great, I wish I had thought of that’. These needs are identified through consumer generated observation.

Created needs – we didn’t need them, but now we do. It’s a need that has been completely created. This is the kind of need that leads to the formation of new categories. Think mobile phones or music on the move – it’s higher risk , higher reward. These needs are identified through semiotic analysis – a leading edge, risk managed technology used by companies like Procter and Gamble and Nurofen to access future needs as a foundation for planning new product development.

So, what’s next?

Now we have explored needs, we can review how the jakepearce.com system applies the needs framework to support your creating or maintaining market leadership. We will review:

• Trends; and/or
• Innovation

Then it’s time to tailor the toolkit to deliver break throughs…