Article prepared by Annick Devillard
Many business people look with great envy at recent success stories such as eBay, Friends Reunited, datingdirect.com and Maman Jojo Bébé and wish they could figure out what the next ‘holy grail’ will be. It is not just start-ups that need to spot new trends and turn them into profitable businesses; established companies also need to keep their finger on the pulse to generate growth in new areas as opposed to organic growth in existing areas.
Identifying new trends is not easy. It requires a good understanding of the market, vision and sometimes courage. Large companies often suffer from ‘analysis paralysis’, work to a rigid set of priorities and may not always have flexible and nimble enough structures to capitalise on these trends in time. One would have thought that IBM would have spearheaded and dominated the PC market and the 4-wheel drive vehicle sector was heaven-made for Volvo. In both cases they were late entrants, having been busy focusing on other priorities.
For some organisations identifying profitable new trends is a matter of necessity and survival. The creation of the colourful iMacs, engineered by the return of Steve Jobs, saved Apple from disaster, and the company has been able to sustain innovation and creativity since by taking the personal music market by storm with the iPod.
In the case of Dell Computers, the direct sales model was conceived out of frustration when no retailer was interested in buying computers from what was then just another upstart company. Michael Dell’s focus on the direct model never wavered and the internet vindicated the direct approach – the rest is history and Dell is now the leading supplier of computer systems in the world.
But when is a trend real, and when is it a ‘fad’? In the haircare market many years ago, gel never really took off whereas the mousse format captured consumers’ imagination and became an instant success. Technology and fast communications nowadays seem to accelerate emerging trends, encouraging people to accept and adopt new ideas more readily but also discard them and move on as speedily.
Bearing in mind that about 80% of new products and services fail within three years after launch, how does one capitalise on consumer trends such as the ageing population, female power, an increasing number of dwellings with single people, or a willingness to hire services to get things done? Or perhaps the propensity to eat out and favour natural and ethnic foods, or e-shopping, or green awareness? Or business needs for accurate global reporting, tighter costs controls, improved corporate governance, lead generation and more demanding shareholders?
Market research and market analysis are key for successful business planning. However segmenting customers by age, income or geography is no longer enough and needs to be supplemented by lifestyle, mood, beliefs and occasions – these psychographic factors in many cases being the most important.
There are two types of research: primary and secondary.
Primary research – qualitative and quantitative - is used to test motivations and concepts among a sample of customers that are part of a company’s potential target audience. One-on-one interviews and focus groups provide useful insights in customers’ attitudes and behaviour patterns, whilst quantitative surveys help measure the size of a potential market. To make the most of primary research a company should have identified the features and benefits of the potential new offering and be clear about its points of difference or uniqueness. It does not have to be a totally brand new area but could be a better way of ‘packaging’ an existing product, as ASK did in the pizza market.
Secondary research is access to information that is in the public domain or already exists, such as population trends, competitor intelligence, barriers to entry such as taxation and government regulations (as Google has just found out in China). The internet is a good source of such data, as are business libraries like that of the IOD or the CIM and government departments.
The key though is to understand both customers and consumers, listen to their motivations, beliefs and challenges, and try to view the world with their eyes – then develop a product or service to meet their needs, delivered with focus and consistency. Those who succeed in creating genuine customer value are bound to be on to a winner.
At Link Management Group our Marketing and Sales Practice has expertise and experience in helping companies make the right decision in optimising their Marketing and Sales opportunities.
Copyright Annick Devillard and Link Management Group January 2006
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