Companies should redefine themselves as satisfying customer needs and wants, and redefine their product ideas accordingly.
In 1960, Theodore Levitt published a revolutionary article in the Harvard Business Review entitled ‘Marketing Myopia’. In this article, he argued that too many companies looked inwards at their products, rather than outwards at their customer needs.
He famously said that customers do not want drills, but holes.
Sources of product ideas in a business
Option A: INTERNALLY from within the business:
- Company’s own market research. Market research including focus groups can stimulate discussion about new products that customers like, do not like and those which they would like to see on the market in the future. For example, teenagers prefer sweeter breakfast cereal than adults.
- Research and Development (R&D) department. This mainly includes engineers, technicians and developers working in the research department. The business can benefit immensely by encouraging knowledgeable and experienced workers to become involved in generating new product ideas or product improvements. For example, engineers working for car companies may have valuable ideas for upgrading current engine specifications to consumer less gasoline per 100 km.
- Employees. Having own Research and Development (R&D) department is a very expensive process which not every business can afford. Therefore, asking different workers in the firm about their suggestions might be beneficial for discovering new product ideas. Additionally, staff who participate will feel important hence motivated. Friends and family members of workers can also contribute. For example, baristas in coffee shops will know exactly which products are popular and which products do not sell well in the coffee shop.
- Sales people. Sales personnel who have contact with the existing products and customers will always have excellent ideas for new product developments. It is because they may suggest improvements to existing products or even completely new products as they are the ones who have close daily contact with the final consumers. For example, IT companies which produce corporate software for other businesses will like to know customer expectations before developing and launching new versions of their computer programs and applications.
- Brainstorming in groups. Brainstorming can bring the benefits of synergy where 1+1=3. Members of the group working together might be able to generate new ideas for goods and services beyond the level that would be achieved by individuals working on their own. This applies to complicated products that require input from many different workers across business departments. For example, building a new laptop computer will require collaboration between workers from both marketing department and production department.
- Extension strategies. Developing new products based upon existing products which are in the maturity stage of the Product Life Cycle. These products are successful and well-established on the market; however some of them might be losing its appeal over time. For example, new smart phones with better software, more memory and higher-resolution camera.
- Complementary products. Creating new products that can be used together with existing products. For example, gaming companies creating new games for newly launched SONY PlayStation 5.
- Trials and errors. Building better products based on failed attempts from the past. For example, after several failures, NASA has finally developed a stronger supersonic parachute for its NASA’s Perseverance rover when sending it to land on the surface of Mars.
Option B: EXTERNALLY from outside the business:
- Copy from competitors. These ‘me-too developments’ rely on other firms to be innovative and then simply copy their ideas in a legal manner. For example, Coca-Cola and Pepsi are very similar sodas co-existing for over a century as they trace their origins back to the 1890s.
- Adaptation of competitors’ ideas. It is important to be careful not to infringe copyright or patent laws by creating the same product. For example, after the success of PlayStation 1 launched by SONY, Microsoft developed its own video game console called Xbox which was first released to the market in 2001. It was competing directly with SONY’s PlayStation 2.
- Laws and regulations imposed by the government. Sometimes the government will introduce new policies that will require companies to upgrade their products in order to meet the requirements. This will stimulate creation of new products in the economy. For example, when the government imposes more strict regulations toward air pollution, car companies will start producing electric vehicles and utility companies will start more green energy projects.
- Changes in external environment. New trends in the society as well as culture and traditions can be a valuable source of product ideas for the business. For example, growing popularity of tattoos increased the supply of new products like tattoo furniture and tattoo studio equipment.
‘Railway companies went bust because they thought they were in the railroad business when they should have thought of the transportation business. Do not think bricks but think building materials. Do not think glass bottles, think containers. That way if building materials or containers change, the company can still be in business. More importantly, if the company thinks one level up and is in tune with the changes in its customer’s needs, it has a chance to make changes in its production.’ said Theodore Levitt.
