Sources
Within the Business or Industry
1. Unexpected
Successes or Failures
Whether
the unforeseen, unanticipated success or failure of a product or service
happens within your own firm or that of your competitor, analysis of the
situation provides an opportunity for learning.
Understand why was it successful, so you can build upon it or improve
your own product offerings to be more competitive in the market. If there was failure, why was it not
accepted? What was the consumer
expecting or demanding that they did not receive? What variation of this product would be desirable
or what other market segment should be targeted instead?
2. Incongruities
between reality as it actually is and reality as it is assumed
We
are talking about discrepancies between what is and what we think it ought to
be. This can be differences in
perception between what the customer's expectations and value for the product
is versus what the manufacturer of the product believes the customer's
expectations are. If suppliers in the
marketplace fail to discern this difference, then the opportunity arises for a
new entrant to the market to provide an alternative that narrows this disparity
and becomes more attractive to the consumer.
Example: When our firm opened in 2003, management
thought our customers would value delivery of products by our uniformed
drivers. We purchased a fleet of trucks,
put logos on them and set up daily routes to service our 500 customers. After operating 5 years in this manner, a
significant downturn in sales forced us to re-evaluate our delivery
service. We started utilizing FEDEX and
LTL carriers, then eliminating drivers and trucks in specific territories. Not only did we find that our customers did
not care at all who delivered their merchandise (zero value), but actually
preferred receiving shipments via FEDEX, because it was almost always
guaranteed to arrive before noon. Many
of our customers were always at the tail end of the delivery route, getting
their product at 3 or 4pm. The
innovation in this case was a dramatic change in delivery method, which in the
end saved the company money and provided our customers with better service.
3. Process Needs
When
looking at the process of how things are done, opportunities lie where there
are ways of doing it better and the customer sees value. This may include improvements to existing
products or services, that make it easier for the consumer to use. The streamlining of a process a consumer must
go through to purchase your product, resulting in a more cost efficient procedure
for the company and a happier customer, would be another example.
4. Changes in
Industry and Market Structure that catches everyone unaware
Changes
in customer taste or preferences usually will prompt changes in the industry. Whether or not these changes are long term or
just a fad may not be known in the beginning.
Perceiving and understanding where customer demand is moving away from
the norm and why will provide the opportunity to capitalize by introducing new
products or services that meet this new or varied need, not yet discovered by
the industry as a whole.
Sources
Outside the Business or Industry
5. Changes in
Demographics
Evaluating
existing demographics or shifts in the statistical data of a given population,
whether based on age, sex, race, disposable income or education, can provide
opportunities for innovation. Over the
years as more women have received higher education and entered the workforce,
they now have more disposable income and more independence than in the past. This increases the purchasing potential of
this market, allowing for more products that are tailored specifically towards
women and their preferences.
6. Changes in
Perception, Mood or Meaning
This
refers to changes in how customers perceive a product or service. This can be influenced by a combination of
economics, a change in values, etc.
Example: Before gas prices escalated to $4+/gallon in
2008, consumer demand for large SUVs was extremely high. They valued such automobiles for their capacity
to carry a family in luxury and safety.
They were spacious and powerful, capable of hauling boats and
trailers. Once gas prices rose above a
certain level, consumers perception of this product changed drastically. They were considered gas hogs and bad for the
environment (not a concern before).
Certainly there were those on the cusp who could barely afford these
vehicles and the significant increase in the cost of fuel made it financially
impossible or impractical. However,
people who used to drive Hummers typically had more than enough disposable
income to afford the increase. Their
image as a Hummer owner was tarnished by the change in perception of society as
a whole, making it now less undesirable.
It no longer gave them stature, but rather shed a negative light on
them.
7. New
Knowledge, Scientific and Unscientific
New
discoveries in technology or the sciences can provide opportunities for
innovation. The question is how long it will
take to develop this knowledge into a viable, marketable product. What are the costs involved and do you have
the capital or infrastructure to take advantage of the opportunity?
