For new product success, change your market orientation from responsive to proactive
- · Recent empirical research supports what battle-weary development practitioners know intuitively.
“For any business to create and sustain new product success, a responsive market orientation is not sufficient and, thus, that a proactive market orientation plays a very important positive role in a business’ new product success” 1
- Proactive market orientation addresses the latent needs of customers
At first customers don’t express latent needs. However, after hearing a new product concept’s description and reflecting on it, some put their latent needs into words and describe how they think the concept might work for them.
- Responsive market orientation addresses the expressed needs of customers
Customers are aware of these needs and solutions and can readily voice them
Expressed needs are known by all competitors. The result is an aggressive price competition as competitors quickly match new features meeting expressed needs
Making the most of latent needs
- Latent needs often surface when early adopters in emerging or adjacent markets reflect on a new product concept. These leading edge users will pay value-based margins for the product and ungrudgingly work with the developer to resolve post launch “teething” problems.
Niche markets — where surfacing latent needs pays off
- All proactive new products materialize in specialty niche markets.
- Once the new product gains a foothold in the market niche, competitors struggle to match the evolving product’s growing value as early adopters and the developer continue to talk.
- Some niche markets evolve to become essential cogs in more complex end-products. They remain specialty niche markets and sustain value-based pricing and the loyalty of their customers with increasing emphasis on service features.
- Other niche markets are harbingers of larger markets. They break out of the niche with an explosion of demand. Here the major customer need is for reliable supply. If the foothold in the niche market is secure then switching costs are high. As demand skyrockets, developers who then focus on supply chain issues will gain gratifying revenue and profit growth.
Eliciting customers’ latent needs increases the value of your new product concept
As a seasoned elicitor of customers’ latent needs, I’ve seen that discovering and understanding latent needs results in highly defensible niches with high gross margins and improved success rates. (How to elicit prospective customers’ latent needs.)
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1.(2004) Narver, J. C., Slater, S. F., and MacLachlan, D. L., “Responsive and Proactive Market Orientation and New-Product Success” Journal of Product Innovation Management, 21: 334-347