Finding growth opportunities in a mature market … weak signals, deafening noise

Most ideas for new specialty products in a mature market are incremental improvements on the old. Consumption growth remains the stagnant as current customers substitute the new for the old. 1

Weak signals about growth opportunities from unanticipated customers

Specialty products sometimes have unanticipated customers who can grow the supplier’s overall consumption base.  Finding and listening to the weak signals sent by unanticipated customers is tough. However the result can lead to a good growth opportunity. As a bonus, a new product platform for employing the supplier’s unique technology and marketing skills may develop.

Hunting unanticipated customers…their profiles

Time and again, unanticipated customers who send up valuable weak signals are lead users 2 and early adopters.3 Such customers are found in both non-served markets and current markets.

Lead users work on the edge of their firm’s product platforms. Lead users have a product problem they must solve. They believe the solution lies in the supplier’s unique technology and marketing strengths. Lead users also have insight on why the solution is important commercially.

Early adopters start using innovative solutions as soon as they become available commercially. They rely on their intuition to infer that the innovation will create value if they use it. They also accept the risk that the value-creating result may not occur.

Deafening noise comes from sources in both customers’ and suppliers’ firms

Procurement agents’ decisions are a major source of noise in customers’ firms. Mostly this is because agents are rewarded for making purchases that meet current production needs.

Our experience is that procurement agents are not overly concerned with the needs of lead users and early adopters in their firms. Agents may have a laundry list of the needs of lead users and early adopters in their firm but the list is full of noise, outdated and nonsensical.

The overconfident attitude … We know all we need to know about our customer base …  is a major source of noise inside some supplier firms. This attitude drowns out weak signals from lead users and early adopters at unanticipated customers. It’s a biased view that isn’t willing to begin a meaningful conversation with representatives of future growth of the customer base.

Amplifying the weak signals from lead users and early adopters

First, make sure that your sales and R&D antennas for customers’ needs signals don’t filter out weak signals. In a project I am familiar with, the signal came in through a client’s manufacturing operation. An individual in manufacturing noticed a sharp growth in demand for a pricy customized product from unanticipated customers and brought the weak signals to the attention of sales and R&D.

When it was brought to their attention, the weak signals did not interest sales or R&D. Marketing then initiated a project to contact lead users and prospective early adopters and gain insight about potential growth. Based on this insight, the client made major adjustments in their current product to fit an innovative business model. The new product exceeded expectations and in three years evolved into a rewarding product platform.

Second, point your antennas to pick up weak signals from lead users and early adopters who are —  1. In markets adjoining your current markets and, 2. Non-customers in your current markets. For statistically significant information, collect it from a random sample of at least 40 lead users and early adopters in target markets or in non-customer firms in your current markets.

1. (2012) Christensen, C. M.  Bright Ideas: A Capitalist’s Dilemma NY Times p. 3-4 N BU 11/4/2012

2. (1998) von Hippel, E., Churchill, J., and Sonnack, M. Breakthrough Products and Services with Lead User Research Lead User Concepts, Inc. Cambridge, MA, Minneapolis, MN

3. (1991) Moore, G., Crossing the Chasm: Marketing and Selling Technology Products to Mainstream Customers p. 21 Harper Business NY, NY