Market Research

Innovation in Niche Markets

Innovation is the mainstay of niche marketing, yet your customer may not be able tell you what they will need in the future. And this makes sense if you think about it.

John Bradley "JJ" Jackson

20 Apr 2007 • 1 min read

"It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them."

-Steve Job, Apple CEO in Business Week, May 25 1998

Innovation is the mainstay of niche marketing, yet your customer may not be able tell you what products they will need in the future. And this makes sense if you think about it. Invariably your customers are focused on the here and now. Future needs make great cocktail conversations, but invariably they get put on the backburner. Making payroll and shipping product are just higher priorities.

This is the dilemma of market research and product development. As Steve Jobs infers, customers don’t always know what new products that they will need in two years. Most market research methods, such as focus groups, rely heavily on customers’ opinions about future products. With many industries having product development cycles that require the providers to think two and three years ahead, the challenge becomes even more complex.

So how do you develop future products? According to “Creating a Killer Product” by Clayton M. Christensen and Michael E. Raynor, “To create products that customers want to buy--ones that become so successful they "disrupt" the market? It's not easy. Three in five new-product-development efforts are scuttled before they ever reach the market. Of the ones that do see the light of day, 40% never become profitable and simply disappear”.

So, on top of everything else, it is easy for new products to fail. The authors additionally said, “Managers need to segment their markets to mirror the way their customers experience life--and not base decisions on irrelevant data that focus on customer attributes. Managers need to realize that customers, in effect, "hire" products to do specific "jobs." That's one reason why retail formats like Home Depot and Lowe's have become so successful: Their stores are literally organized around jobs to be done”.

The lesson is to not build products that are cool or easy to make; instead you need to look for jobs that need to get done tomorrow.