Give the people what they don’t know they want

Spencer Platt/GETTY IMAGES - People wait on a set of stairs to get into the Apple store to purchase the new iPad on March 16, 2012.

Steve Carlotti is the CEO of The Cambridge Group, a growth strategy consulting firm that is part of Nielsen. Jason Green is principal at The Cambridge Group and leads Nielsen’s global Growth and Demand Strategy practice.

Let’s talk about latent demand.

Gallery

Latest from Ideas@Innovations

The boss who’d put a tiki lounge by your desk

The boss who’d put a tiki lounge by your desk

A chief executive points to research showing that workers who have more fun are most productive.

The role of your gut in allergies

The role of your gut in allergies

Scientists are investigating how common bacteria in our bodies can contribute to allergies.

Real talk about innovations

Real talk about innovations

Just because something is new doesn’t mean it should be touted as an innovation.

For the uninitiated, it’s neither a tangible object nor is it an accounting function you’ll see on a business school classroom chalkboard. Rather, it is the unarticulated demand consumers have for solutions they didn’t realize they were seeking.

Latent demand, we find, exists for two reasons. First, consumers are always open to better ways to address their needs. Marketers erroneously declare their market to be “mature” only to be unceremoniously surpassed by some unforeseen upstart that understands consumers want convenience, customization and positive experiences. Second, consumers are rarely able to envision or articulate the new solutions they would benefit from. To identify latent demand opportunities, start with the fact that latent demand is available within any industry, including your own.

Companies need to look at the same consumers and situations they’ve always looked at but see things never seen before. Leaders must challenge existing approaches to industry and push back on the time-honored orthodoxies dictating prices, distribution and marketing. Think about how you would disrupt your own industry and how others might disrupt it.

Companies must also learn to see the world through the eyes of the consumer, which, granted, is not as simple as it sounds. As management expert Peter Drucker noted, “The buyer rarely buys what the seller thinks he is selling.” Seeing the world through consumers’ eyes enables companies to avoid this trap and illuminates latent demand potential.

If you’re a business owner, product developer, or aspiring entrepreneur eager to energize the hunt for latent demand, we propose four approaches:

First, challenge the industry’s dominant business model. If that model happens to be centered around, say, low cost, you may be able to tap latent demand by taking a premium approach. Alternatively, a company could work on decreasing ownership costs and expanding the market.

Second, crash the category. This means, importing a new benefit or set of benefits from a different industry or country. Find out if consumers are buying and bundling multiple products to deliver a single desired benefit and if importing new benefits could open up opportunities.

Third, latent demand can be tapped by stripping down offers with too many features that add cost but don’t add value for significant customer groups. Find out if consumers will be okay with more affordable, convenient options that don’t have as many bells and whistles or may have different bells and whistles that cost less to deliver.

Fourth, and finally: try to resolve tradeoffs. Demand can be unlocked in situations where consumers are forced to make compromises that leave them unsatisfied. Find out if customers have to sacrifice performance for speed, great taste for greater healthiness or low cost for convenience.

Successful innovation is less about unbridled genius than about focusing on the evolving needs of your actual – and potential – customers. Understanding your consumer and uncovering latent demand is possible, and with it comes growth.

Read more news and ideas on Innovations :

Dominic Basulto | Is your technology biased?

Lincoln didn’t invent Facebook

Dominic Basulto | The Super Flynn effect

The next generation of SWAG

Vivek Wadhwa | The gangsters of Silicon Valley

Facebook | @oninnovations | Tumblr | Google+ | Pinterest

 
Read what others are saying