MarketLoop #7, November 1997

Finding New Markets

Various Loop newsletters have addressed the significant competitive need to find new markets and new segments. New competition can easily upset the status quo and force the need to reframe marketing effort. The search for these new markets and unexploited niches is a constant marketing challenge, for pursuing organic growth is seldom sufficient any more. For this reason, there is now a premium associated with new ways of thinking and the development of differentiated ideas.

The Tamagotchi Principle

Through the Loop distinguishes between in-category innovations which take advantage of a shift and out-of-category innovations which are based on or create their own discontinuity. Discontinuities can have the ability to transform business operations. It may be easier to achieve in-category innovations such as First Direct in consumer banking and the Guinness widget which helped to develop the take-home beer market. To reach out-of-category innovations proves a much harder task when genuine discontinuity is sought in terms of concept, product delivery, channel of distribution or communication. Products/ services such as Yakult and the various probiotic yoghurts, UK supermarket majors moving into banking, the development of Encarta, the Philosophy range of beauty products (complete personal wellness company), Onken's Lutschis (tubes of fromage frais for lunchboxes), Tamagotchis, the wave of collagen drinks sweeping Japan from Shiseido and Kanebo and the publishing of Mungo Park, an on-line travalogue follow the Walkman as possible discontinuities. There is no doubt that the Tamagotchi transformed the fortunes of Bandai, but the search will be on to create the next discontinuity. Akio Morita emphasised this point when he wrote that "creating ideas is about looking for the unexpected and stepping outside your experience." Finding that shift should be the constant marketing task to overhaul the existing product line. Through the Loop has also shown in several brand best practice studies that strategic innovation propels a brand faster than any other marketing strategy.

Unexpected Combinations of Competencies

In Jamming, John Kao writes:

"since creativity is born of ambiguity, complexity and improvisation, its quest requires specifically tailored managerial techniques."

Through the Loop has now put in place four different techniques to assist companies in their innovation processes. These are complementary to existing new product development strategies but can add significant impetus to this effort. The techniques are based on the consultancy's ability to take a broad, "helicopter" view of the terrain based on a multi-disciplinary team who are deeply immersed in the marketing environment. It has been said that consumers may not be able to articulate what they might want in the future and as the BrandLoop on strategic innovation commented "an innovative company must look beyond today's consumers in the development of products and services."

New Paths

The four Through the Loop techniques are described below and can be commissioned in stages or as a total exercise.

Bedrock™:

This is an innovation template developed through best practice case histories. It has been found that these case histories should both be part of the current category and also beyond the category. All solutions can then be benchmarked against this best practice template.

Blackjack™:

This is a process which look at new development themes in a series of categories and then proceeds to look at how these themes can be used in new combinations to develop new products. A recent workshop among students yielded drink concepts such as Temata, tequila with Mango, Tabasco and aromatic herbs and Exhice, a mix of exotic fruits, as cold and light as ice.

Horizon™:

This uses some of the techniques of Scenario Planning to look at market, consumer and brand forces of change to help identify potential shifts in needs, technology, delivery etc. However, some of these forces may not be linear. Often patterns are found which move products and brands into services. New combinations of required company competencies can be developed from this.

CreativeLoop™:

These are a series of creative workshops run by Through the Loop to brainstorm new solutions. The recruitment is biased to those who are either more creative in their thinking or be opinion leaders/ early adopters. This yields a raft of new concepts to add impetus to NPD efforts.

These techniques have been developed specifically to focus on forces of change, relevant discontinuities and yield unexpected combinations of company and brand competencies.

New Markets?

For example, looking at markets/ categories which will develop in the future:

• personal allergy management.

• nutraceuticals.

• new services through direct distribution.

• online recruitment.

• electronic commerce.

It is combinations of solutions which can become new consumer opportunities and Bedrock™, Blackjack™, Horizon™ and CreativeLoop™ have been devised to help clients down this road. Through the Loop's previous experience shows that to reach both in-category and out-of-category innovation, multi-disciplinary, multi-functional teams carry a considerable advantage.

There are also other processes coming forward to help consumers share in the new articulation of a category. Just one process was demonstrated by Andy Dexter from DVL Smith, in his award winning ESOMAR paper, 'I Don't Know Much About Art But I Know What I Like' which identifies some of the dimensions of creativity. Creativity clusters have been determined which link to phases of early adoption. He suggests that "we are looking for creative respondents to move our thinking forward rather than individuals who will react to just what is presented."

Summary

There will be a premium in the future associated with developing new markets and new segments. It is no accident that developing knowledge programmes and harnessing higher creative skills can drive a search for new discontinuities to achieve marketing advantage. Have you looked recently at your company's horizon? Have you identified sources of creativity in your organisation? Marketing to mood and occasion, time of day, satisfying and delighting the consumer will become pre-requisites. How does your company and your brand portfolio fit against this template?

The marketing implementation of products and services can be worked very differently now. It may be possible to harness new channels of distribution and communications more flexibly and cost-effectively than the traditional retailing structure may allow. Greater experimentation should ultimately permit greater market success. Reframing and reshaping marketing effort should be a continuous quest.