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Big trends create new markets

By Mark Trigg - posted Thursday, 12 November 2009


To “create demand” the great companies pick up trends and use them. In a sense, they are not actually creating demand. They are just tapping into demand areas yet to be identified by competitors.

Apple, for example, launched iTunes in response to the growing trend of young people downloading music from the Internet and sharing files, even after the music companies had put Napster out of business. Similarly, Apple launched the iPhone in response to the growing convergence between computers and telephony.

But Apple never went out and asked its customers what they wanted. Steve Jobs scoffs at the notion of target markets and market research. As he told Fortune, it was a case of identifying the trend and working with that. Jobs said:

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We did iTunes because we all love music. We made what we thought was the best jukebox in iTunes. Then we all wanted to carry our whole music libraries around with us. The team worked really hard. And the reason that they worked so hard is because we all wanted one. You know? I mean, the first few hundred customers were us. It's not about pop culture, and it's not about fooling people, and it's not about convincing people that they want something they don't. We figure out what we want. And I think we're pretty good at having the right discipline to think through whether a lot of other people are going to want it, too. That's what we get paid to do.

So you can't go out and ask people, you know, what the next big [thing]. There's a great quote by Henry Ford, right? He said, “If I'd have asked my customers what they wanted, they would have told me ‘A faster horse’”.

So what are the big trends that companies need to look at. Clearly climate change is one such trend, driving the big push towards sustainability and renewable energy. And smart manufacturers have identified this as an opportunity.

US sports clothing maker Atayne for example makes its sports T-shirts out of garbage. Its customers wear T-shirts sporting the Atayne environmentally-friendly logo, far better than the brand logos. Philadelphia-based SRS Energy has been manufacturing solar panels disguised as roof tiles. Similarly, British based company RidgeBlade has developed a wind-power system that can be fitted to buildings with minimum visual impact and maximum energy conversion potential. The system employs discreetly housed cylindrical turbines positioned horizontally along the apex of a sloping roof, ensuring no one notices wind turbines on top of your house.

One cannot say, however, that these companies created the demand. As with Apple, they just recognised what customers wanted and the demand grew from there.

The global financial crisis has created a number of other trends. We are now seeing increased demand for low prices. Products with longevity are also doing well. Buying fewer products that last longer is easier on the wallet and the landfill. Furthermore, people are eschewing glitz and going for simplicity.

Tougher conditions also mean companies are more focused on productivity. Also, anything practical and useful now goes down well in austere times. We can expect to see more products coming out that make a particular niche item or lifestyle easier to manage. Like, for example, special gloves that keep your hands warm and dry while we operate electronic gadgets. That even includes the latest, a hands-free mobile phone for winter sports, or social networking mobile phones.

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The boom in telematics is an interesting case in point. Telematics is the blending of computer and wireless telecommunication technologies for motor vehicles. Toyota models will have such features as emergency assistance location and stolen vehicle notification.

The new Chevy Volt’s OnStar communications system will allow consumers to program when they want to charge the vehicle much like they operate home heating and cooling system. They can charge their cars during off periods.

The Indian-produced Reva NXR, a lithium-ion powered electric car which will go into production early 2010, will be a three-door, four-seater hatchback. If a customer runs out of power, they can SMS or call the customer support centre. The advanced telematics feature will assess the car's batteries remotely. It can then activate a reserve amount of energy. Within minutes, a few extra kilometres of range are made available.

While telematics are now a feature of most new vehicles, they are a prominent part of the latest hybrid and electric cars. And analysts say this is very much around creating demand by making the car easier to manage.

“With hybrid and electric vehicles, they all need extra features so that the automakers will be able to sell the cars,’’ Rao says. “That’s the reason why cars like the Prius and Volt will have advanced telematics features.”

It’s not just about sales. Hybrid and electric vehicles tap into the sustainability trend with green telematics showing drivers the easiest route to take depending on the traffic conditions and providing them with increased fuel savings.

“The theme of hybrid and electric vehicles is to reduce the C02 emissions and increase fuel savings so that’s another reason why they have these features to take it forward,” Rao says.

The significant part about telematics is that they can help revive an industry that has been hammered and seems to be out for the count. For vehicle manufacturers, it offers the opportunity to obtain an ongoing revenue stream. At the same time, it can enhance both standard and after-market product lines. For auto manufacturers and their suppliers, telematics provides a life line and promises many new opportunities.

Healthcare is the other big trend. An ageing baby boomer population means that more will be focused on staying fit and well, out of the nursing home and as independent as possible. Potentially, this could open new opportunities for manufacturers. Examples could include "intelligent textiles". These would be shirts and suits with embedded sensors designed to monitor body fluids such as blood and sweat, which doctors can use to remotely check on the health of recovering hospital patients and those with chronic illnesses.

As with the iPhone, iTunes and telematics, the companies behind these sorts of products are not actually creating demand. They have only identified forces that are already there, and that can be used to create new markets.

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About the Author

Dr Mark Trigg is CEO of the Advanced Manufacturing CRC.

Other articles by this Author

All articles by Mark Trigg

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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