Dynamics of attribute competition

Competition produces a continuous round of new product attributes. If a new attribute succeeds, several competitors soon offer it. To the extent that oil companies all offer credit card payment at gas station pumps, payment methods are no longer a basis for choosing gas station. Customer expectations are progressive.

This fact underlines the strategic importance of maintaining the lead in introducing new attributes. Each new attribute, if successful, creates a competitive advantage for the firm, leading to temporarily higher-than-average market share and profits. The market leader must learn to regularize the innovation process.

A firm must look ahead and anticipate the succession of attributes that are likely to win favor and be technologically feasible. The firm has to discover new attributes. There are four approaches:

1. A customer-survey process:
Company asks consumers what benefits they would like added to the product and their desire level for each. The firm also examines the cost of developing each new attribute and likely competitive responses.

2. An intuitive process:

Entrepreneurs get hunches and undertake product development without much marketing research. Natural selection determines winners and losers. If a manufacturer has intuited an attribute that the market wants, that manufacturer is considered smart or lucky.

3. A dialectical:

Innovators should not march with the crowd. Thus blue jeans, which began as an inexpensive article of clothing, over a period of time, became fashionable and more expensive. This unidirectional movement, however, contains the seeds of its own destruction. Eventually, the price falls again or some manufacturer introduces another cheap material for pants.

4. A needs hierarchy process:

The first automobiles were expected to provide basic transportation and be designed for safety. Later, automobiles would start appealing to social acceptance and status needs. Still later, automobiles would be designed to help people “fulfill� themselves. The innovator’s task is to assess when the market is ready to satisfy a higher-order need.

The actual unfolding of new attributes in a market is more complex than simple theories suggest. We should not underestimate the role of technology and societal processes. For example, the strong consumer wish for portable computer remained for a long time until miniaturization technology was sufficiently developed. Developments such as inflation, shortages, environmentalism, consumerism, and new lifestyles lead consumers to reevaluate product attributes. Inflation increases the desire for a smaller car, and a desire for car safety increases the desire for a heavier car. The innovator must use marketing research to gauge the strength of different attributes to determine the company’s best move.

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