Consumers of Complex Products

Two dimensions help determine the most appropriate relationship between developers and users: the range of different applications and the number of possible users of each application. Of course there should not be any doubt such products are innovative.

Few applications and few users is the case where direct face to face negotiation regarding the technology design and use is possible.

Few applications but many users is a marketing case which demands careful segmentation but little interaction with users.

Many applications but few users is a case where there are multiple stakeholders amongst the user groups, with separate and possibly conflicting needs. This requires skills to avoid optimization of the technology for one group at the expense of others. The core function of the technology must be separated and protected and custom interfaces developed for the different user groups.

Many applications and different users: In this case developers must work with multiple users of different types and therefore aim for the most generic market possible, customized for no one group.

In general, where there are relatively few potential users, as is usually the case with complex products for business customers. Customers are likely to demand that developers have the capability to solve their problems and be able to transfer the solution to them. However, customer expectations vary by sector and nationality. For example, firms in the paper and pulp industry do not expect suppliers to have strong problem solving capabilities, but do require solutions to be adapted to their specific needs. Firms in the specialty steel industry demand suppliers to possess strong problem solving capabilities. Overall, German and Swedish customers’ suppliers to have problem solving and adaptation capabilities but British, French and Italian customers appear to be less demanding.

Lead users are critical to the development and adoption of complex products. As the title suggests lead users demand new requirements ahead of the general market of other users, but are also positioned in the market to significantly benefit from the meeting of those requirements. Where potential users have high levels of sophistication, for example in business to business markets such as scientific instruments, capital equipment and IT systems, lead users can help to co-develop innovations and are therefore often early adopters of such innovations. The initial research suggests lead users adopt an average of seven years before typical users, but the precise lead time will depend on a number of factors, including the technology life cycle.

*Recognize requirements early – those who do are ahead of the market in identifying and planning for new requirements.

*Expect high level of benefits – due to their market position and complementary assets.

*Develop their own innovations and applications – have sufficient sophistication to identify and capabilities to contribute to development of the innovation.

*Perceived to be pioneering and innovative – by themselves and their peer group.

This has two important implications. First, those seeking to develop innovative complex products and services should identify potential lead users with such characteristics to contribute to the co-development and early adoption of the innovation. Lead users can provide insights to forecasting the diffusion of innovations. A study of development  projects in telecommunications, computer infrastructure found that the importance of customer inputs increased with technological newness and, moreover, the relationship shifted from customer surveys and focus groups to co-development because conventional marketing techniques proved to be of limited utility.

The buying process for complex products is likely to be lengthy due to the difficulty of evaluating risk and subsequent implementation.

There are two types of risk; the performance risk, that is the extent to which the purchase meets expectations and the psychological risk associated with how other people in the organization react to the decision. Low risk decisions are likely to be made independently and therefore it is easier to find decision makers and identify buying methodology. For complex products there is greater uncertainty and the consequences of the purchase are more significant and therefore some form of joint or group decision making is likely.

In the case of organizational purchases, the expectations, roles and view of risk of the main decision makers may vary. Therefore we should expect and identify the different buying criteria used by various decision makers in an organization. For example, a production engineer may favour the reliability or performance of a piece of equipment whereas the finance manager is likely to focus on life cycle costs and value for money.

Political and legal environment may affect the availability of, and information concerning, competing products. For example, government legislation might specify the tender process for the development and purchase of new equipment.

Organizational structure includes the degree of centralization of decision making and purchasing; tasks include the organizational purpose served by the purchase, the nature of demand derived from the purchaser’s own business, and how routine the purchase is. Influencers add information or change buying criteria, deciders choose the specific supplier or brand and the buyers are responsible for the actual purchase.

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