Market Potential and Market Trend

The first is market potential and market trend. How large can we expect the market for our business to be in five or ten years — assuming no basic changes in market structure or technology? And what are the factors that will determine this development?

Second, what changes in market structure are to be expected as the result of economic developments, changes in fashion or taste, or moves by competition? And “competition” must always be defined according to the customer’s concept of what product or service he buys and must include indirect as well as direct competition.

Third, what innovations will change the customer’s wants, create new ones, extinguish old ones, create new ways of satisfying his wants, change his concepts of value or make it possible to give him greater value satisfaction? This has to be studied not only in respect to engineering or chemistry, but on respect to all activities of the business. There is a technology in the mail order business, in banking, in insurance, in office management, in warehousing, etc as well as in metallurgy, or in fuels. And innovation is not only a servant of the marketing goals of the business but is in itself a dynamic force to which the business contributes and which in turn affects it. Not that “pure research” is a function of the business enterprise – though in many cases business enterprises have found it a productive way to obtain marketable results. But the “advancement of the arts” – the constant improvement of our ability to do by applying to it increased knowledge is one of the tasks of the business enterprise and major factor in its survival and prosperity.

Finally, what wants does the consumer have that are not being adequately satisfied by the products or services offered him today? It is ability to ask this question and to answer it correctly that usually makes the difference between a growth company and one that depends for its development on the rising tide of its economy or industry. And whoever contents himself to rise with the tide will also fall with it.

The outstanding example of a successful analysis of the customer’s unsatisfied wants is, of course, that of Sears, Roebuck. But the question is so important as to warrant further illustration.

Our manufacturer of fuse boxes and switch boxes asked the question back in 1943 when he was deciding what to do after World War II. He gave one correct answer: the customer needed a switch and fuse panel that would accommodate much higher electricity loads and carry more circuits than existing equipment which had been designed in the main before household appliances became general. Yet this new equipment, while carrying almost twice the load of existing panels would have to cost, fully installed, much less than two and not much than one of the old panels. A homeowner in need of additional circuits would have to find it easier and not much more expensive to have his electrician rip out the existing panel and replace it with a new high load panel, instead of putting in a second standard low load panel. The manufacturer’s success in first analyzing the problem and then answering it by designing the required high load panel was the second major in his rapid progress. But his failure to see another unsatisfied want of the customer is largely responsible for his disappointing performance since Management did not see the customer also wanted an automatic circuit breaker to take the place of the clumsy fuses that, when they blow out, have to be individually inspected and individually replaced. What makes management’s failure even greater is that it saw the need but substituted its judgment for that of the customer. It decided that the customer did not know what he wanted and was not ready for so radical a change. When two competitors came out with a domestic circuit breaker in 1950, the company was caught unprepared; and the “unready” customer has gone all out for the competitor’s new product.