The concept of a market oriented business versus a product oriented business is the fact that a product oriented business starts with a product then asks a sales and marketing team to sell it to the public. Market oriented businesses focus on identifying needs in the consumer market and designing their product or service to satisfy that need. Often the more successful of the two tends to be market oriented businesses because they are actually addressing the stated needs of the consumer rather than what a small group may think they need.
As members of the business world, satisfying customer needs should be our bread and butter. One of the goals of business is to add value to products before passing them along to the consumer. Businesses thrive on the ability to create value at as low of a cost as possible so that they can have the competitive edge in pricing, and make a profit through their margins.
The concept of co-creation means that consumers are involved in the process of adding value to the products that they are purchasing. This kind of interaction could be as simple as Ikea’s process of letting customers transport and assemble their own purchases in order to decrease the price of shipping and set-up. This savings is then passed on to the consumer. Another example is Fiat allowing for the public to go to their website and vote on over 3000 features that they wanted to see on the next model release. This allowed for customer feedback to become a driving factor in the product planning process and it was considerably cheaper than traditional R&D methods.
Speaking of R&D, many big names in the manufacturing world have been choosing to use a type of crowdsourcing in order to solve their toughest engineering, chemical, and technological questions. Companies can get stuck on a problem and waste thousands and thousands of dollars trying to answer it and may never come up with a solution. This is bad for business, especially when it doesn’t yield results. In addition, it doesn’t help that whenever you stand too close to a problem for too long, you begin ignoring the simple solutions. So companies like Proctor & Gamble have decided to look elsewhere for their talents. A company called InnoCentive has answered this call by providing a place for companies to post their problems and a cash payment upon delivery of a solution. Meanwhile, scientists, engineers, chemists, etc, are searching through these problems and trying to come up with solutions to them in order to earn supplementary income. This decreases costs of R&D for companies, provides them with access to over 1.5 million problem solvers, and gives opportunities to free-lance workers who enjoy the ability to work in doses and at their leisure to make extra money. This is a revolution in how we solve manufacturing problems.
What are some ways to involve your customers in the creation of value? Try making them your employees. Quirky has an interesting business model where their product development ideas come directly from their customers. People submit ideas (sometimes reaching over 2000 ideas per week), their ideas are up voted or down voted, then reviewed by the analysts at Quirky headquarters. Ideas are mulled over, and the best of the best are discussed in a meeting of employees which is broadcasted live via the internet. Once it has been decided that an idea should move through to production, the company goes into production and marketing mode, creating the product and figuring out the best distribution strategy for it. Their long list of retailers allows them to identify the best markets for certain products and idea turnover to product is relatively quick. Idea creators receive a handsome percentage of the indirect sales that are generated from the product and it has been proven that idea people can make quite a bit of money. How much are we talking? One inventor currently makes over $1 million per year. All I can say is Quirky, you’ve got my attention.