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May - 2008 - issue > Profiles in Innovation
Sowing-Innovations,-Reaping-Benefits-–-A-Mass-Market-Story
Ash Tankha
Thursday, June 26, 2008
In the past, the initial focus of a vast majority of businesses was niche market segments, and most of the innovations were driven to cater to the top end of the market pyramid. The product prices reduce as the products percolate down the market segments to reach the mass market. In the new age economy, companies are focusing on innovation keeping in mind the lucrative bottom layers of the market pyramid.

The myth that only the early adopters determined the validity and acceptability of the product in the market has been discarded now. Innovation is increasingly being fueled by the needs of the society at large. The mass market consists of consumers who are closer to the bottom of the pyramid and who are quite price sensitive. Businesses are realigning their product development focus on tapping the potential of this larger segment of consumers. The diversity in the needs of these consumers is very large, forcing businesses to rethink their market segmentation, targeting, and product positioning.

Companies worldwide are looking at the emerging markets as the next big growth driver. The strong purchasing power of the middle class in both developed and developing countries may significantly dictate the product requirements of the future. The middle class in developing or near developed economies such as India and China is now a lucrative target for companies worldwide.

Many a times, business managers are setting product affordability as a primary criterion for new product development and innovation research activities. “The largest market opportunity lies at the bottom of the pyramid. Products that have traditionally focused on select segments need to cater to specialized features that may not have mass appeal, and often become too expensive. Such a product ends up at the stratosphere of the market and eventually gets forced out,” says Suneet Singh Tuli, Founder, Datawind Ltd.

The needs of the mass markets are far from homogeneous. The products and service requirements in a mass market may require mass customization. Product positioning in small niches is not necessarily dead. Increasingly, products will need to be positioned for a variety of users in the mass segment.

The economics of the market is set to change dramatically in the next twenty years. If fluctuations in the stock market worldwide, the rapid GDP growths, shorter but sudden recession cycles, etc., are true signs of today’s dynamic market, companies may need to cut down the product development cycle time in order to react to sudden changes in market and customer preferences. The length of innovation cycles will follow a different set of dynamics in the new age economy.

The purchasing power of the rural markets cannot be ignored. In fact, many firms are now releasing their products first in the rural market. “We gave importance to rural networks, starting with rural areas and then moving to urban areas, therefore moving backwards in the hierarchy. Everything we did in the lab affected some of the biggest operators in the world. In some markets, 80 percent of the traffic is local, so fiber, microwave, and satellite networks can be connected. The idea was to go after rural markets and drive costs down at the right time by getting breakthroughs,” says Mark Fitzgerald, CEO, Altobridge Ltd.

“Innovation for a product company is a key differentiator tool and it gives an immediate market edge over your competition. When catering to a mass market or niche market without innovation, both on the product development side and on the adaptation side, it will result in obsolete products that no one wants or your cost of running your operations will be so high that a company could potentially go out of business,” says BV Jagadeesh, CEO, 3Leaf Systems.

The needs of the mass market will dictate the intellectual property protection that companies will pursue. For example, the acute needs in the high-tech, energy, and environmental sectors are driving innovators to undertake collaborative research and license and cross-license intellectual property portfolios.

Ash Tankha, US patent attorney, Gosakan A and Roopam Ghosh provide patent services to inventors. They can be contacted at ash@ipprocurement.com, or
visit www.ipprocurement.com

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