Author : Aniket PATHAK
Date : 24 April 2023
Product space in the current era is very fluid and spread out, but still there are some commonalities in how different product comes into existence. Its not what they can do but what problem they can solve.
Below is a very high level analysis to explore this product journey or rather different ways through which these products come into existence.
Product and services are meant to solve a problem. If there is no problem or in marketing sense, if there is no need there can not be a product. All companies and industries are selling a product or service which has a unique demand from its targeted consumer. While some product address existing problem and need some companies like Apple and some luxury brands who create a product which create a new need.
There are various techniques and practices to manage products and ensure their sustainability in an ever-changing market. But if you try to simplify it and look at it from a very broader point of view there are very few ways any new product can come into the market. From what I understand and observe, a very simplified version of how different companies try to create a product or service, comes to below three unique approaches.
First in Market - Innovation
These products and services bring a completely new concept to the market or in some cases create a new market all together. Most of the common fields where we see more such products and innovation are mostly B2C markets like technology, hospitality, or retail etc. Institutional domains such as finance and insurance are comparatively deprived of such innovation. If we analysis the catalyst for such innovation we will find a interesting corelation with regulatory framework i.e. Innovation in the field are inversely proportional to local regulations. All domains where there is less regulation we can see lot many and lot faster innovation. With regulation comes restriction and limited scope to play with. Such companies and instituters need to stay within the regulated guidelines, so the scope in a way is restricted e.g. finance is a typical example, as there are only few ways a financial institution offer services to its customer, unless regulatory body allows them to venture into new category.
Corelation between Innovation and regulation
I don't to mean in a wrong way but, industries that are less regulated (here regulation is about ability to expand the scope without the approving authority), are likely to have more innovative products e.g. there is no regulation in technology, so you can create any type, shape, and form of devices to offer various services. Medical is again another example where there are governing practices but no regulatory framework, hence many break through innovation are possible. But if you look at an industry like BFSI which are highly regulated i.e. all products need to be within the regulatory guidelines do not product path breaking products that often.
Change the Game
When there is limited scope the only way to create your product identity is to create a product with completely new features and capabilities but still addressing old problem. This is what I call "Change the game".
For example in India mobile services were available with tough competition in various service providers fighting over price and various add-on service offerings. When Reliance entered this market they did a complete disruption not once but twice. The first time they provided free incoming calls which was unheard of at that time and recently they adopted an approach to charge only for data usage and make all calls free which was widely used in many countries but was not available in India. Even the launch of the iPhone is not a "First in Market" product. There were a lot of phones and models that existed with a giant like Nokia. But Apple provided a disruptive technology and ecosystem like "App Store" which changed the whole game.
In case of Apple if you split the iPhone into two products i.e. phone device and App Store, then phone device is like "Change the game" but App Store is what "First in Market"
ChatGPT is very similar example. Who would have thought that anyone will ever question Google as the best search engine, but with ChatGPT people have started questioning everything.
So if you can not be first in the market you can always change the game. This allows completely a different way to be kind of first in the market but through the existing product. Nowadays this is mostly achieved through Technology and the latest trend is integration of AI. Even that is becoming a normal now, so they have to change the game again.
Join the race
This might be the easiest of all three. Don't get me wrong here, it is still hard but comparatively easier to do.
All around us, we have an existing tested market with well-known problems answered by standard solutions provided by various institutes. Any company with sufficient resources can create a product or service imitating existing products and be part of the community. This is what I call In "Join the race".
This can only be achieved in a large market where every competitor has some kind of market share. Many institutes over the period expand their product portfolio with similar strategies and introduce their services in line with what already exists in the market. There might be some nuances to differentiate each product offering but overall provide the same services.
If we look at these strategies from risk and reward point of view we can see that each one has its own place in the market .
"First to Market" is always a high-risk high reward strategy as you are the only one testing the market. So if you have analyzed all aspects perfectly then the winner takes all, or else the product can fail dramatically.
"Change the game" is very similar to "First to market" in terms of risk but at the lower end as your base product is always what the market is currently utilizing. The disruptive part is what makes or breaks your uniqueness. It is still a very highly rewarding strategy as you have the biggest advantage to capture the bigger share of market using the a unique service and product.
"Join the race" is a low risk and marginal reward strategy. As I said before the market has to be significantly big to make sure you also get some kind of share to justify the existence of the product.
This is the very basic level of introduction into the Product domain, but the field goes way deep and highly technical. Most start-ups fall normally take the first two strategies whereas well-settled institutions normally start with the "Join the race" approach.
Especially in the finance domain it needs a fintech to come and disrupt the market first. most of the banks do not cross the traditional boundaries until someone tastes the waters and publishes the results.
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