Identifying Product Opportunities: The SET Factors
Identifying product opportunities should be the core force driving companies that manufacture products, supply services, and process information. A product opportunity exists when there is a gap between what is currently on the market and the possibility for new or significantly improved products that result from emerging trends. A product that successfully fills a Product Opportunity Gap (POG) does so when it meets the conscious and unconscious expectations of customers and is perceived as useful, useable, and desirable. No one asked for a body monitor that integrated into daily activity before BodyMedia introduced the FIT System, and no one asked for an alternative hangout to a bar before Starbucks provided the coffeehouse as “your ‘third place.’” Successfully identifying a POG is a combination of art and science. It requires a constant sweep of a number of factors in three major areas: Social trends (S), Economic forces (E), and Technological advances (T) (see Figure 1.2).
Figure 1.2. Scanning SET Factors leads to POGs.
The social factors focus on culture and social interaction and include these:
- Family and work patterns (for example, the number of single parents with two jobs or the number of double-income households with flexible hours)
- Health issues (for example, people living longer with more active lives)
- Use of computers and the Internet
- Political environments
- Successful products in other fields
- Sports and recreation (for example, Gen-X snowboarders creating a new “loose-fitting grunge wear” fashion aesthetic and lifestyle)
- Sporting events (for example, the emergence of new, retro, or ultramodern state-of-the-art facilities and the athletes who perform in them)
- The entertainment industries, including film and television
- Vacation environments (for example, the fantasy fulfillment provided by Disney World, Las Vegas, and Club Med)
- Books (for example, Oprah’s Book Club)
- Music (from hip-hop to new classic-chic)
- Environments at work (that raise quality of workplace standards)
The second major SET Factor is Economics. The economic factors focus on real or perceived excess income that gives people purchasing power. This results in a state we call psycheconometrics: the spending power people believe they have to buy the products and services they believe will enhance their lifestyle. These factors are influenced by the overall strength of and forecast for the economy, fuel costs, raw material costs, loan rates, availability of venture capital, the stock market and its forecasts, and real disposable income. Other economic issues that influence product development come from understanding who has the income, who is doing the purchasing, and for whom the purchasers are buying. As social factors change, where people spend their money changes.
The Technology factors focus on direct and imagined results from new scientific discoveries in corporate, military, and university research and the implied capabilities stemming from that research. These factors include the amazing growth in computing power predicted by Moore’s Law (Intel co-founder Gordon Moore’s prediction in 1965 that the number of transistors per square inch on integrated circuits would double every year) and the analogous reduction in physical size of peripherals and supporting functions; new material and manufacturing advances; electrical, mechanical, and chemical innovations; aerospace and military technologies; film and sports entertainment technologies; and micro-, nano- and biotechnologies. The capability for sensors within products to consistently connect to external systems in real time has generated a plethora of new product service options.
The SET Factors generate opportunities for producing new products that can have an effect on the way people live their lives at any given moment. The goal is to create products and services by identifying an emerging trend and to match that trend with the right technology and understanding of the purchasing dynamics. The window of opportunity is often small—a product that comes out either too early or too late can fail even if the opportunity existed initially. For example, in the 1970s, AMC introduced the Pacer, a shorter, wider car with a larger window area to maximize the internal sense of space. Many of the attributes that the Pacer incorporated became the goal of all car manufacturers in the two decades that followed. As another example, the Apple Newton was an early PDA with many of the attributes of smartphones today, but cost and size compromised its appeal beyond the lead users and early adopters.
Perhaps the most salient example of introducing products too late is the U.S. automotive industry’s failure to understand the potential growth in small, well-made, fuel-efficient cars, which allowed Japanese car manufacturers to dominate the four- and six-cylinder-engine car market for decades. American car manufacturers generated their profits from small trucks and SUVs rather than the smaller fuel-efficient vehicles, partly leading to their collapse through the economic bust of the 2000s. The American car companies apparently have read the SET Factors and are introducing a wide variety of smaller, more efficient, and more intelligent vehicles, coupled with a leaner, more efficient approach to production.
Successful new products become necessary once they hit the market. Most consumers are not even aware they need the product because they are immersed in the trend. If the company hits the trend at the point it is just catching on, the product will become instantly desirable. The length of a trend, combined with the product’s attributes of use and usability, determines the lifetime of the product. Las Vegas has continued to be successful by complementing the fantasy and dreams of gambling with the characteristics of a family amusement park; Disney World has extended its market by creating vacation programs and packages for adults as well as kids. Coca-Cola has been able to maintain its position as the leading soft drink for an entire century; contrast it with Tang (the drink of astronauts), which was a hit when NASA was a major cultural influence but has now been replaced by Gatorade. Gatorade has responded to the SET Factors and evolved into the G Series, with a range of products and sports stars to promote the system of products. Barbie has lasted decades and American Girl has become a successful option for parents and children; the frenzy surrounding Cabbage Patch Dolls, on the other hand, lasted only a few years.
Figure 1.3. 1957 Chevy and 1959 pink Cadillac. (Reprinted with permission of General Motors)
Changes in the SET Factors produce Product Opportunity Gaps (POGs). After identifying a POG, the challenge becomes translating the POG into the development of a new product or the significant modification of an existing product. In both cases, these products are a hybrid combination of a new aesthetic and a set of features stemming from the possibilities of new technology that match emerging shifts in consumer preference. An example of a product hybrid that successfully filled a gap was the first Apple iMac. Integrating the monitor and CPU, and using translucent plastic combined with a variety of bright candy colors, made the iMac easier and more fun to use than other computers. The iMac evolved with and continued to define the aesthetics of offices and homes, which look sharp with an iMac on the desk. Setup was a breeze, and cable-management issues virtually disappeared. The Apple desktop has continued to use the integration concept and is now an elegant thin, soft-cornered rectangle with a minimal aluminum base.
You might not find that all of the products and services included in this book are ones that you would buy. This is an important point to make. The products that we include are highly successful within their intended markets. Understanding how your views differ from the users’ views is critical to the development of successful products. The SET Factors identify POGs for a targeted user group—that target might not be you.