01
16 PROCESS, MATERIALS, AND MEASUREMENTS
ways to understand and exploit these unmet needs as quickly as possible. General
Motors and Proctor & Gamble are examples of companies who rely heavily on con-
sumer insights to drive product development.
The second position companies might take is a
push
position. Whether a market is
saturated
or not, a company may choose to
invent
a wholly new product or service
that solves a particular problem or achieves a particular level of quality, then commu-
nicate to consumers the benefits of this invention. Inventing wholly new solutions is
both expensive and risky. Inventions do not happen on a predictable schedule and it
often takes many attempts to find one that is successful, and the company’s finan-
cial and time investment may not generate the desired return in the market. However,
if a company does create an invention that consumers identify with, the financial
rewards can be considerable. Apple Computer and Bose are examples of companies
who innovate first and then lead consumers to their improved product solution
through communications, direct mail, and advertising.
COMPETITIVE FORCES
All businesses face some form of competition. Competitors can take the form of
direct rivals, who offer a similar product or service, as well as competitive forces,
which take the form of indirect competitors. Direct competition can be easier to
identify and develop a strategy against; note the decades-old competition between
Ford, Chrysler, and General Motors in the U.S. auto industry. Competitive forces, by
contrast, can be difficult to plan for, such as unforeseen increases in raw material
prices, an unexpected drop in consumer confidence, or increased regulation by
the Federal government.
A
s
d
c
s
W
h
w
w
T
o
F
i
c
m
S
e
i
i
t
t
t
D
t
e
e
Seek
Consumer’s
Needs
Drive
Consumer’s
Demand
Identify
Advertise
Product
Opportunity
#1
Product
Opportunity
#2
Product
Opportunity
#3
Product
Opportunity
#1
Product
Opportunity
#2
Product
Opportunity
#3
Market “Pull”
Market
Push
Seek needs first or invent solutions first? The two basic strategies companies can use have
strengths and weaknesses, but both can be effective.
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Design in the Context of Business 17
01
As design and business have evolved together over the years, competitors have
sought to emulate advantages gained by businesses that understood the role of
design in developing consumer preference for a particular product or service. As one
company in a product sector began to use design to differentiate its products and
services, another would copy these efforts, ultimately eroding the initial advantage.
While every area of a business experiences a competitive arms race, this pressure
has caused design to evolve beyond the creation of superficial “looks” for products,
which are easy to copy. Now, it is more common to use a targeted design strategy,
which is more difficult to copy.
There are several models that describe the competitive environment of a business,
one of the most well known being that of Harvard Economist Michael Porter. Porter’s
Five Forces model lays out the basic external forces that apply generically to any
industry: the power of suppliers, distributors, new entrants, substitutes, and direct
competitors. Understanding these forces is a critical first step in determining and
maintaining an effective, profitable business strategy.
Since one of the basic functions of any business is to take inputs (i.e., raw materials,
energy, money, components) and add value to them, suppliers of these inputs play an
important role. Suppliers are power ful when there are few of them for a particular
input. In the case of a factory, there is often only one supplier of electricity, making
the electric company relatively powerful. Suppliers are weak when there are many of
them—for the same factory, labor may be plentiful and not organized in the form of
trade union, making the supplier of labor relatively weak.
Distributors, or channels, for a particular product or service are any entity from which
the end user purchases the product or service. Like suppliers, channels can be pow-
erful if few in number, or when the channels represent a large share of potential buy-
ers. Large, mass-market retailers such as Wal-Mart or Home Depot in the U.S. are
Opportunity Business Strategy Resource Strategies Tactics
Unmet Need
(Pull)
OR
New Solutions
(Push)
Business Plan
for Exploring the
Opportunity
Strategies of
Key Contributing
Business
Recources
Orchestrated
Activities to
Deliver
Response
to Market
Michael Porter’s Five Forces model is a useful tool for examining the external forces on a busi-
ness in any given market: essential information for setting effective strategies for a business.
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