Do you know your market?
Working on a demand led market can be very different from working on a supply driven one. You may not think in terms of supply driven and demand led markets, but as a consumer you will certainly act according to them.
The supply driven market is more or less driven by a few producers, who decide what the market needs and when it needs it. Emerging markets are often supply driven; and there are several reasons for this. The market has few customers, who are unsure about their own needs and how to use the products and services to their best benefits. Suppliers are inventive and creative in this market. Functionality is the competitive edge. Reliability, interoperability and quality are less important. Uniqueness is vital. Customers are willing to overlook problems as long as they are not catastrophic. They know they have a unique product. They also know that things are getting better. The supplier more or less invents the market. You may think of the market as immature. Being “first on the market” creates lots of advantages when claiming market shares and setting standards. Being first on the market is a dream to many companies. But the creative part can be a problem too, as the supplier is dependent on its own designers to be inventive and come up with new functionality. There are, however, solutions to this problem as well. Most suppliers borrow or simply steal ideas from their competitors, but some suppliers get inspiration from other disciplines, such as art, music and literature. They incorporate values from these disciplines into their own products in clever ways. True-types are one such example, which was borrowed from the art of typography and book printing. Being first on a supply driven market is by no means a guarantee that you will survive in the long run. There are many more examples of companies that have failed the transition from a supply driven market to a demand led market, than companies that have survived.
As markets grow, they mature until they finally become demand led. At his point the market has aware customers with specific needs. They are very capable of analysing how a product or service can contribute to their business or personal benefits. There are many suppliers on the demand led market, all with similar products and services. Competition is fierce. Many functions and properties are standard; the customer more or less expects a certain type of behaviour from the product. It is increasingly difficult for a supplier to compete with unique functionality in this environment. Therefore, the supplier has to find other competitive edges. The cell phone market is an excellent example of a supply driven market, which in a couple of years has transferred into a demand led market. In the beginning, customers were happy to simply talk to their friends and business partners. They overlooked short battery times, problems with hand-over between base stations and inadequate user interfaces. They had a unique product! After a couple of years the cell phone became a life style item, especially with young people. No one understands this better than the fashion industry. They know that you express who you are by wearing clothes and displaying items. Driving a Volvo is a statement, talking in a Nokia is a statement, buying health products in a Body Shop is a statement. It says something about who you are, your values and your personality.
Companies that work in a supply driven market competes with uniqueness – unique functionality and unique products. But how is it possible to compete in a demand led market, on the bleeding edge? The simplest answer is price. If a company cuts its development and production costs, the competitive edge can easily be the price. Price only is however seldom enough in a competitive market, where location, brands, advertisement and other advantages are as important.
Developing software for a client is not that different from delivering services in general. Competing with price only will hardly guarantee a new contract, even from the same client. Delivering services is very much about relationships, as any experienced sales person already knows. Building a good relationship with your client includes keeping what you have promised, being dependable, trustworthy and honest, and never ever disappoint him or her. You have to ensure that the customer doesn’t expect more than you can deliver, disappointment is a sure way of loosing customers. If you loose one client, you have probably lost two or three future ones, as the word of your failure travels fast.
In the demand led market, the way the service (or product) is delivered, is as important as what is delivered. For some industries, such as the airline business, the way a service is delivered is almost the same as what is delivered (transportation between points A and B). If you have the choice to fly with one of two airlines, you will probably choose the one who treats you the best. Sadly, most passengers won’t think of air safety record or maintenance quality as a decisive factor. Most of us expect to arrive in one piece.
People working within marketing psychology talks about satisfaction with a capital ‘S’. They say that consumers don’t buy products or services - they buy satisfaction. People have four types of motivators, which control their buying behaviour: needs, wants, desires and fears. Needs are things that a consumer must have, like food, money or somewhere to sleep. Wants are not absolutely necessary, but things that a person would like to have. Consumers can sometimes confuse needs with wants: the need for a new cell phone is not a need but a want. Desires are more like daydreams, which are seldom met. Desires are powerful motivators, cleverly used by marketing people. Winning the first prize in a lottery is a desire, because it can provide a person with a new life, but it is not very likely that it will happen. Fears are about making selections and not making selections. Fears can hold people back and prevent them from fulfilling their needs, wants or desires.
Therefore, it is not enough to simply satisfy the needs of your customer, not even in a software project. You have to satisfy the needs, wants and desires at the same time, possibly even exploit some of their fears. And it has a lot to do with how you deliver your service.
In the end, if the customer finds it enjoyable working with you, your price doesn’t have to be the cheapest. Dependability, quality, and process transparency may be more important for your relationship. And it is for you to find out. Your future may depend on it.
