I have long maintained that before or as we start working on an innovation, we should look at, and establish its target market, all the way to the ultimate paying customers – and ask ourselves what the benefits (vs. product/service features) to those customers are, that would cause them to actually pay money for them. It's the critical connection.
If you're a supplier in the automotive industry and "follow the money", you will find that it may not be where you think. Tier 1 systems suppliers don't print it or have it. They get it from their car company customers. Car companies don't print it (the only ones who get to do that are the government folks), or have it yet either. They get it from their customers: the people who actually part with their money to buy a car. That's where the money is – not only for cars, but ultimately for just about every new product or service.
So, if you can agree that innovation is doing new things that customers will value, then that's where to start: at the end of the chain, following the money to the ultimate customer.
Here's an example of one automotive supplier who seems to be doing that, as written by April Wortham in Automotive News, January 28, 2008:
Brose seeks to connect more with drivers
DETROIT —
Germany's Brose Group wants to get closer to consumers.
Brose, best known for window regulators and door systems, is offering new products that give drivers and passengers more contact with the brand.
Among the technologies displayed on a Brose concept vehicle at the Detroit auto show was a unit that allows the driver and front passenger doors to be opened or closed by remote control. It's the same idea as a power liftgate found on many SUVs, but Brose added features that combine convenience with safety.
For example, anti-collision sensors detect an obstruction in the door's path, such as a child's hand or a vehicle in the adjacent parking space, and stop the door from fully opening or closing.
"Until now, a lot of Brose components were inside the door or the seat structure, not in direct contact with the consumer," said Bryan Russell, spokesman for Brose North America Inc. "But with Brose's first show vehicle, we're getting closer and closer to the consumer."
| Reaching out Brose Group products that give motorists more contact with the Brose brand include -- Anti-collision sensors that detect obstructions and stop remote-controlled vehicle doors from fully opening or closing. -- Power folding rear seats that create an extended flat cargo space with the touch of a button. -- Power adjusting cargo tray that extends for easier loading. |
The trend toward third-row seating has driven several Brose innovations for the rear of the vehicle. They include power folding rear seats and a power adjusting cargo tray that extends with a touch of a button for easier loading.
Most of Brose's new products derive from its existing components and technology, said David Clements, development director for Brose door and closure systems in North America. For example, the motor and hardware used in the power adjusting cargo tray are found in power adjusting front seats.
Sharing parts and technology helps lower costs and make the products attractive to customers, said Marcus Klopp, Brose vice president for new product development.
Klopp said the price of the gearbox and electronics in the cargo tray is 60 to 80 euros ($88 to $117 at current exchange rates). "But the customer could sell it as an option for $400 to $500," he said.
Said Arnd Herwig, vice president of engineering for Brose North America: "It isn't that our engineers developed something that will just get another engineer excited. These products deliver either real comfort or safety to the end user."
-end of article- (read on)
Klopp's "customer" here is the car company, and they (or a tier 1 systems supplier) are Brose's direct customer. However they nail it when Klopp says, "But the customer could sell it as an option for $400 to $500." ...and Herwig adds, "These products deliver either real comfort or safety (the benefits) to the end user." (the ultimate customer, and the one with the money who values these additional benefits enough to pay the car company that $400 to $500). He makes a good point. Typically, car companies (especially the Detroit 3) always ask, "How much will it cost?", when they might also determine the other half of the equation, e.g., "How much could we sell it for?" - as determined by the value of its benefits to their customers. Car companies often term such innovations, "priceable options", and the whole equation considers not just the cost, but the end value & price, also generating room for all in the chain (including the dealer) to make a reasonable profit.
All the car companies (and many of their larger suppliers) either do their own consumer market research or hire some capable outside company to do it for them – and include such useful and potentially valuable methods as conjoint analysis, anthopological interviews, and other analytical tools to determine the potential value of a new offering. If you want to know more about this approach, I recommend contacting fellow independent and expert in this field, Brian Ottum, Ph.D.
In the meantime, and since we (and every employee in the enterprise) are all consumers (and therefore end customers for innovative products and services), we can start by simply asking ourselves, colleagues, friends, etc., "Would we be willing to pay for (the benefits of) this new product/service – and if so, how much?" It's a start, and a "sanity check" that can be easily done before we go off to spend valuable time and money on our latest and greatest new idea.
Innovate! Connect!
Comments