Retail Innovators' Solution Part 3 Get The (Hockey) PUCK Out Of There -- Small Businesses Discussion Forum

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Subject: Retail Innovators' Solution Part 3 Get The (Hockey) PUCK Out Of There

Author:
Dennis S. Vogel

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Date Posted: 21:19:59 10/08/11 Sat
In reply to: Dressed up where do I go? 's message, "where will the profits be?" on 15:12:24 10/07/11 Fri

I've added extra insights to what Clayton M. Christensen, Michael Raynor, Matthew Verlinden, et al have written, so some of this may seem unfamiliar.

I've developed a hypothetical situation (below) to explain a very general way to apply the "skating to where the puck is" advice.

Windermere Associates discovered a basic buying criteria hierarchy - functionality, reliability, convenience & price. Depending which products people consider buying, they may have other important criteria. A buying hierarchy could include safety, comfort, style, fit, environmentally friendly, then price.

When this buying criteria hierarchy - functionality, reliability, convenience & price - is used (consciously or subconsciously), a product has been commoditized by the time the majority of buyers has set price as the top priority/main criterion.

Innovation can put a product (that was a commodity) above price in a buying hierarchy by producing what a market niche deems to be special.

Whatever a market niche values (especially what they choose as a top priority) becomes the basis of competition. It's possible to persuade people to change their buying criteria & shift the basis of competition to hopefully delay commoditization. (It's another subject we can write about if there's enough interest.)

Any business/person, trying to promote anything based on any other values or priorities, is either a pioneer or fool.

Pioneers innovate or work with innovators to create, further develop & market what people don't want YET. They risk being too early. Example - When primitive people effectively used fire & wheels, they made significant progress. Then making progress meant inventing something very basic (by modern standards) or innovating to improve an invention.

Fire (combustion) & wheels (tires) are necessary to operate cars. Even the most advanced cave dwellers weren't ready for cars. They hadn't even driven wagons yet. So, Henry Ford would've been bankrupt if he were alive 100,000 years ago & tried to make cars.

Is this just a ridiculous idea of mine? No, so don't call it horse hockey. It's a bizarre example to help you realize & remember how Wayne Gretzky's wisdom applies to business.

Eventually, people used rolling logs, but when wheels were invented rolling logs were no longer good enough for many tasks.

Wheels were improved through experience & innovation. Making wooden wheels durable was where the rubber met the road. Making wheels tough enough for gravel paved the way for more travel.

After tires were developed, wooden wheels seemed a little flat. Wheels weren't good enough for rapid, long distance travel.

A Hypothetical Scenario -
Eventually, processes for using recycled materials to make fabrics may be more efficient & profitable. More demand for recyclable materials should reduce accumulations of waste products like plastic bottles.

As it becomes more profitable, more suppliers will offer more of these products. Then at some point, products in this category will be commoditized. After that, prices are apt to come down because of economies of scale & competitive pressures.

That kind of fabric could be a viable alternative as long as those recycling & manufacturing processes aren't significantly more expensive than producing what's currently available.

If it requires less mining & drilling (ecological threats) &/or fewer byproducts (less pollution & landfill use), people may prefer it if it's at least as comfortable & durable as what's available now.

It's best if the product's materials don't harm people, animals or the environment (Unlike products made in Communist China & sold in big box stores - Save Money. Live Better as long as you don't use big box store products made with cadmium, lead or other toxins.).

In part 1, I figured 'Based on styles, prices & shipping schedules, you narrowed your list of potential suppliers to 2.'

Now let's figure 1 of those manufacturers gets good, though preliminary, results by making fabrics from recycled trash. Consumers may be enthusiastic about this fabric & clothes made of it because the fabrics are perceived as better than others. To them, standard fabrics seem to be less than good enough.

The other hypothetical manufacturer isn't innovative at all. What it produces used to seem good enough, but more people prefer environmentally friendly products.

Now it's time for you to buy some clothing inventory. Let's figure you can afford to buy from either supplier, but not both.

Your past profits may have come from sales of standard products. Now standard products are less popular, so to sell those you have to markdown the prices.

(Hypothetically) Environmentally friendly products are more popular (fashionable) & many consumers are buying more of these. These consumers are also willing & able to pay full retail prices for these products.

In this hypothetical scenario, if you buy those environmentally friendly products & market them well, then you're on your way to where the profits are or will be.

As long as ecology is a high priority for your market niche, they may keep expecting ecological products to improve. Until most clothes are ecologically sound, people will want what they perceive to be the best. When all/most products in a category are perceived to be equal in an attribute (like ecology), consumers will put a higher priority on another attribute. They'll still expect a certain level of environmental responsibility when they evaluate products.

As long as they're satisfied with the product attributes they expect, they'll pick products according to their next priority.

Warning 1
There will always be some who disprove of innovations. Example - Athletic Clothing Made from Recycled Plastic Bottles (technorati.com).

Warning 2
Very few things work optimally at the beginning. There are many variables in experimenting (research & development) & production. Some variables are beneficial & others aren't. When good variables are improved & bad variables are excluded, products improve.

Too often, critics seem to demand immediate perfection. Some criticism is good, but many critics put down any inventors & innovators, plus their products.

Note - Criticizing potentially unsafe products is justified, even if the prices are always low.

If everybody refused to buy safe, but imperfect products, manufacturers couldn't afford to keep innovating & improving products. To succeed, manufacturers need to find somebody who wants imperfect products.

Imperfect products can still have benefits for somebody. If the benefits (in quality or quantity) outweigh a lack of those benefits, & potential product users can afford to buy those benefits, there's a market niche.

Example- Clothing prices would probably spike if 1) drought or pestilence wiped out an annual cotton crop; & 2) makers of commonly used fabrics were already using their full production capacities.

In a situation like that, if clothing made of recycled products were inexpensive; some people would either buy those kinds of clothes or not buy any new clothes (they'd be stuck with old clothes).

Critics enjoy finding what's wrong because then they feel superior. But what have those negative critics ever contributed to the world?

As plastic gets used for fabrics more often, it'll probably become better ecologically, financially & physically.

You should monitor trends carefully, so you'll know where to go get profits. When you find them, you need to take the right actions.

If Wayne Gretzky went to get a puck but did nothing with it, he wouldn't have been a star. Something people seem to forget or disregard this fact - After Wayne Gretzky got a puck; he got the PUCK out of there.

Before you go to where your puck will be, you should have a plan so you'll know what to do with the puck.

Dennis S. Vogel
Even if you have the best, most environmentally friendly product, your success depends on reaching the right people, at the right times, with the right messages.
Some information you need for successful promotions is here -
http://www.lakefield.net/~thrivingbusiness/
http://www.voy.com/31049/

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