A model I wish every entreprenuer knew before hand

With sand under my feet, a warm breeze and the sound of the waves beating on my ear drums I can definitely say I am relaxed.

Now for the real reason you are here.

A lot has been written and preached about new disruptive technology and what it does to existing markets, big companies and startups, but a model that I came across that I wish each budding entreprenuer knew would be

“Buying Hierarchy”

by Windermere Associates of San Francisco, California

Functionality — — Reliability — — Convenience — — Price

This model discusses various stages of product evolution and with it the changes in market requirement and the perceived value propositions.

Stage 1:

When no available product statifies the functionality requirement completely, at this stage the product choice is made based on the product functionality.

Stage 2:

As soon as 2 or more companies start to credibly satisfy the market demand for functionality suddenly the game changes and product choice is now based on reliability.

The most reliable company wins this battle.

Stage 3:

Once a customers appetite for reliability is satisfied the shift takes place toward convenience and now product choice is made by how convenient the product and the company is to deal with.

User friendly products and great customer service are game winners here.

Stage 4:

Finally when no aspects of the product are differentiable then the market always swings in the favour of price. At this stage adding a few more functionalities does not change the market behaviour and companies that have learnt how to keep prices in check stay on top.

My advice : Find out accurately which stage the market is in where you are trying to make a dent, we all would like to start in stage 1 but, that is rarely the case.

For more read THE INNOVATORS DILEMMA.

Time for me to take a dive the sun is just about to set.