Supply-driven
innovation is the common way by which products usually
reach markets. A company invents, mass produces and
distributes a new product in the market. This is the
case with the older inventions like car bulbs to the
recent introductions likecamera phones, iPods, MP3
phones, etc. Most of the time, in this method of innovation
the customer is not aware of the kind of need the
new product is going to satisfy. Thus, the product
inventors have the big task of educating the customer
through advertisements to condition him to fulfill
a non-existent or newly identified need with the latest
product available in the market. This is what happens
in supply side innovation. But, another unique way
of innovating products has become common these days
and is called demand-driven innovation.
Unlike
supply side innovation, where the customer plays no
role in the innovation process, the demand side innovation
involves the customer in the innovation of the product.
The customer plays an active role right from the conception
of a product idea. Since he plays a vital role in
designing the product, his role becomes important
in price fixing too. He helps the company become a
price taker instead of price maker.
Involving
customers in the product designing or conceptualization
phase is a new practice and increasing with the intensity
of competition and pressure building up over the company
to deliver value to its stakeholders. Demand-driven
innovation is not the rule in product companies alone;
it also plays an important role in service industries
like insurance, banking, etc. |
