From meeting supply to creating demand
I had the good fortune to sit in on Ron Sim's talk at Nanyang Polytechnic recently. Ron is the founder of Osim International and ranked by Forbes as the twenty-first richest man in Singapore with a net worth of $1B. So when he spoke of his business philosophies, I sat up and took notes. I will be writing more about it, but over the next few posts, will dwell on one nugget per post. The first of which is moving your business from meeting supply to creating demand.
In all businesses, we need to offer a product that is demanded by our target customers. We need to find a unique value proposition that will meet customers' needs much better than our competitors and that will allow us to maintain a healthy market share.
Yet, we all know that this is not enough, because if we cannot protect our market share through innovation, soon some upstart will do that, and we will lose our pre-eminent standing. So while we must first meet market demand, supplying what is needed, we must move from that to creating demand as what Osim had done. Osim moved from trading electrical goods to creating demand for massage chairs, and from there, to health supplements (GNC) and then to luxury teas (TWG). Today Osim is trading at about $650M with about $50M profits.
Here are the key ingredients for achieving this:
1. Understand your customers intimately
We need to know what exactly they are looking to achieve, even if they don't know it yet.
2. Find market whitespace
Look beyond the current market at the white spaces between segments. This is where your unmet (unknown) demand rests.
3. Develop a product to meet this new need
It is hard for customers to know what you are saying without putting something in front of them. Yet, it does not have to be perfect as we are in greenfield space. A minimum viable product (MVP) is all that's needed to get them to perfect it. The more your audience is loving - or hating - it, the better. This will allow you to make it better. The worst thing you need are customers who are lukewarm to your product. You will not know what to improve on.
4. Create the desire to own the product
Lastly, you need to make your product desirable. Just as Steve Jobs created the demand for Apple by focusing on design - he famously said that Apple creates an icon that is so delicious that you might want to lick it off the screen - you too must make your product equally desirable.
Points to note:
A. It takes time
Just as Rome was not built in a day, creating demand requires that you plug at it day in, day out. Traction - and the tipping point - comes over continued brand and image building. Your vision, therefore, is paramount to keep you sustained over the lean years. Know what you are building, and the time that it takes to build it. If you are looking for short-terms gains in such an endeavour, you might cut the project prematurely, and remain on the supply side of the business.
B. You need to take some risks
You need to put in some personal equity on the line. You need to embrace failure, you need to be wrong and move on, you need to put down money (sometimes quite a lot of it) and be prepared to lose it all. When creating demand, you need to be in the forefront of taste, and we all know how fickle that is! If you cannot stomach variability, if you don't know how to pivot at the right moment, if you don't know how to look beyond the sunk costs, this might not be something for you.
C. You need marketing savvy
Creating demand requires your product to be top of mind. You need to work with brilliant marketers to create the right message, pushing them along the right channels, and interacting with customers in the right manner. Getting all your marketing ducks in a row takes time and effort, some luck and a whole lot of creativity. But it is all worth it when you finally rise to the top, and dominate your market.
D. You need success stories/testimonials
We all know that you cannot capture the whole market. As with all new product development, the first 15 percent of the market are innovators and early adopters of new products. What they say, how they react, will determine if you get the early majority or not. If you can't go past the first gate, your product will be dead in the water. You therefore NEED to have a strategy to engage with your early adopters so that you can give them a voice in making your product better. The more stake you give them, the more involvement you provide, the more you listen to them, the more success stories and testimonials you will receive. And the better you will be at creating demand.
The road less travelled
Creating demand is an arduous journey, and one which is fraught with uncertainty. It is no wonder that many people don't follow this road, because the downside can be high; and if you are unable to protect your market after having done so much to make it, it would be an exercise in futility. This is surely a road less travelled. But its benefits are huge and if one can master the process, one can master the market, as Osim has done for massage chairs.