By only talking to our best customers we potentially miss segments of potential customers whom we are currently not catering for and who might make up a significant proportion of the market.

I’ll share an example; The product marketing team for an analytical instrument were seeing sales numbers stagnate and increased competition drive down price. The company had been first to market and had been highly successful for over a decade. They were technically superior to the competition and had been considered market leader. However, multiple competitors had entered the market in the last 2 years and one company in particular was winning a lot of deals.

Talking to customers revealed that most also owned a competitor instrument (or two) and many non-customers owned the cheaper, less superior competitor instruments. Customers shared with us the fact that they found the market leader’s instrument very complex to use which meant that the operator needed to be technically very knowledgeable; something that often took years to learn as an apprentice to a master user. The competitor’s instrument, on the other hand, had been developed to be extremely quick and easy to use. While the data was not always as robust, it did give accurate relative scores. This meant that customers used the instrument to do screening and quick exploratory experiments to define assay conditions which they then transferred on to the more sophisticated instrument to do the final assay and get publication quality results.

The competitors had effectively captured a much larger market while the leader’s technology remained niche serving those tech savvy few who had the know-how and disposition to master the complex technology.

This proved to be a classic case of Disruptive Innovation,* a process whereby a smaller company with fewer resources is able to successfully challenge an established incumbent. The incumbent focuses on improving their products and services for their most demanding (and usually most profitable) customers, and as a result, they exceed the needs of some segments and ignore the needs of others. Disruptors begin by successfully targeting the overlooked segments and gain a foothold by delivering more-suitable functionality, usually at a lower price.

In the case of the analytical instrument described here, simply dropping the price would only help in the short term as a substantial proportion of the market would never buy the instrument because of its complexity.

Even market leaders need to stay in close contact with customers and non-customers to anticipate changes in their needs and fend off competitors who can redefine a market place very rapidly.

*HBR Article: What Is Disruptive Innovation? Clayton M. Christensen, Michael E. Raynor, Rory McDonald, DECEMBER 2015

This article is an extract from a podcast on Life Science Marketing Radio. You can listen to the full discussion between Chris Connor and Marina Hop by clicking on the link.