As marketers, it is easy to become infatuated with a “clearly” better, more elegant market solution. But a human tendency is to project our values onto others. This can be very unprofitable when those “others” are our potential customers.
To see this, consider the market for eggs. Personally, I eat only pasture raised eggs, preferably those from small farms where the hens roam freely most of the time. I’m convinced these eggs taste better and are significantly more nutritious. Moreover, the treatment of the hens is in alignment with my own feelings toward animal welfare. As such, it is easy to convince me that moving production from barn-raised to pasture-raised hen eggs would unambiguously benefit the customer and in so doing “create value”.
While it is true that every customer would indeed be better served eating healthier eggs, it may not be a good business decision. The sustainability of any business depends not only on its ability to create value for customers, but also to capture a fair portion of that value. Personally, I’m both able and willing to pay double for pasture raised eggs. But my values don’t currently align with the mass market segment. And so, for the marketer of pasture-raised hen eggs, there are two choices. To be competitive in the mass market, they must sell at the prevailing market price despite their higher cost of production. Or they must abandon this segment of the market and pursue a narrower market segment that is willing to pay the necessary premium.
A superior product is only a superior solution when the target segment also perceives the increased value, and when that increase in value is deemed sufficient to justify any necessary price increase. A common marketing refrain is to “educate the consumer”. And perhaps consumers might value a new product more once they learn its advantages. In such a case, being early in the market can be a source of future competitive advantage, essentially moving to where the ball will be. But it also might be a warning that you’ve failed to sufficiently empathize with your target segment.