An article authored by Clayton Christensen, Michael Raynor and Rory McDonald in the Harvard Business Review defined two types of market creation birthed by disruptive innovation. (A big thank you to Brand Experience magazine reader and friend, Christine Mau, for sharing this article with me.)
The first market category is low-end footholds. These markets come into being because existing companies are focused on their most profitable customers. Although this is a smart business idea most of the time, and may I add, something that should be encouraged. As businesses continue to focus on the most profitable offerings, smaller markets continuously have unmet needs, which drives demand even further.
The authors of the aforementioned Harvard article believe these new markets are in the lower cost ends of individual markets. I would argue that this is too narrow-minded and that low-end footholds can exist in the entire spectrum of products and services, from mass market to luxury, but live primarily in the lower profit categories, whether this lower profit is because of margins for individual products or services or generally from a lack of volume for the individual offering.
This brings us to the second type of market—the new market foothold. These are markets that didn’t exist prior and often are submarkets in existing product and service categories.
Lisa Thurman and Sue Katz did both, when they founded Amazing Cosmetics. The ladies, who are the featured brand leaders for this issue’s CXO article and episode, started an Internet-based company, which is now distributed online, in bricks-and-mortar stores such as Ulta, and on QVC, that addressed a whitespace in the makeup category.
Disruptive innovation isn’t the sole purview of industry outsiders turned industry icons, like Thurman and Katz. I believe brands of all sizes can take three specific actions to build new business: 1) Listen to your customers to discover innovative new markets, 2) Seek to create emotional connections through your marketing, including package design and advertising, and 3) Recognize that new competitors can come from anywhere so look for ways to build new offerings while protecting your core business.
My staff and I would love to hear how you are keeping your brand fresh and innovate. So, we are launching the hashtag #BXPinnovate with this issue, and invite you to share what keeps your brand innovative.