As someone who advises firms on marketing strategy, it is somewhat remiss of me not to be a viewer of Dragon’s Den on BBC2. To be honest I did watch a few shows in the series early days but found it to be a false construct. People do not invest in businesses based on an internet style pitch. Weeks or months of work are normal in investment decisions and venture capitalists usually require detailed business plans and financial forecasts. I have always assumed that businesses picked for the show are either wacky ideas as an entertainment or pre-researched businesses. It also annoyed me that some businesses already had funding and were using the show as free advertising.
That said, there are things to be taken from Dragon’s Den. Firstly, there is the focus on financial data and market research. Second is the focus on start ups having a realistic expectation of their market potential.
Often, a dragon will say, “I’m out” on the basis that the applicant has not properly defined their product or their intended market.
Dragon’s Den is a programme about innovation in business. Often prospective businesses bring a product to the programme based on an idea with little research being carried out as to whether or not there is a market for that product. it is a case of design the product and try to find a market for it rather than finding a customer base and designing a product to meet that group’s needs.
In many businesses, innovation is the domain of the research and development department. New products are designed and then Marketing is called in to organise who the product is to be sold to and how it is going to be sold. Often a product was dumped on the marketing team which met the needs of only a few consumers or for which there was little demand.
An example was shown in the Channel Four programme, The World’s Most Expensive Food. A US entrepreneur was trying to sell a chocolate bar in London. The price for one small bar of chocolate was £170. The entrepreneur had bought extremely rare forms of cocoa beans he had spent months making trial bars and rejecting hundreds as not suitable. He had designed a special wooden case to hold the bar. His annual production level, 300 bars. We watched as this ‘salesman’ traipsed round the boutiques outlets of Knightsbridge trying to offload his chocolate with little success. The chocolate was too bitter said some. It was no better than bars costing £50 said others. Customers opined that for that money they could buy a whole box of designer chocolates. The £170 bar was the classic example of a product which had been developed with little or no research as to the expectations of the intended customer base.
Marketing and product innovation are intrinsically linked. A business that does not include their marketing team from the outset of the development process may be making costly mistakes or relying on luck.
Innovation is necessary for businesses for a variety or reasons. For example, to:
- adapt to changes in customer tastes
- find temporary competitive advantages
- develop a modern image
- create increased margins for innovative products which could demand a higher price
- distance branded products from generic competitors
- to get a higher profile at point of supply
- As a defensive strategy.
Many firms in the tech sector use innovation as a marketing strategy. This is often referred to as innovative marketing. The idea is to use sustainable marketing and product innovation to capture emerging consumer needs. An example is mobile phones which are often sold on the basis of increased battery life and higher spec features. The aim is to capture new consumer needs before your competition. Consumers will find new ways to meet their needs; capture the answer to those needs before your competitors do.
Dyson uses innovation to help defend their products. It is no accident that a Dyson vacuum has numerous patents for components. This prevents competitors from copying the technology and means Dyson can ask a premium price.
At the extreme edge of innovative marketing is the Blue Ocean. This is where you do not simply innovate a product for existing markets but you create products for new markets. An example would be Bic, best known for disposable razors and ballpoint pens. Bic have developed a mobile phone for the elderly. It is only a phone. It has no camera or numerous apps. It’s for making phone calls. However, Bic carried out massive levels of research to ensure that there was a new market for this product. They did not produce the phone and then wait to see if a market for it existed.