Building Products in The New Economy

In the dark ages before the Internet, we lived in a seller-driven economy. People were only aware of what was at their local market, so they had limited choice. People relied on advertising and word-of-mouth to learn about new products and services. Companies would create new products based on not much more than a Don Draper hunch and a few focus-groups, then blast them into the world with very little targeting. Companies could succeed through the sheer brute-force of mass marketing and advertising. If Gillette made a new razor, people would likely buy it because of how often they saw it advertised and how few competing products there were on shelves.

In this seller-driven economy reaching a mass market was really only possible for large companies like Unilever, Proctor and Gamble, and Coca-Cola that could spend millions on national advertising campaigns. Today, some startup down the street can make a Google ad in five minutes that can reach a huge (and highly targeted) audience for a fraction of that cost. And that’s not even counting all the ways to reach people on social media. Just look at how rapidly Dollar Shave Club has grown, gobbling up Gillette’s market share with a fraction of their advertising budget. Now you see Gillette offering razor subscriptions to compete with the little guy. This wouldn’t have been possible without the power of the Internet.

The Internet has given consumers access to nearly any product, anywhere in the world, at any time. This access to the “long tail” of products and services has shifted the landscape and created a buyer-driven economy. People now have access to niche products which satisfy their specific wants and needs. As this trend continues and more options become available to buyers, sellers face increased pressure to create products that people will not only use, but love.

The good news is the Internet has also given companies access to previously invisible groups of customers. The long tail goes both ways.

The challenge is no longer finding and reaching your customers — it’s understanding them.

What are their needs and wants, pains and fears? To build a successful business you must understand your customers on a deeper level because they are the ones driving today’s economy forward.

This shift to a buyer-driven economy has increased the need for human-centered design or what some academics call customer centricity, which means creating products with the customer in mind. Companies that blindly mass produce products for a loosely defined market are a relic of the pre-Internet days. The companies thriving today provide value with products tailor-made to deliver value for their customers.

In order to create products that are valuable to people, you need to understand their needs, wants, and fears. When you truly understand your customer, you can make magic happen.

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This is an excerpt from my upcoming book – LOOPS, Building Products with Clarity & Confidence. Get more here.