Products and technology

Marketing thinking should not begin with a product, or even a product class, but rather with a need. The product exists as one solution among many to meet a need.

Now a need is satisfied by some technology. The need for "calcu­lating power" was first satisfied by finger counting; then by abacuses; still later by slide rules, adding machines, hand calculators, and comput­ers. Each new technology normally satisfies the need in a superior way.

Within a given demand-technology cycle, there will appear a suc­cession of product forms that satisfy the specific need at the time. Thus the hand calculator provided a new technology offering "calculating power". Initially, it took the product form of a large plastic box with a small screen and numerical keys, and it could perform only four tasks: adding, subtracting, multiplying, and dividing. This form lasted a few years and was succeeded by smaller hand calculators that could perform additional mathematical operations. Today's product forms include hand calculators no larger than the size of a business card.

Companies must decide what demand technology to invest in and when to transit to a new demand technology. Today's companies face many changing technologies but cannot invest in all of them. They have to bet on which demand technology will win. They can bet heavily on one new technology or bet lightly on several. If the latter, they are not likely to become the leader. The pioneering firm that bets heavily on the winning technology is likely to capture leadership.