Company leaders willing to adapt quickly to market changes are those who best exemplify what entrepreneurship means. The market has seen many innovative firms repackaging their products and improving customer experience to cater to customer needs.
For example, Apple usually launches a service bundle when it launches the latest iPhone in the United States. Customers can pay a monthly fee, which includes mobile internet, insurance, and repair fees. More importantly, with the service bundle, customers can upgrade to the latest iPhone model 12 months later with zero fees.
This service has unleashed demand from customers who can’t pay the full price of the latest model. And it has increased annual iPhone sales by over 5 million. In addition, Apple can collect old models and recycle them.
Electric carmaker Tesla offers similar trade-in services. It agrees to buy back old models at 70 to 80 percent of the original price from their customers, who can upgrade to newer models by paying the price difference.
The practice is more like a magazine subscription. Tesla customers can constantly own the latest model as long as they pay the “subscription fee”. This service is very popular among car fans.
Another rising trend is “experiential consumption”, which allows customers to experience a particular service or set of services.
Top accommodation rental platform Airbnb enables people to experience the lifestyle of locals. Travelers can enjoy a delicious chicken porridge and fried egg breakfast in Taiwan, or they can join fishermen in one of their trips in the Mediterranean.
Many vacation rental homes now offer local experiences, which cater for young travelers who are looking for something more than visiting tourist attractions or shopping.
These innovations happen because of new technologies and the internet, which is able to match buyers and sellers. This has given rise to a new type of “sharing economy”.
If you want to start a business, you’d better think carefully about customer needs. Then design a platform utilizing data and catering to customer demand. You may be creating a new market for the “smart industry”.
This article appeared in the Hong Kong Economic Journal on Oct 19
Translation by Julie Zhu
[Chinese version 中文版]
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