Vacuum / Demand

In Physics, we study about “Vacuum”. It is a blank space, which requires filling. Our environment has innumerable examples of vacuum building and its filling. We know about low pressure and high pressure areas. Winds, temperature, tides, etc. move from high pressure to low pressure areas.

Even people from over-supply areas move to low-supply areas to take the advantage of market and price.

Stock markets work on this principle. Stocks with high intrinsic value but lower stock price gives the maximum return on investment in long run.

Vacuum can be identified with underlying demand for goods / services in Economics sense, requiring to be catered.

It’s said that foundation of future products has been laid somewhere in the world but the same needs to be identified and analysed.

Organisational Context

The entrepreneur builds the organisation to fill this vacuum only.  We see following vacuum around:

    • Sectors where the supply of products / services is very low;
    • Sectors witnessing poor quality of goods / services;
    • Sectors where manpower not available.

The “principle of vacuum” has lot of relevance in organisational growth. It needs to regularly re-visit its business model to verify whether vacuum still exists or has been over-filled or competitors’ products are in pipeline leading to non-relevance of the organisation’s products in future.

Similarly, vacuum needs to be identified and products be developed to take early advantage of premium.

Nokia and Blackberry are live examples of leaders losing substantial market share vis-à-vis Android and smart phones available at cheaper price with large, consumer friendly apps changing the business space of mobile sector.

Product vs. Commodity

    • Product is generally specific while commodity is generic.
    • Product carries certain specifications which distinguishes the same from others.
    • Customer purchases product believing the specifications being existent in it.
    •  Product has consistency in providing specifications / quality and one doesn’t differ from other largely.

Organisation must work on regular basis in building products which distinguish from other competitive organisation.

Mass Vs. Boutique Product

The organisation needs to choose in which segment it operates since different strategy is required for each market.

    • Mass Product
        • Large number of similar products produced, e.g. cold drink bottles, consumer products, etc.
        • Chinese factories working extensively in mass production → building large range of moulds, automation, standardisation, smooth logistics, etc. → capable of supplying products matching customers’ requirements → you ask the quality & price; they will match the same.
        • Strategy
            • Economies of scale important
            • Automation
            • Negligible variation is quality of various goods and standardisation
    • Boutique Product
        • Creates exclusivity, i.e. each product varies or unique from another
        • Smaller number of products produced
        • Requires more use of manpower’s skills
        • Customer purchases these products to demonstrate pride (e.g. Lladró porcelain figurines or M.F. Hussain’s paintings, etc.)
        • India, Bangladesh, Vietnam, Hongkong, etc. working on services and boutique items.
        • Strategy
            • Training of manpower → cross-training → retaining the manpower
            • Create pool of good manpower
            • Delivering the quality products as per specifications as per time schedule
            • Building brand value (we’ll discuss in separate topic)

Some of the Process Implementation for vacuum identification

    • Capturing feedback of customers, manpower, stakeholders. All the feedback (suggestions, complaints, positive or negative) must be captured and analysed. Necessary modifications in existing products or building new products must be carried out. Regular meetings with existing customers are necessary for the above purpose.
    • Catalogues of existing products in other markets or countries must be analysed to identify products capable of filling the vacuum of existing market.
    • Developments at competitors’ workplace must be analysed to understand their weakness and strength (SWOT analysis) alongwith new products in pipeline.

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