Targeting nonconsumption is at the core of developing market-creating innovations–innovations that transform complicated and expensive products into products that are simple and affordable, making them accessible to a whole new segment of people for whom there was always underlying demand, but no adequate solution on the market.
But what truly is nonconsumption?
Nonconsumption is the inability of an entity (person or organization) to purchase and use (consume) a product or service required to fulfill an important Job To Be Done. This inability to purchase can arise from the product’s cost, inconvenience and complexity, along with a host of other factors—none of which tend to be limitations for the rich, skilled, and powerful in society.
For its part, a Job to Be Done arises when an entity is struggling to make progress in a particular circumstance, such as when someone gets sick and tries to recover. If there are not adequate facilities that can aid their speedy recovery, then that person is a nonconsumer of basic health services.
This video below provides 3 tips in identifying the nonconsumption market:
The power of targeting nonconsumption
In a research paper by colleagues, Efosa Ojomo and Lincoln Wilcox highlighted the rise of Japanese electronics company, Sony. After World War II, Japan was a devastated and impoverished country. At the time, Sony was a struggling company with no government financial support, and could only hope to develop inexpensive products for a poverty-stricken population.
In the years after the end of the war, the company introduced a portable tape recorder that at first found little consumer appeal. Then Sony channeled its energies into marketing, sales and distribution. After touring schools to promote the device for educational purposes, Sony saw orders for the product skyrocket. This process of targeting nonconsumption was repeated with the first battery-powered pocket transistor radio, a portable television and decades later with the iconic “Walkman.”
Sony’s strategy was to develop electronics that were simple and affordable so that nonconsumers in Japan, a poor country at the time, could afford them.The company directly promoted its products to people who would never have imagined a reason for owning electronic equipment before, and created a new market in the process.
Through the experience, Sony executives learned that it wasn’t enough to simply make a good product. For innovators to successfully target nonconsumption, they needed to invest in sales, marketing, distribution, education, and other components in a product’s value chain.
In time, other Japanese companies like Toshiba and Panasonic developed their own products to compete with Sony, spurring jobs in electronics design and manufacturing as well as sales, distribution and advertising. Due in part to its electronics industry, Japan has become one of the world’s richest economies.
Sony has also become a global leader in electronics. Its success illustrates how targeting nonconsumption, even in the direst of circumstances, can launch a successful global brand and help reinvigorate a poor and struggling nation.
Another example is Clinicas del Azucar in Mexico. Diabetes is the primary cause of death and amputations in Mexico, but treatment is too expensive and inaccessible for most Mexicans. Javier Lozano, founder of Clinicas del Azucar, a chain of medical clinics, realized that in addition to cost restraints, most Mexicans with the disease were unable and unwilling to travel to different hospitals and specialists to treat their diabetes. And so he founded Clinicas del Azucar.
Clinicas del Azucar offers different healthcare specialists within the same location, while dispersing clinics widely throughout the country to make them accessible. By reducing the complexity of treatment and offering lower costs ($250 per year as opposed to the typical $1,000 per year), Clínicas del Azucar has stimulated significant demand for diabetes care in Mexico.
In the past ten years, Clinicas del Azucar has treated more than 200,000 patients, opened around 30 hospitals, and enabled more than 1.5 million consultations. This integrated solution has resulted in a 60 percent decrease in diabetes-related complications. 95 percent of its patients had never received specialized diabetes care.
These examples showcase that nonconsumption is an opportunity for many entrepreneurs and investors especially in growth markets. With a vision to create new markets, innovators can build profitable companies with long-term sustainability, while also generating inclusive wealth for millions of people.