Posted in Marketing and Strategy Terms, Total Reads: 402
Definition: Market Disruption
Broadly speaking, any profound change in the business environment that compels organisations to undertake major transformations, as opposed to incremental alterations. Specific to marketing, market disruption occurs when a product caters to such a market segment which is not being served by existing players in the industry. It can be of two types – low-end disruption and new-market disruption.
‘Low-end disruption’ occurs when the rate at which a product advances exceeds the rate at which customers can embrace the development. Since its performance exceeds the needs of certain customer segments, the disruptor enters the market with a low-cost offering with lesser features. For example, Nokia Asha phones cater to market segments which do not require premium phones like Samsung Galaxy phones or iPhones, which have high performance and fancy features.
‘New-market disruption’ addresses non-consumption in an existing category. In other words, such a product is available for customers in such a way that its competitor products aren’t. It could be more affordable, available in more places, in more varieties, etc. So, disruptive products address the reasons why customers are unable to use the existing products offered in the market.
Following are examples of major new-market disruptions in the world:
• Academia: Traditional encyclopaedias were replaced by online resources such as Wikipedia.
• Data storage: Floppy disks were replaced by CD-ROMs which have in turn been replaced by pen drives.
• Hardware: Personal computers are being replaced by smartphones