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Customer

Dissatisfaction as
A Source of
Entrepreneurial
Opportunity
K.Ramachandran
Indian School of Business
K.Ramachandran

K Ramachandran joined the Indian Institute of Management, Ahmedabad, in 1986


soon after obtaining a Ph.D. from the Cranfield School of Management, UK. He was an
academic advisor to the Satyam Computer Group on e-business during 2000-2001. Since
July 2001, he is a Professor of Entrepreneurship and Strategy and Head of the Wadhwani
Centre for Entrepreneurial Development at the Indian School of Business, Hyderabad.
He has been teaching on short and long duration programmes, including MBA and
PhD since joining IIMA. He ahs done research on entrepenreurship and strategy and has
published extensively in reputed Indian and overseas journals including the Journal of
Business Venturing, Small Enterprises Development Journal, Entrepreneurship & Regional
Development, Venture Capital, Keio Business Review and Vikalpa. He has presented
papers on entrepenreurship and strategic management at national and international
conferences. He has also published three books and has contributed chapters to books
on entrepenreurship, global strategy and research methodology.
His strong areas of knowledge include all aspects of entrepenreurship and strategic
management with special focus on growth strategies, customer satisfaction, resources
management, innovation, corporate venturing

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Vol. 2 No. 2 July – December 2003
Customer Dissatisfaction as a Source of
Entrepreneurial Opportunity

Abstract

Millions of dollars are wasted every year in failed and less successful new
products and ventures. This is universally true. Not much success has been
made so far in solving this problem, though identifying an attractive investment
opportunity has been one of the determining factors of firm success.
Methodologies to spot an opportunity have been scarce and weak. This paper
discusses a simple but highly effective framework to fill this gap. This is based
on the logic that customers buy new products and services if they are dissatisfied
with the existing and if the new offering is better. Here customer need may be
explicit or latent. Two implementable frameworks are discussed. One, Criticality-
Discontentment Matrix for opportunity identification and, two, Customer
Dissatisfaction Elimination Chain to refine business strategies and thus to achieve
zero customer dissatisfaction for any business. A number of case studies from
globally known firms have been referred to illustrate the frameworks.

How to Identify Entrepreneurial Opportunities

Fact
• most ventures fail for want of customer support, with higher mortality at start up
• most entrepreneurs ‘click’ once or twice, not always
• most venture capitalists do not hit the base every time they swing the bat.

M
ost often entrepreneurs rely on discussed here. Building on this matrix,
their intuition; they do not use we have developed another framework
any clear reliable framework to that enables firms to refine their product
check the power of an idea. They do try market strategy and constantly meet
to check the attractiveness of the idea in changing customer needs.
terms of the overall demand and
entrepreneurial capabilities to exploit it Customer Dissatisfaction:
commercially. After tracking the history the source of opportunity
of ninety new ventures from the US,
Europe, Japan and Asia, representing a Fundamentally, firms do not sell
number of industries at different stages products or services. They offer solutions
of growth and operating under different to customers’ problems. Customers pay
economic conditions, we seem to have for them based on their perceived
created a simple, basic framework that can confidence in the ability of the product or
predict the possibilities of success of a service to solve their problems. In that
new product in the market. This has been sense, customers always look for a
refined and validated further and better alternative to eliminate their

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Vol. 2 No. 2 July – December 2003
dissatisfaction; if one product is found importance of customer desires as a
better than another, they buy that. determinant of satisfaction. Homes (2000)
The search for an alternative arises has also discussed the relationship between
either when customers are dissatisfied with customer expectations and dissatisfaction.
the existing products (including services) It is useful to remember that the purchase
or when customer needs change under the decision of a customer is influenced by a
influence of a number of stimuli such as number of factors (Teare 1994; 1998).
age, income, habits, interests and They include: consumer’s preference
knowledge about things available structure, information search behaviour,
elsewhere. In that sense, customer needs prior product experience, extent of product
are dynamic and firms have to understand involvement, feeling of perceived risk,
the changes in needs constantly to extent of role specialization and the role
eliminate customer dissatisfaction entirely. of decision rules in choice. Mittal and
Conventional wisdom suggests that Kamakura (2001) concluded that customers
dissatisfaction is uni dimensional. with different characteristics have
However, a closer, analysis would show that systematically different thresholds and
this is not true. The extent of response biases. This helps to explain why
dissatisfaction is not the same for all a customer’s level of satisfaction with the
products and services even if they are same product changes over time.
equally poor on all features. Similarly, the In all these references, there has been
extent of dissatisfaction is not the same no serious effort made to study what
for the same product under different constitutes customer dissatisfaction. It is
conditions and at different points in time. common knowledge supported by research
For instance, the extent of dissatisfaction evidence that the level of dissatisfaction
with the quality of a TV channel is not the rises when importance of the need goes
same when we watch an important up. For instance, Goodman and Fichman
programme and at other times. Similar are (1995) studied the relationship between
the feelings with Internet connectivity or customers’ evaluation of core and
the quality of drinking water supply, peripheral factors in their transactions and
depending on their importance to us. customers’ overall satisfaction. They
We did a content analysis of customer concluded that customer dissatisfaction
comments on their level of dissatisfaction with peripheral factors (such as help on
with a number of different products which product use) may make them more
showed that dissatisfaction has two dissatisfied with the overall performance
dimensions. One, the extent to which of the product. They too have not
customers are discontended with the categorized the peripheral factors as more
features of a product and processes and less critical needs, though they seem
involved in its purchase and consumption. to admit that not all factors, core or
Two, the level of criticality of specific peripheral impact the customer equally. In
features and processes to customers. essence, when needs are expressed as
These are independent dimensions of desires, which are either not met in part or
customer dissatisfaction. in full, entrepreneurial opportunity arises.
However, such bifurcation of Interestingly, the relevant entrepreneurship
dissatisfaction has not caught the attention literature focuses heavily on the strengths of
of researchers on customer satisfaction so the entrepreneur and not so much on
far, though there have been a number of customer need. This includes exploration
excellent papers in this area, (Singh and of opportunities based on technological
Wilkes 1996; Bearden and Teel 1983; innovations (Colarelli and Rice 2001; Choi
Olshavsky and Miller 1972). and Shephard 2000) and the entrepreneurs’
Parasuraman, Berry and Zeithaml (1985) previous work experience and area of
had identified customer need as one of the expertise (Hench and Sandberg 2000; Kickul
three factors determining customer and Gundry 2000; Melyrath and MacMillan
expectations and resultant satisfaction in 2000; Hills and Shrader 1998; Kirzner 1997).
service organizations. They confirmed the Christenson and Peterson (1990) concluded

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Vol. 2 No. 2 July – December 2003
that specific problems and social encounters Quadrant (1) offers the most attractive
experienced / observed by entrepreneurs are market opportunity to anyone who offers
sources of venture ideas. This probably is solutions to customers who are most
one of the few studies capturing the essence dissatisfied. Since customers in this
of opportunity in customer problems. A few quadrant eagerly look for new products,
studies (Henard and Szymanski 2001; firms will have to make minimum
Kleinschmidt 1987; Cooper 1979) on marketing efforts as there will be a natural
industrial products have concluded that pull coming from customers. The reason
the key to success in industrial products for the rapid success of a number of
remained unknown. However, introduction products including Barbie doll, Dominio’s
of unique and superior products, unique Pizza, Dell Computers and the Harry Potter
customers benefits and solving customers’ series of books can be attributed to the high
problems were identified as factors level of customer dissatisfaction that
contributing to new product success. From existed at the time of their entry, with the
an entrepreneurial angle, this means available alternatives. These experiences
reduction or elimination of existing customer are elaborated below.
problems and dissatisfaction revolving
around them. However, this stream of 1. Barbie
enquiry has not captured much attention in
recent years. Barbie doll’s wonderful success story
It is in this context that this paper reinforces the criticality – discontentment
becomes relevant. Since discontentment argument of opportunity made here. Barbie
and criticality are two independent doll made Mattel Toy’s sales to go up to
variables, we need to examine their $96m in 1964, compared to the pre-Barbie
influence on the level of customer sale of $9m in 1959.
dissatisfaction and resultant Ruth Handler got into toy business in
entrepreneurial opportunities. the early 1940s, and introduced the Uke-
As shown in Exhibit 1, this A-Doodle musical instrument in 1947, and
Discontentment – Criticality Matrix is the a toy piano with black and white keys and
heart of entrepreneurship opportunity real scales a few years later. During the
identification process. Customers are most 1950s, Mattel became the third-largest toy
dissatisfied when they are most company in the world.
discontended with the features and Handler noticed a basic play need in a
processes of buying and consumption for child when her 9-year-old Barbara imagined
a product which is very critical to them adult features for her paper creations;
(Quadrant 1). Customers are least stewardesses, secretaries, or college coeds.
dissatisfied if the discontentment She noticed in her daughter the existence
level is very insignificant or nil for a of a critical need to have dolls that enabled
product which is not at all critical to the her to fantasize an adult life (beyond being
customer (Quadrant 3). a mother). She also noticed that the
existing products did not have the features
Exhibit 1: Criticality-Discontentment Matrix to eliminate the discontentment that
existed. She built on some adult dolls
collected from a Swiss holiday, and
redesigned to make them look like the
current day Barbie. She hired a hairdresser
to experiment with hairstyles,
and a dress designer to design a complete
wardrobe of clothes.
The trader perception that children
always wanted to be mommies and hence
little girls wanted cuddly bobby dolls got
shattered when Barbie galloped the store
shelves. It took Mattel three years to
eventually catch up with the burgeoning

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Vol. 2 No. 2 July – December 2003
customer demand. Barbie met two kinds Michigan University. Pizza was a highly
of customer needs. One, an already high critical product for the students of
critical need to fantasize an adult life, and Michigan because of its high quality,
two, a need to be like others. Since there delicious taste and low price combination.
were no real alternatives for these dolls, At the same time, they were dissatisfied
the existing level of dissatisfaction was not with the product features but with the
very high [quadrant (1)]. processes involved in their purchase.
Monaghan realized that students were
2. Domino’s reluctant to go out for pizza, particularly
during their examinations, though it was
The success of Domino’s Pizza from a one of the best and cheapest sources of
borrowed $500 and one shop to a $3.4 food for them. Besides, students, most
billion international company with 120,000 without cars, could stay in the dorms and
employees in 2,000 outlets across the order pies to share with their friends.
world demonstrates the discontentment- Pizzas also provided them with some
criticality link very clearly. respite from the drab and predictable
Domino’s Pizza’s phenomenal success college food. This observation about
can be attributed to its initial ability to spot exam days also implied that students
a segment of the market, which was highly would not go out whenever they are
dissatisfied with the then existing busy, which is most often the case. Yet
possibilities for cheap but high quality another implication was that the total
food. In 1960, when Tom Monaghan and potential market was much larger than the
his brother bought Domino’s Pizza in numbers who came to the shop to eat. The
Vpsilanti, Michigan, his largest customer moment Domino’s removed all the hurdles
segment consisted of students of the to their having pizza in their rooms, the
University of Michigan and the Eastern demand zoomed.

Box 1:

Good /Bad Opportunity Illustrations

Disney

When Disneyland was started, and customers were highly dissatisfied with the existing
alternatives Walt Disney met a critical need for amusement. In Disney’s own words, “existing
amusement parks are neither clean nor amusing, and offered nothing for Daddy”. Disneyland
became a roaring success because it shifted the speed and size of the thrill to the show
element. Their attractions were seen by visitors as extensions of the already famous Disney
movie experience with visitors taken out of their seats and placed in the middle of the
action. Disneyland has always been an attraction for the entire family, and has been kept
clean always.

VISA/Master Cards

The concept of a credit card, with guaranteed payment by a banking organization began
in the 1940s. The phenomenal success of Master and Visa Cards in the subsequent decades
can be attributed to their meeting a critical need for which the existing alternatives were
not at all satisfactory.
In the absence of cards, people had the option of carrying money (often in large quantities
to meet specific requirements) with the associated risks and discomforts. Those without
adequate cash had to either abandon shopping plans or postpone them. Cards eliminated
most of the high levels of discontentment associated with possession of liquid cash as the
means to buy. Since the need to have cash or its equivalent is critical for all, credit cards
met a critical need. In some cases, it enabled maturing of latent need for a number of
products, as it facilitated easy payments in multiple instalments at a later date.
Later card companies introduced variations including debit cards, ATM cards and co-
branded cards to eliminate customer discontentment in some other areas of financial
transactions.

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Gilbert Toys
Gilbert Toys, which was known for educational toys with solid craftsmanship made a
foray into mass market plastic toys in the 1960s. Though the need for new toys such as the
slot-car racing sets had become quite critical for every child to have, there were several
players in the market offering good quality product; so, customers did not have much
dissatisfaction of any kind. Gilbert’s entry would have had some impact, had it eliminated
some pent up dissatisfaction. It did not offer anything new. On the contrary, its poor
engineering, shoddy construction did not impress buyers, and word regarding its poor
quality rapidly got around.

Electric Cycle
Sir Clive Sinclair, pioneer of pocket calculator and pocket TV, took advantage of a 1983
law in the UK that permitted small electric vehicles on the highway without road tax, a
license or compulsory insurance. Sinclair imagined that availability of an electrically assisted
cycle would create new dissatisfaction with the existing geared cycle. In 1985 he introduced
C5, an open-top, single seater, lightweight three-wheel buggy, powered by a lead acid battery
and foot pedals. Unfortunately for him, instead of eliminating any dissatisfaction on the
CDE chain, it created more when many customers found the vehicle too low, too slow and
too limited in range. Customers were extremely disappointed with the poor technology
and lack of sophistication. Stores selected for selling vehicles often did not have enough
space to give demonstration rides to buyers, besides being familiar with its workings.
Also, it was priced much higher. It was seen more as a fun machine rather than a serious,
everyday, all-weather transport.

Ford Edsel
Edsel, introduced in 1957 in the US market, was designed as a “smart” everyday transport
solution for young executives and families on the way up. Ford was able to create great
expectations in the minds of the target group, and dissatisfaction about the existing
competing cars through a massive ad campaign. Unfortunately, the result was disastrous.
Ford failed to meet the hype surrounding its launch that led people to believe that it was a
major motoring innovation. Customers did not like its styling and the fancy failed to work
satisfactorily. Also, most of the cars in the initial lot had something wrong with nearly each
one of them, with overpowering as a basic problem.

The market for pizza could thus be 30 years. They covered more
divided into customers for whom geographical ground but with the same
belonging to different combinations of target group of high criticality-high
levels of criticality and discontentment discontentment customers who
existed as shown in Exhibit 1. The most wanted fresh, tasty and cheap food
attractive segment has very high [quadrant (1)].
criticality of need and high level of Domino’s had two options to grow.
discontentment with the existing options One was to focus on the less
for eating pizza type of food. Those who dissatisfied and less critical market
went to the shop to eat reflected only a segments in Michigan itself by
tip of the potential market size. When expanding capacity of their first store
Domino’s offered home delivery of pizza, further. Since the level of criticality
it was able to mop up all the customers would be lower for the other customers,
who were at the high criticality-high Domino’s would have had to contend
discontentment point in the matrix. Their with lower level of market pull. This is
offering of high quality, fresh, tasty pizza a situation when both criticality and
at reasonable price eliminated discontentment are low. An alternative
all kinds of pent up discontentment would have been lowering prices. This
customers had about food. would have resulted in lower level of
Domino’s continued to offer traditional profits particularly when the level of
pizzas with different toppings for almost discontentment also is lower.

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The other option was to target the same The Harry Potter series of four books
segment elsewhere. They went for the made J.K. Rowling a household name all
second option. Focusing on the section of over the world with her books getting
the society whether students or not, which translated and distributed in most parts of
wanted tasty, hygienic and low priced the world. These books met a highly critical
pizzas delivered at home they set up stores need of the children to fantasise with
in different parts of the US. Everywhere, excitement in a world full of magic, with a
Domino’s became the home-delivery pizza lot of positive suspense built in. Yet
people. Domino’s continued with the time another of children’s critical needs is to be
tested traditional pizzas for almost three like other children. There has been no
decades before introducing product writer since Enyd Bliton who has captured
innovations in the nineties. the imagination of children so well.
It is when firms continue to offer Quadrant (2) represents customers who
products, which are highly critical to the are highly discontended with the existing
customers, but also the absence of which products which are not critical to them
will create high level of discontentment that in terms of importance: for instance, poor
they tend to become immortal. This is public transport in a town where
amply illustrated by the experiences of a everyone travels by own vehicle.
large number of successful and failed Customers there are indeed discontended
products across the globe. with the quality of local public transport
Michael Dell met the so far unmet needs service, but do not bother so much because
of a category of computer customers who it is not critical to their movement. On the
wanted a say in the configuration of their other hand, poor quality of service of local
systems, which was critical for them. He trains would become a major public issue
also eliminated a lot of discontentment that in any large city because of the criticality
existed in terms of price and delivery. Dell of the service to the public. Poor quality
is now one of the largest PC manufacturers of peripheral features of many products
in the world. also belong to this quadrant. E.g.

Box 2:

Structure of needs and dissatisfaction

Dynamism in needs
This is a function of a number of variables such as income, habits, trends in the society,
and personal likes and dislikes. For people at lower levels of income the more important
needs are the basic needs as identified by Maslow and would include food, clothing and
shelter of a basic nature. For higher income people the ingredients and the quality of much
basic needs would vary. There are also possibilities of higher needs of a societal nature.
For instance, products used for daily subsistence a will be most critical for all people but
non-essentials will be less critical. Because of the dynamism in need, today’s non-critical
products may become very critical tomorrow. High prices as perceived by customers, can
also be a source of dissatisfaction. Some of these sources of dissatisfaction do influence
each other. For instance, new knowledge about better products can lead to dissatisfaction
with existing product features.
The criticality of a need is also influenced by habits such as for food and clothing.
Disregarding levels of income and social contexts of living, most people prefer to have
their traditional food. This is true with Indians, Chinese and the Spanish in Europe or the
U.S. The extent of criticality can also be influenced by fashion trends in the society for
items such as for clothing or furnishing. This is particularly so for youngsters. Individual
likes also determine the extent of criticality. This could be for music or even food. The
need for fun may be momentary, as is the case with some kind of food. In short, a close
analysis of the factors influencing the dynamism in customer needs would enable managers
to know where on the criticality continuum their products lie.

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Elements of Discontentment
When products fail to meet customer expectations, they feel discontented. The four
key sources of discontentment are: product features, process involved in buying and
consumption, and intangible external variables. Most often deficiencies in product features
are major sources of discontentment. This could be design related or manufacturing
related. In a world where most products are getting standardized at least in terms of their
core features, the challenge to understand the customer needs for peripheral features is
enormous. The key processes involved in buying start with collection of information
about the product. This could include level of discontentment with reference to adequacy
of data. During the process of buying, customers may get discontented for a number of
reasons such as lack of interest shown by sales people, ambience of the location (shop/
restaurant) particularly in the case of service business, and the extent to which
confidence in the product is built during product demonstration. With respect to
delivery, there can be discontentment due to delays, damage in transit and arrogance
of deliverers or service people. This can be particularly so for services such as courier
and products such as furniture or decorative items.
Consumers may get discontented for want of adequate training and instruction on the
use of the product as can happen in the case of a washing machine or a product to be self
assembled. Internet connectivity for want of band width and physical breakdown of
gadgets can also be sources of discontentment. Yet another source of discontentment
could be limited number of choices for customers, often for want of competition. In that
sense, availability of choices can eliminate discontentment. Toys are a category where
children always love to have new toys rather than using the same toy again and again,
disregarding their price.
One of the intangible sources of discontentment is customers’ knowledge about better
products offered elsewhere but denied to them. Discontentment may also be due to
knowledge about improved processes existing elsewhere for buying and consumption.
Thanks to the Internet and other communication facilities, knowledge dissemination is
faster now, creating opportunities for some and threat to some others.

customers do not bother much about the customer into quadrant (1) through the
poor quality of wrapper of a mineral water discontentment-criticality tunnel as shown
bottle if the quality of water inside the in Exhibit 1.
bottle is very high. However, level of
criticality of such needs may also undergo Discontentment– Criticality
changes over a period of time, and quality Tunnel
of wrapper may also become a determinant
factor of brand preference. In dynamic external and internal
Introduction of products into this market environments, customer needs keep
will not be easy and new venturists have changing, some faster and more
to carefully identify niches for which such substantially than others. In that sense,
items may be critical (and hence falling into the level of criticality for a product also
quadrant (1)) and the commercial viability changes over a period of time. (There is
of such a decision. For customers who likely to be new customers entering any
belong to quadrant (2), substantial given market segment at any given point
marketing efforts will be required to make in time). As the criticality rises, latent need
impact, if any. This could include efforts also matures, and market pull goes up
to change customer needs. (please see Box 2 for how latent need
Quadrant (3) represents customers who matures). For innovative products, growing
have currently no discontentment with level of criticality also means growing
products which are any way not critical to discontentment with the existing since the
them. This is the least attractive part of existing alternatives fail to meet the new
the market as considerable marketing needs. Over a period of time, customers
efforts are required to create demand, if any. with such critical needs and
It may, however, be possible to move the discontentment will travel through the

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Vol. 2 No. 2 July – December 2003
Discontentment-Criticality Tunnel to reach product introductions in tune with the
the farthest point in quadrant (1) as was dynamism on the level of criticality to
experienced by Kellogg’s in many countries; customers. The company went public for
for instance, it took about 25 years for the first time in 1996. Its net sales grew
Kellogg’s to break-even their operation in from $12m that year to $42m in 1997 and
Japan and Mexico. Kellogg’s has been $85m the next year. Total revenue for 2000
following this strategy of deep investment was $210m, and $310m for 2002. Net
and long wait for customer needs to slowly income also registered attractive growth
change through promotions, and making ($1.2m in 1996, $2.8m in 1997, $6.4m in
their products critical in almost all 1998, $26.6m in 2000 and $36.5m for
developing countries. Here Kellogg’s is 2003). The overall toy industry in the US
trying to change the levels of is estimated at $15 billion in sales per
discontentment and criticality of not any annum. Jakks Pacific manufactures a new
breakfast item but specifically of cereals. array of toys, the most popular among
The speed of change and influence of such them being action figures of the World
attempts on specific factors determining Wrestling Federation (WWF). In 1998, it
criticality obviously vary from society to introduced 100 new products under the
society. In essence, they are trying to shift WWF category. Many of these products
people from quadrant (3) to quadrant (1) were made interactive in 1999. The others
and offer cereals to bring them to (4), and are ‘American Muscle’ category cars,
reduce competition. Entrepreneurs who animated animal toys for babies and dolls
enter the market with solutions for of adolescent age ‘Charlie’s Angles’ coming
customers who are at lower points in the with fashion accessories and additional
tunnel may have to make a significantly clothing. Jakks Pacific brought out about
higher level of effort (and substantial 700 products in 1999, all categories put
investment) to possibly make some impact together.
in the market. For instance, Iriddium failed Jakks Pacific’s toys are different from
in the market because despite some of the others in two ways. One, they have
best promotional efforts, Motorola could introduced a new range of toys bringing in
not make its targeted customers feel a novelty element which is important for
critical about it, nor have high level of toy business. This is based on the fact that
discontentment with the existing situation. children always want change and look for
Ford Edsel failed when the company new toys. Once the novelty disappears,
brought out a car with features which were the consumer looks for a change. Here the
neither critical to customers nor eliminated need will be maturing in tune with the
any discontentment. changing socio-cultural profile of the
Unlike Kellogg’s which proactively work society. It is in this context that the second
towards creating a change, there are dimension becomes relevant.
instances of some firms spotting changes It is useful to understand the socio-
in the level of criticality of some customer cultural factors contributing to the rise in
needs under the influence of either external demand for these characters. Pro-
or internal factors. These changes on the wrestling is becoming big business in the
criticality front could also lead to a rise in US with the two privately owned
discontentment level. This movement of organizations (World Wrestling Foundation
customer from quadrant (3) to (1) through and World Championship Wrestling)
the Discontentment-Criticality Tunnel accounting for annual sales revenues of
creates new opportunities, as is being US$1 billion generated from sales of action
experienced by toy maker Jakks Pacific. figures, T-shirts and matches broadcast.
Jakks Pacific is one of the Fortune 100 Obviously, there are direct and indirect
Fastest Growing Companies since 1999 commercial dimensions to the promotion
when the ranking was introduced and is of this violent ‘game’. Each of these
one of the Forbes 200 Best Small businesses supports the promotion of
Companies in the US since 1999. Its the concept and thus the other businesses
strategy has been to grow through new indirectly. There are also training

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Vol. 2 No. 2 July – December 2003
schools across the US to train people to because of the perceived risks involved if
be ‘professionals’. such a change is insignificant. Customers
The rapid growth in viewership for do not switch brands not because they are
programs organized by the ‘pro-wrestling’ loyal to any brand, but because of the
organizations could be interpreted as a uncertainties associated with untested
reflection of the changing social values. experience of using an alternative.
In any case, that has led to a change in the Customers do not want too many hassles
preferences of children for toys. They and there is a zone of ‘satisficing’ (Simon,
would like to possess models of their icons 1959) or ‘tolerance’ (Zaithaml, Berry and
from this field and create their own boxing Parasuraman, 1993) within which they
‘rings’ at home. would prefer to stay. Therefore, minor
Jakks Pacific exploited a maturing deficiencies in the mix of offering are not
latent need for such products without likely to result in a shift in brand
changing any of the processes involved for a customer. This should not be
in toy purchase, except for the misunderstood as pure loyalty to any
introduction of an online store. They brand. Also, the level of discontentment
offered solutions to customers who had for a given brand will be lower, if
moved up from a low discontentment - substitutes exist.
medium criticality position ]in quadrant The strategic implications to existing
(3)] to a high discontentment – high firms are: one, they have to constantly
criticality position [in quadrant (1)]. It is identify changes in needs and modify the
interesting to note that when they noticed features accordingly, as is done by many
signs of a fading interest in the wrestling airlines. The other option is to create new
characters, the company quickly jumped needs by terminating an existing product
on to selling Harry Potter craft sets in before it completes its life cycle. For
2001. Building on the ‘Harry Potter’ brand, instance, Intel’s Pentium chips are upgraded
they have got into licensing agreement before their demand matures. Gillette
for introducing Harry Potter characters. upgraded its Sensor XL the same way with
In this case, they are exploiting an the offer of Mach 3 razor.
opportunity in the high discontentment Introduction of colour TV to substitute
– high criticality zone of the matrix. The black and white TV and email replacing fax
company is launching a line of girls and surface mail are examples of creation
fashion accessories based on the hit TV of discontentment (moving the customers
show ‘American Idol’ and a toy line for to quadrant 1) and reaping benefits.
Nickelodeon’s’ The Fairly Old Parents, For new entrants into the market, the
both in 2003. challenge is to develop something that can
Quadrant (4) reflects customers who are create discontentment with the existing.
highly contended with the existing options That requires identification of maturing
available to meet their critical needs. It is latent needs. Apple Computers became a
very difficult to penetrate into such markets run away success with its PCs because of
with new offerings. The challenge gets its ability to identify a maturing latent need
compounded because customers do not to have more comfortable and convenient
work out the best solution always; they computing. Disruptive technologies are
tolerate variations in performance within found to achieve this by challenging
a range, which is called the ‘tolerance existing market leaders.
zone’(Kasper, Helsdingen and Vries jr,
1999). For most critical items, the Where to enter:
tolerance zone is narrower compared to
less critical items. This argument applies This framework can be used to
to other quadrants as well. predict potential attractiveness of an
We should remember that a dissatisfied opportunity, whether for start up or
customer may not always offer an existing firms. An understanding of
entrepreneurial opportunity easily. the dynamism in criticality and
Customers would not like to switch brands discontentment will enable managers to

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Vol. 2 No. 2 July – December 2003
identify entrepreneurial opportunities. Where are the opportunities?
As shown in Exhibit 1, maximum
market attractiveness lies where both Entrepreneurial opportunities exist
discontentment and criticality are high wherever the level of criticality and extent
and currently existing, which we call of discontentment peak. These cover not
Today’s Star. At the other end, when only products but also services required
both are emerging, the opportunity is to consume products, traditionally called
indeed promising, but not immediately value chain. According to Michael Porter
(Distant Star). When only one (1985), value is created in a product
of the dimensions (either high through a series of activities in the
discontentment or high criticality) is organization involving all the resources in
existing now and the other is only different degrees. Extending the logic, the
slowly emerging, it can be an sources of dissatisfaction are also some
Opportunity for Tomorrow. Making a or all of these value links. In other words,
success out of products falling into the role of this chain is to eliminate
quadrant (4) is not very easy. It calls customer dissatisfaction, and is, therefore,
for challenges in innovation. Managers called Customer Dissatisfaction
and entrepreneurs have to constantly Elimination (CDE) Chain. An analysis of this
watch the movement of a product idea chain enables us to identify a number of
on these dimensions to exploit the entrepreneurial opportunities in both
opportunity at the appropriate time. manufacturing and service sectors. These
This analysis can enable managers to can be any link on the CDE Chain. A close
determine when changes are required look at any link would show that it
in product features. represents a Criticality-Discontentment
Firms will find easy entry and quickest Matrix. For instance, outsourcing of house
success for products which provide keeping services. In terms of criticality,
solutions to highly critical customer it is not very high, but it can be a major
p ro b l e m s b u t f o r w h i c h e x i s t i n g source of discontentment for internal
s o l u t i o n s a re h i g h l y i n a d e q u a t e customers and hence the decision to
(quadrant (1)). Maximum returns can be entrust it with specialists in that area. It
made with minimum effort in this case. becomes a commercially viable
As soon as the product concept is sold, opportunity for a new firm when many
customers would lap up such products. firms realize this logic in outsourcing such
Buyers will have limited bargaining services. Courier services and IT enabled
power, and several firms can manage services are examples of such
operations with negative working opportunities. With the rise in
capital. Sales would peak once the intensification of attitude, skill and
possible process hurdles related to knowledge for success in eliminating
discontentment such as information discontentment in each link, their role,
availability and distribution are removed. significance and structure have undergone
This situation is similar to a waterfall changes rapidly. Modifications in the
f ro m a v e r y h i g h p o i n t w i t h o u t structure of the CDE Chain is a reflection
obstructions on the way down, creating of the methods used to eliminate
maximum impact. Such a strategy will dissatisfaction on the Chain. New links
also ensure quicker cash flows and may be added, which can eliminate
market feedback. An analysis of the discontentment easily and profitably.
v a r i a b l e s a ff e c t i n g c r i t i c a l i t y a n d The key steps involved in the use of
discontentment and where different the matrix to determine attractiveness
segments of customers are located of an opportunity are listed in boxes
on Exhibit 1 would be very useful to 3, 4 and 5.
formulate product market strategy
in detail.

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Vol. 2 No. 2 July – December 2003
Box 3:

Applications of the Tools

Some of the useful applications of the tools discussed here are the following:

• Level of attractiveness of an opportunity can be predicted fairly accurately.


• Identify where new market opportunities exist.
• The customer Dissatisfaction Elimination chain argument opens up possibilities of identifying
opportunities anywhere on the CDE chain.
• Possibilities of modifying or creating new attractive links on the CDE chain can be explored
more accurately.
• Product positioning, brand building, advertisement and promotion strategies can be formulated
by choosing areas of criticality – discontentment.
• Determine when to make changes in product features.
Since the stage in the life of an industry will influence the extent of attractiveness of an
opportunity, the criticality discontentment framework can be used to formulate and evaluate
entry strategies.

Box 4:

Applications of the Tools

Customer-route and product-route can be the starting point to be iteratively linked to each other.

Customer-route:

This route is appropriate for entrepreneurs who have not invested in the development of a technology
as of now.

1. Observe customers to identify things, processes or prices with which they are dissatisfied. This
may be with special focus on certain industries or skills in which the entrepreneur is interested.
2. Construct the CDE Chain and locate the links, which are the sources of dissatisfaction.
3. Develop a Criticality-Discontentment Matrix for each such weak link and plot the source of
discontentment on it.
4. Assess the extent of attractiveness of this as an opportunity in terms of the location on the
Matrix, and the level of dynamism in criticality. The more the dynamism, the greater the challenge
in reminding customers about their dissatisfaction with the present. For instance, for ‘fun’ products,
the level of criticality is more dynamic than for a staple food, and the sources of fun may be the
products and processes.
5. Examine the extent of match between the identified opportunities and entrepreneurial resources
(existing and that can be created) and overall corporate or personal strategy. This is to determine
the entrepreneur’s capabilities to develop solutions to the problem links already identified.

Product-route:

This route is advised for those with a product or process already developed, and who are looking for an
attractive application.

1. Identify as many applications of the product / process through a brain storming session.
2. Plot each of the above on the Criticality-Discontentment Matrix for different customer segments.
This can be iteratively done to fine tune and focus on customers groups in quadrant 1.
3. Evaluate the techno-commercial implications of implementing each of the most attractive
opportunities.

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Vol. 2 No. 2 July – December 2003
Box 5:

Measuring Criticality and Discontentment

Criticality

Observing and/or interacting with customers who are dissatisfied with the present can
determine the level of criticality of a need. Accordingly, rate the criticality on a 5-point scale. To
revalidate this rating, ask the customer the level of criticality in the immediate need set. For
instance, criticality of need for bottled mineral water my be rated as 5 on the scale. Ask the
customer, “in your overall need for a journey, how critical is this water compared to the level of
criticality for class of journey in the train, snacks on the way and so on?” This additional question
is to make the customer think more logically, rather than intuitively, and enable the entrepreneur
to determine the level of criticality more objectively.
It is important to determine the level of criticality of each of the links on the CDE chain
separately, where the entrepreneur is either creating a CDE chain afresh, or the quality of other
links on the CDE chain is important for the success of the opportunity already identified.

Discontentment

Broadly the sources of discontentment are product features, processes of buying and
consumption, and price. Customers can rate the extent of dissatisfaction on a 5-point scale through
observation and or interaction as discussed under criticality.
Recent performance of conjoint method in identifying customer preferences in a number of situations
is very promising. It is possible to validate the findings quantitatively.

An entrepreneur / manager has to A close look at the sources of


constantly identify existing and emerging discontentment would show that a number
sources of discontentment and level of of factors contribute to it, besides those
its criticality, and then keep offering identified by conventional wisdom. When
solutions, all to retain customers and products are becoming increasingly
create new ones. Each link in the CDE standardized with given core and
chain plays a unique role, high or peripheral features, many process involved
low on criticality. in linking the firm and the customer

Exhibit 2: Customer Dissatisfaction Elimination Chain

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Vol. 2 No. 2 July – December 2003
becomes sources of discontentment. This Delivery Process: Arrival of courier
would include information collection, service itself eliminated a lot of the
buying, paying, delivery, consumption, dissatisfaction that existed with the quality
return of unused products if necessary, of delivery of parcels and mails. FedEx
after sales service and disposal of waste introduced a number of features such as
after use. Each one of these or their sub- bar code label on package for route
activities is a possible new entrepreneurial tracking thus enabling customers to check
opportunity; the level of attractiveness of the location and progress in the journey of
course depends on a number of techno- the parcels. Other facilities such as home
commercial dimensions. delivery and Saturday 10 am delivery
Information Collection Process: One of further eliminated customer dissatisfaction.
the most critical steps in the buying process DHL Courier service identified yet another
is collecting information not only about a critical need that left a lot to be improved
specific product but also about alternatives. when it offered DHL Jumbo service.
This remained a major challenge until the According to this, customers with a number
arrival of the Internet. Firms such as ebay, of small parcels could put all in a big box
Amazon and Google eliminated most and courier it safely and more economically,
customer dissatisfaction on this count as is done in cargo containers.
when they made it possible to collect
information on a variety of things quickly CDE Chain and Business
and reliably. Strategy
Buying Process: Amazon.com became
a run away winner because it eliminated We shall see the role and significance of
customer dissatisfaction that existed in the CDE chain in the context of the strategy
the process of going to a bookshop at a of a firm and its efforts to achieve Zero
time when it is open and buying a book Customer Dissatisfaction (ZCD) in the
from among titles available there, as context of Domino’s. In order to achieve
against scanning all possible titles in the the strategy described above, Domino’s
area of interest and deciding in a few designed and developed an appropriate
minutes from anywhere in the world, all CDE chain. Each link formed a source of
using the Internet. For most book buyers, dissatisfaction, reflecting the different
while the buying process is very critical, processes that a customer is involved in
they are not particular about seeing the the purchase and consumption stages. One
product as it is standardized in terms of of the important links is product feature.
shape and looks. This is not the case with The Company perfected and strengthened
many other products where touch and feel all links in the CDE chain.
are important. Boo.com failed as an In the case of Domino’s, the company
Internet garment firm for this reason. For perfected and strengthened all links on the
such items, firms have to ensure wide CDE Chain over the years and built
distribution through a number of competitive advantage. Some of the
channels/outlets to eliminate customer important links on Domino’s chain, and how
dissatisfaction. it strengthened them are worth examining.
Payment Process: This is yet another
critical process, but has created much Ordering Process:
customer discontentment until credit/debit
cards came on the scene. Customers had Domino’s developed a computer
to bear the consequences of carrying liquid system and database that enabled it to
cash while going for any shopping. speed up order taking and delivery
Similarly, shop owners also had to bear the processes. For instance, it could generate
consequences of cash based transactions, immediate information on the customer
including non-purchase for want of such as the previous pizza order details.
adequate amount of liquid cash. Cards As a result, time and effort required for
from Visa and Master (and others) both the company and the customers in
eliminated all associated dissatisfaction. giving details of address and preferences

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Vol. 2 No. 2 July – December 2003
could be avoided, thus eliminating pizza stores with more than 150 products,
possible dissatisfaction on this count. ranging from dough to pizza boxes. This
takes care of the need to have consistency
Delivery Process: in quality also across stores. The central
commissary system also ensured that these
The database also provided addresses sales outlets are relieved from spending
and directions to customers’ place and even long hours making dough, grating cheese
the location of the doorbell. The system and preparing toppings.
would print all such information, which
would then be stuck on the pizza box for
Exhibit 3:
delivery. Domino’s also perfected a system
Price Elasticity and Needs
for scheduling drivers for their bikes.
Domino’s was able to replicate this model
all over the US and abroad within a short
period of time. In order to ensure that
customer concerns about supply of hot
pizza were met, Domino’s offered delivery
within 30 minutes. Later, in 1993, it
discontinued this practice and replaced it
with ‘Total Satisfaction Guarantee’. It was
forced to lift the 30 minute limit faced with
traffic related problems. By this time, the
corporation had already built up its
reputation as the supplier of high quality
pizzas at home within a short period of
time. Each Domino’s shop is permitted to
accept orders only from within a two-mile The above strategy has enabled
radius to ensure high quality timely service. Domino’s not only to keep the price low
The introduction in 1998 of Heat Wave, a for its pizzas, but also maintain high quality
hot bag using patented technology that product, both eliminating customer
keeps pizza oven-hot to the customer’s discontentment to a great extent.
door further ensured that Domino’s did Similar levels of perfection exist in the
not allow any kind of customer case of a number of other products such
discontentment from cropping up. as Dell Computers. Dell has perfected the
art of assembling and delivering PCs
Cost and product features without having to carry any inventory of
(quality, taste): its own.
Our research showed that price elasticity
Domino’s followed regionally centralized of demand is one of the most critical factors
purchasing, processing and handling of raw influencing the success of a product. For
materials and other ingredients through instance, customers often buy a product,
their distribution centers called even when it is expected to meet a need,
‘commissaries’. However, negotiations for low both on criticality and discontentment,
specifications, price and delivery terms for provided the price is very low.
most pizza ingredients and other supplies Conceptually, customers buy such products
such as boxes and napkins are handled by to meet momentary critical needs for fun,
Domino’s central purchasing department on when price is close to zero. To capture the
a worldwide scale. For instance, Mozzarella power of price in this process, we suggest
cheese is sourced from New Zealand a three dimensional relationship involving
for all Domino’s outlets across the world criticality, discontentment and price as
through a number of commissaries. shown in Exhibit 3. As noted earlier,
Through its network of 18 such distribution Dominos offered a solution combining high
centers, Domino’s pizza distribution quality, tasty pizzas at low prices to meet
division regularly supplies more than 4,500 a critical need of customers.

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Vol. 2 No. 2 July – December 2003
Existing firms offering unique value to Combining the features of the CDE chain
customers and then eliminating their and the Criticality-Discontentment Matrix
dissatisfaction will have to constantly provides for a powerful tool for
review changes in the needs of their managers to evaluate the appropriateness
customers, and offer entrepreneurial of their existing strategies.
solutions. This builds deep corporate
entrepreneurial culture in organizations.
For instance, Disney theme park and Intel
chips have been constantly innovating their
offer to customers, and creating entry
barriers for others in the process. There References
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