This section of the IB Business Management course examines the importance of developing goods and services that address customers’ unmet needs (AO2).

"The easy and the simple are not identical. To discover what is really simple and to act upon the discovery is an exceedingly difficult task". ~ John Dewey, Experience and Education (1938)

Research & Development can lead to the commercialisation of innovative products that can completely revolutionise an industry, thereby fulfilling the unmet needs of consumers. In rare and extreme cases, innovation can lead to the creation of products to meet the needs that consumers didn't even know they had. For example, in the portable music industry, customers moved away from cassette tapes and vinyl records when compact discs (CDs) were invented. This made way to portable MP3 players and the iPod which enabled customers to carry their entire music collection with them. Although the iPod is no longer produced by Apple, it was the product that revolutionised the whole of the music industry.

Educationist John Dewey (1859 - 1952) suggested that simple and easy are not the same thing - Steve Jobs, the entrepreneur behind the iPod (and subsequently the iPhone) believed in the same philosophy in developing Apple's innovative and simple-to-use gadgets - but huge amounts of resources were required to ensure these 'simple' devices became appealing to customers; which was certainly not an easy task.

Watch this video clip of Steve Jobs introducing the iPod to the world, which totally changed the landscape of digital music:

Watch this video about the history and evolution of portable music players:

"We need to accept that we won't always make the right decisions, that we'll mess up royally sometimes - understanding that failure is not the opposite of success, it's part of success." - Arianna Huffington (b.1950), co-founder of The Huffington Post

R&D enabled companies such as Samsung, Sony and Canon to become market leaders in the digital cameras industry, something that Kodak failed to recognise as an unmet customer need). This eventually led to the collapse of Kodak, as the company chose to focus on an outdated product (camera film),

Kodak failed to keep up with changing customer needs

As R&D is risky (in terms of high expenditure with unknown results or financial returns), firms will often create a prototype to test whether a product addresses the unmet needs of customers. This is a test (or trial) version of the product, to gauge the chances of commercial success before the final development and launch of the product. Car manufacturers use prototypes prior to mass producing a new model vehicle.

Car manufacturers produce prototypes as part of their R&D