Market Pull, Technology Push or…?

There are two strategies that companies adopt to innovate in order to reach potential customers: traditional companies can implement either a market-pull or technology-push strategy. The main question is now: “what strategy do companies operating in the sharing economy implement?”

The sharing economy

To begin we can provide a short description of both strategies mentioned above. The market-pull strategy is quite simple since companies who intend to use it usually gather information from the market concerning what people want. It is thus only a matter of understanding what potential customers actually need, but which is not on the market yet. After this first process, companies try to develop a product or service which is the closest to the outcome of the customer-needs analysis.

A little more complicated to implement is the technology-push strategy, also called “innovation push.” This strategy aims to develop either a new product or service. The challenge here is to “teach” customers about new and innovative offers. The starting point is technological development, and from that the firms’ managers must be able to create demand in customers for what has been invented.

Instead sharing economy firms are neither market-pull nor tech-push companies. The fact here is that these companies do not create something new but thanks to the ability of their founders, team members, managers and so on, they provide something that goes to satisfy a pre-existent need but in a more attractive way. The real innovation in the sharing economy is the business model that companies implement. Their ability is to understand that not only customers have needs but also normal people, so-called peers: that is, making money. In times of difficulty, after the global crisis occurred in 2007, an alternative way to make money is definitely well received by those with assets to exploit. At the end of the day, sharing economy firms make their money by keeping part of the value created when two groups interact who would never have otherwise met.

To answer the original question: “what strategy do companies operating in the sharing economy implement?” we can now assert that they aim to have an innovative business model, which puts together different pieces of something already existing but in a different way rather than developing a web of products. Thanks to this substantial difference with other firms, they are creating wealth in the economic system by enabling the movement of money where otherwise there would have been nothing.