It used to be that engineers developed a product based on some perceived need, marketers sold it, and customers bought it.

In some forward-thinking companies, the marketing department might help drive product development based on user feedback, but the experience was almost wholly internal. Those days are gone.

Now products are often developed by someone either seeing an opportunity or, perhaps just as often, having an idea they think might be interesting. A product is developed and released and people use it.

Then an interesting thing happens ... the product-development cycle responds to the way people are using the product. Engineering might have a few tweaks they’d like to make, but much of the innovation comes from how people are using (or want to be using) the product.

Which brings me to Foursquare (foursquare.com). At heart, it’s simply an application that runs on your smart phone allowing you to “check in” at various locations throughout your day. Let’s say you stop at Starbucks in the morning. You open the application on your phone, select the Starbucks, and hit a “check in” button. If you’re feeling ambitious, you could even write a short message: “Getting my morning pick-me-up.”

Each time you check in, you earn points based on a system of Foursquare’s devising, and you can unlock badges for certain aspects of your movements. Check in at several venues and earn an “Explorer” badge. Visit one location more than anyone else and become “Mayor.”

Now, at least a few of you are asking yourselves why you would want to do that. Who really cares where you are and where you go throughout the day?

The answer is, your friends might (with emphasis on the might), but the businesses you frequent most certainly do (or should.)

Foursquare began as a way for friends to check in wherever they are and notify one another about what they’re up to, much the same way Twitter was originally intended for friends to tell one another what they’re doing. But just as Twitter dramatically evolved based on how people actually used it, Foursquare stands at a similar threshold.

Businesses are now realizing that some of their most loyal customers are checking in at their stores, bars, restaurants, etc. And Foursquare sees an opportunity here, adapting into a way for businesses to communicate with these people. If you check in at a business enough to become the mayor, you might earn yourself a special perk. If you simply check in and tell other people about it, you might be rewarded with a discount.

Because the application is location-aware (meaning it knows where you are), business owners also can add tips to help people find things nearby. If you’re standing outside a coffee shop, you might see that a competitor up the street is offering free pastries with a cup of coffee this morning and adjust your habits accordingly. As the owner of a business, you can add these tips to your location to help bring people in the door.

Much of the new development of Foursquare seems to be related to finding ways to better serve both the customers and the business owners using it, and I suspect we’ll see more robust tools to help you track and analyze what’s happening. But if you own a business that relies on walk-in traffic, this is a creative way to potentially increase that traffic.

And as the user base grows (100,000 new people joined in the last 10 days!), you might find it too useful to resist.•

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Cota is creative director of Rare Bird Inc., a full-service advertising agency specializing in the use of new technologies. His column appears monthly. He can be reached at jim@rarebirdinc.com.