Use this framework to devise a unique way of beating the competition
We all love something new. New is one of the most powerful words in the marketing vocabulary. It promises improvements. It suggests excitement. And yet, we all react to “new” in different ways. Some of us can’t wait to get our hands on a new product. We love “new” for the benefits it gives us and the status it conveys. Equally, some of us are fearful of “new”. Experience has told us that it often doesn’t deliver what we hoped and wanted and for this reason we prefer sticking to what we know.
It follows, therefore, that new products and services aren’t embraced by everyone in the same way. An innovation that is launched into a market is diffused rapidly to some people and slowly to others.
In order to explain the process by which a new idea or product is accepted, several theories have been proposed.
The two-step process: This theory argues that new products and ideas are accepted first by a small group of the population – opinion leaders. These people are key to the diffusion of the new product because if they like it, they will promote it and the general population will accept it. We can see this happening in certain markets where the voice of the opinion leader really does count. New cars are reviewed by journalists and their comments can have an enormous effect on the success of the launch. Theatre critics can make or break a new musical or play. Within companies there are gurus whose views on new products will influence people who work with them.
The trickle-down effect: Many new products are expensive in the first instance. Only the wealthy or the privileged few can afford them. This may give the product status in the eyes of the masses who wait for the time when the price of the product falls and become more affordable[ii]. The first mobile phones cost a relative fortune and were the size of a brick, but they were only available to those with a high income or a high position in politics or business. As the prices tumbled they became available to us all, including kids at school.
The diffusion of innovation theory was promoted by Everett Rogers in 1962. He argued that any new product would be received in a different way by 5 groups of people:
Innovators - a group of people who are always eager to be first to own a new product. These people are risk takers and want to be seen as leaders.
Early adopters – this is an educated group of people, often young rather than old. They are leaders in their social environment.
Early majority – as the name of this group suggests, it addresses a mass market where informed people begin to adopt the product.
Late majority – eventually the product is accepted by a large but sceptical and traditional group of people, often made up of the lower socio-economic classes.
Laggards – when everyone else has accepted the new product, those who have resisted it to the end, finally give in.
Rogers’ model of diffusion has become the most accepted of the theories. In his work, he determined proportions of any population that are likely to fall into the different groups - innovators, early adopters, early majority, late majority, and laggards. He proposed that the distribution of these groups closely follows that which we would expect in a normal bell curve. He split the 5 groups so that half the population is to the left of the curve (people who are early to embrace innovation) and a half is to the right-hand side of the curve (people who embrace innovation at a later stage). However, the classification of the adopters is not symmetrical and there are three categories adopting early and only two adopting late. This is because research shows that innovators and early adopters can be recognised as exclusive groups whereas the laggards are homogeneous.
There are many innovations that simply never get off the ground. In order that an innovation can get traction among a large group of people, there needs to be a "tipping point" – a proportion of people who find the new product attractive and in sufficient numbers to spread the word to the next group. It is widely held that the tipping point exists between the early adopters and the early majority; that is at the point where 16% of the population have accepted the innovation. It is at this point that there is a chasm which, if not jumped, will mean that the innovation is in danger of atrophying.
The diffusion of ideas spreads quickly in some markets. This is the case in toys and electronic products which quickly catch the imagination of people in sufficient numbers to pass the chasm and spread quickly through the wider population. There are many examples of electronic and digital products which have made multimillionaires out of their inventors in just a handful of years.
Many other products can take years to develop to commercial fruition. Carbon fibre was invented in the 1950s but its use was restricted to sports goods and limited applications for nearly 30 years until accepted in aerospace engineering. Even now, it will be many more years before it moves beyond the early adopter stage. In 2008, graphene, was invented; a new material that is ultra-light weight yet stronger than steel. A product such as this needs time to prove itself as suitable in different applications and also as a material that can be easily and cheaply mass-produced. It is likely to be many years before this passes through the whole diffusion curve.
The diffusion of innovations is now widely accepted as a viable business model. From its origins showing the diffusion of a new pesticide, it has been adapted to the fast pace of technology innovations in electronics and software. The focus of interest in diffusion has helped other researchers understand the subject better. Researchers have pointed out that the diffusion of an idea doesn’t necessarily mean that it is used continuously by the audience. Innovators and early adopters may be the first to try it and they may also be the first to abandon it and move on to something else that is new.
The model only explains the behaviours of a population with regard to a new product. It doesn’t explain how to motivate that population to buy the new product. There have been many new keyboards developed that are quicker and arguably better than the old QWERTY keyboard, but none have yet gained traction with a wide population. Similarly the idea of speaking a common language around the world, such as Esperanto, might make a lot of sense but persuading large groups of people to use it has proved impossible.
Some things to think about:
A useful segmentation of your customers is to understand where they sit in terms of the diffusion of innovation. This will enable you to promote new products and services where they will be more readily received.
In business to business markets, radical innovations can take a number of years to gain traction.
Aim to get your new products accepted by opinion leaders who will influence the rest of the market.