Strategy 2 Market Exchange

So often, when developing new products, new product developers get caught up in the beauty of the solution. We believe the product is perfect and people will clamor to buy it. Like Ray Kinsella in Field of Dreams we believe “If you build it, they will come.”

But, so often dreams are dashed and the product never catches on. We blame marketing and sales, we blame the customer who didn’t see the value of the product, and we are dumbfounded that even though we designed the best solution to a problem, no one wanted it.

Maybe we need to think about the theories of diffusion and adoption. There are things we can do, as product developers, to improve the chance that our new product will catch on and be a success. Everett M. Rogers, author of “Diffusion of Innovations” and grandfather of diffusion theory offers many insights into how innovations are adopted and how characteristics of innovations can help or hinder adoption.

Diffusion

Diffusion is defined by Everett Rogers as the process by which an innovation is communicated through certain channels over time among the members of a social system. Some people take longer than others to try out and adopt a new innovation. The first ones to adopt an innovation are called Innovators. They tend to be avid consumers of mass media, from which they learn about new innovations they are eager to try out. They also tend to be big networkers, sharing information about innovations across far-flung social networks. Since innovators tend to be a little “out there” they don’t function as opinion leaders, but their value is in getting the word out to different far-flung social networks. They make up about 2.5% of the population.

The opinion leaders are in the next group called Early Adopters. They take a little longer to try out and adopt new innovations. They read mass media, but they also network with innovators and learn about new innovations. They are different from innovators in that they are looked up to by their social group as a source of advice on new innovations. Once they adopt an innovation, they use their personal influence with their social network to encourage adoption. Early adopters make up about 13.5% of the population.

The next group to adopt is called the Early Majority, and they make up 34% of the population. To a great extent they rely on the opinions and experiences of the early adopters in learning about and deciding whether to adopt new innovations. Later adopter groups also rely on their social network for finding out about new innovations, but they take even longer to decide try and adopt.

Implications for New Product Development

Based on diffusion theory, Rogers notes several characteristics of innovations that encourage diffusion and affect the rate of adoption. This is excellent advice for new product developers. To encourage diffusion and adoption, create a product with:

• Relative advantage over other products – innovators and early adopters look for a better value proposition

• Compatibility with existing values, beliefs, past history and needs of potential adopters – the less a potential adopter has to adjust their behavior the greater the chance of adoption

• Minimal complexity of understanding and use – the more confident a person is that they can master and use the innovation, the more likely they are to adopt it

• Trialability – free trials and demos let a person try the product with no risk

• Observabililty – very often people need reassurance that they are making the right decision by adopting an innovation. If they can see many people have already adopted an innovation, they will feel more comfortable adopting it

As an example, Rogers presents the case of cellular phones. In 10 years time, starting in 1983, 13 million phones were sold in the U.S. During that time performance improved and prices came down, which encouraged adoption, but the design of the product has all of the above attributes, which encouraged very rapid adoption:

• Relative Advantage: Saves time in missed appointments and delayed schedules, can be used in an emergency, considered a status symbol

• Compatibility: For the user, the cellular phone operates just like a regular phone and it connects into the existing landline phone system

• Complexity: Because the cellular phone operates just like a regular phone, the user did not need to learn new skills

• Observability: The portable nature of the product and its use in public places helped emphasize the benefit of status to potential buyers

• Trialability: It is easy to borrow a friend’s phone and try it out. Also, many rental cars came with a cellular phone, providing an opportunity for trial

The next time you develop a new product, think about how you can incorporate these attributes into your product design. It will make a difference.