The Technology Adoption Lifecycle: Marketing to Mainstream Customers

Topics Understanding Technology Buyers Understanding Technology Buyers Technology Adoption Life Cycle Technology Adoption Life Cycle Marketing to Innovators and Visionaries Marketing to Innovators and Visionaries Marketing to Mainstream Markets Marketing to Mainstream Markets

Reasons High Technology Products Fail Firms frequently fail because they are unable to make the transition from early adopters to mainstream customers. At a time when a firm has just achieved great initial success from the initial market “early wins,” it is difficult for the firm to undertake the immense effort and radical transformation necessary to serve the mainstream market. At a time when a firm has just achieved great initial success from the initial market “early wins,” it is difficult for the firm to undertake the immense effort and radical transformation necessary to serve the mainstream market.

Technology Adoption Life Cycle Groups are distinguished from each other based on their characteristic responses to discontinuous innovations. Groups are distinguished from each other based on their characteristic responses to discontinuous innovations. Risk sensitivity and willingness to change existing behavior in order to adopt new technology are important segmentation variables. Risk sensitivity and willingness to change existing behavior in order to adopt new technology are important segmentation variables. Groups become market segments Groups become market segments Innovators Early Adopters Early Majority Late Majority Laggards

Traditional Technology Adoption Life Cycle 2.5% Innovators 13.5% Early adopters 34% Early majority 34% Late majority 16% Laggards

Early Markets Innovators Innovators are technology enthusiasts Innovators are technology enthusiasts Non-typical customers - willing to tolerate glitches and problems Non-typical customers - willing to tolerate glitches and problems No fancy image advertising - marketing hype. Respond to information from technology conferences, computer bulletin boards, retail storefronts that cater to techies, and technical publications No fancy image advertising - marketing hype. Respond to information from technology conferences, computer bulletin boards, retail storefronts that cater to techies, and technical publications

Early Markets Early Adopters Early Adopters are Visionaries Early Adopters are Visionaries To reach must promise to deliver on the dream of a major breakthrough (major reduction in construction time, radical cost reductions) that will result in a competitive advantage. To reach must promise to deliver on the dream of a major breakthrough (major reduction in construction time, radical cost reductions) that will result in a competitive advantage. Easy to sell - hard to please because of required customization. Easy to sell - hard to please because of required customization. Marketer must manage Visionary’s expectations (pilot projects). Marketer must manage Visionary’s expectations (pilot projects).

Mainstream Markets Early Majority Early Majority are Pragmatists Early Majority are Pragmatists Never stand out Never stand out Goal is to make incremental, measurable and predictable progress to remain competitive Goal is to make incremental, measurable and predictable progress to remain competitive Risk is a negative word Risk is a negative word

Mainstream Markets Late Majority Late Majority are Conservatives and against innovation Late Majority are Conservatives and against innovation As large as Early Majority As large as Early Majority Against discontinuous innovations believe more in tradition than progress Against discontinuous innovations believe more in tradition than progress High tech companies are not sympathetic High tech companies are not sympathetic

Revised Technology Adoption Life Cycle 2.5 % Innovators 13.5% Early adopters 34% Early majority 34% Late majority 16% Laggards

Cracks in the Model Innovator --Early Adopter Innovator --Early Adopter This crack exist when a new technology can not be readily translated into a major new benefit (neural networking, ADSEP/SHOT) This crack exist when a new technology can not be readily translated into a major new benefit (neural networking, ADSEP/SHOT) The key to winning the early adopter segment is to show that the technology enables some strategic leap forward-- something never before possible--which has intrinsic value to the firm The key to winning the early adopter segment is to show that the technology enables some strategic leap forward-- something never before possible--which has intrinsic value to the firm

Cracks in the Model Early Majority--late Majority Early Majority--late Majority Early majority is willing to become technically competent enough to benefit from the technology. Late majority are much less so. Early majority is willing to become technically competent enough to benefit from the technology. Late majority are much less so. Product must be made increasingly easier to adopt in order to reach the Late Majority (e.g., DOS was too difficult for many “home PC potential customers). Windows was much easier. Product must be made increasingly easier to adopt in order to reach the Late Majority (e.g., DOS was too difficult for many “home PC potential customers). Windows was much easier.

The Chasm Already have as many Visionaries as one can handle-cannot take on more custom projects Already have as many Visionaries as one can handle-cannot take on more custom projects No credible reference for Pragmatists No credible reference for Pragmatists Wait and see lull Wait and see lull Revenue growth ceases-often recedes Revenue growth ceases-often recedes Funding needs increase Funding needs increase

Why Pragmatists do not Consider Visionaries Credible References Visionaries Visionaries AdventurousAdventurous Early buyersEarly buyers Think bigThink big Go it aloneGo it alone Spend bigSpend big Think Pragmatists are pedestrianThink Pragmatists are pedestrian Pragmatists Pragmatists Prudent Wait-and-see attitude Manage expectations Maintain relationships Spend to budget Think Visionaries are dangerous Catch 22

Marketing to Pragmatists Trying to cross the chasm without taking a niche market approach is trying to light a fire without kindling. Trying to cross the chasm without taking a niche market approach is trying to light a fire without kindling. Sole goal is to secure a beachhead in mainstream market. Sole goal is to secure a beachhead in mainstream market. Create a pragmatist customer base that is referenceable, people who can provide firm with access to other mainstream prospects. Create a pragmatist customer base that is referenceable, people who can provide firm with access to other mainstream prospects.

Bowling Pin Analogy

Marketing to Pragmatists Provide whole product Provide whole product Generic ProductGeneric Product Expected ProductExpected Product Augmented ProductAugmented Product Potential ProductPotential Product Form Tactical Alliances to develop whole products Form Tactical Alliances to develop whole products

Marketing to Pragmatists Establish strong Word of Mouth (WOM) Establish strong Word of Mouth (WOM) Develop critical mass of informed individuals in small number of segmentsDevelop critical mass of informed individuals in small number of segments Pragmatist communicate with industry and professional association colleaguesPragmatist communicate with industry and professional association colleagues

Marketing to Pragmatists Market Leadership Market Leadership Pragmatist customers prefer to buy from market leadersPragmatist customers prefer to buy from market leaders Whole products grow form market leadersWhole products grow form market leaders Use “Big Fish-Small Pond” approach Use “Big Fish-Small Pond” approach

Marketing to Pragmatists Refocus away from selling products toward creating relationships Refocus away from selling products toward creating relationships Relationships buffer the shock of changeRelationships buffer the shock of change Marketing’s first deliverable is a partnership that can deliver whole product solutions to the customerMarketing’s first deliverable is a partnership that can deliver whole product solutions to the customer

Pursue Other Pragmatist Segments