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Product Diffusion

Buying a totally new product brings with it some risks for consumers, and not everybody wants to try new things at the outset. Every consumer has a different level of risk-taking reserves when making purchasing decisions about new products. Some consumers are more willing to try new things than others; some prefer to wait and see if the product performs well and receives good reviews from fellow consumers and third parties. Every consumer has a different pace and way of adopting an innovation or a new or a newly developed product, and this also depends on the characteristics of the product (e.g., the perceived risks of buying a new car and buying a candy are very different). The well-known bell-shaped “diffusion models” described by Rogers (1962; 1983) define five different consumer types based on their risk-taking styles and personality features.

Early consumers who are keen to try the new product are called “innovators.” These consumers are generally highly educated, knowledgeable, adventurous individuals who enjoy a high income, are willing to try new things, believe in an alternative lifestyle, and are therefore willing to take high risks. (Rogers (1962; 1983) suggests 2.5% of adopters are innovators.) The success of product diffusion is highly dependent on innovators. Marketers’ main challenge, in this context, is to attract innovators and differentiate between innovators and non-innovators so they can direct their marketing efforts towards those who can bring life to a struggling product in its early days. Because innovators are also sensitive and vulnerable to competing new products, it is very important to attract their attention and continuing business. This means reaching an increasing number of innovator consumers and raising repeat purchases so that the product can easily be penetrate into markets for a long-standing market presence.

However, innovators should not be considered the only adopters of the innovation. Once the product is accepted by innovators, “early adopters'' who are social leaders and above-average consumers can be attracted by the product (13.5% of adopters according to Rogers 1962; 1983). Early adopters cautiously follow innovators, and once they perceive a future for the product, they want to be the first to introduce it to their social group. Early adopters are the first big crowd to try the product. Thus, they can be actively used to improve the new product on its way. Later, the product becomes attractive to consumers called the “early majority’ who are more deliberate and have average levels of education (on average 34% of the adopters according to Rogers 1962; 1983). Innovators and early adopters are influenced by the product’s performance and originality, with price a secondary consideration. The “late majority,” who are more skeptical and have lower than average levels of education, start to use the product mostly as a status symbol (on average 34% of adopters according to Rogers 1962; 1983). This may be the point where the product begins the maturity stage of its life cycle, meaning that it is widely available in the market and some level of positive awareness has been established through consumer experience. With the product in widespread use in markets by the different types of consumers described above, the company can now achieve economies of scale, so prices can start to go down. Once the late majority has been attracted, the final consumer group who are called “laggards’" start to enter the market. Laggards are generally very fearful about trying new things and only trust their close in-groups as a source of information (on average 16% of all adopters according to Rogers 1962; 1983). These consumers generally appear as the product is starting to die as its price falls dramatically, so there is less financial risk to buying it. The bell-shaped diffusion model curve is shown in the blue lines of Fig. 3.4.

The company’s success in launching its product will therefore mostly depend on its ability to find and attract innovators and early adopters, crossing the chasm to reach a healthy sales growth. “Crossing the chasm”1

Product diffusion and product life cycle is highly dependent

Fig. 3.4 Product diffusion and product life cycle is highly dependent, first on the company’s success in stimulating enthusiastic and visionary consumers in order to establish an “early market,” and then on its ability to attract the early majority, late majority and laggards who define its “mainstream market” as indicated by the green lines in Fig. 3.4. Without the development of an early market in the early stages of the product launch and introduction, the company is unable to reach the mainstream market and cannot therefore achieve market continuity. This, in turn, shortens the product’s life.

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