The Technology Adoption Lifecycle: Marketing to Mainstream Customers

The Technology Adoption The Technology Adoption Lifecycle:Lifecycle:

Marketing to Mainstream Marketing to Mainstream CustomersCustomers

TopicsTopics

Understanding Technology BuyersUnderstanding Technology Buyers

Technology Adoption Life CycleTechnology Adoption Life Cycle

Marketing to Innovators and Marketing to Innovators and VisionariesVisionaries

Marketing to Mainstream MarketsMarketing to Mainstream Markets

Reasons High Technology Reasons High Technology Products FailProducts Fail

Firms frequently fail because they are Firms frequently fail because they are unable to make the transition from unable to make the transition from early early adoptersadopters to to mainstream customersmainstream customers..

At a time when a firm has just achieved At a time when a firm has just achieved great initial success from the initial market great initial success from the initial market “early wins,” it is difficult for the firm to “early wins,” it is difficult for the firm to undertake the immense effort and radical undertake the immense effort and radical transformation necessary to serve the transformation necessary to serve the mainstream market.mainstream market.

Technology Adoption Life CycleTechnology Adoption Life Cycle

Groups are distinguished from each other Groups are distinguished from each other based on their characteristic responses to based on their characteristic responses to discontinuous innovations. discontinuous innovations.

Risk sensitivityRisk sensitivity and and willingness to changewillingness to change existing behavior in order to adopt new existing behavior in order to adopt new technology are important segmentation technology are important segmentation variables.variables.

Groups become market segmentsGroups become market segments

InnovatorsEarly

Adopters

Early

Majority

Late

MajorityLaggards

Traditional Technology Adoption Traditional Technology Adoption Life CycleLife Cycle

2.5%Innovators

13.5%Early

adopters

34%Early

majority

34%Late

majority

16%Laggards

Early MarketsEarly MarketsInnovatorsInnovators

Innovators are technology enthusiastsInnovators are technology enthusiasts

Non-typical customers - willing to tolerate Non-typical customers - willing to tolerate glitches and problemsglitches and problems

No fancy image advertising - marketing No fancy image advertising - marketing hype. Respond to information from hype. Respond to information from technology conferences, computer bulletin technology conferences, computer bulletin boards, retail storefronts that cater to boards, retail storefronts that cater to techies, and technical publicationstechies, and technical publications

Early MarketsEarly MarketsEarly AdoptersEarly Adopters

Early Adopters are VisionariesEarly Adopters are Visionaries

To reach must promise to deliver on the To reach must promise to deliver on the dream of a major breakthrough (major dream of a major breakthrough (major reduction in construction time, radical cost reduction in construction time, radical cost reductions) that will result in a competitive reductions) that will result in a competitive advantage.advantage.

Easy to sell - hard to please because of Easy to sell - hard to please because of required customization. required customization.

Marketer must manage Visionary’s Marketer must manage Visionary’s expectations (pilot projects).expectations (pilot projects).

Mainstream MarketsMainstream MarketsEarly MajorityEarly Majority

Early Majority are PragmatistsEarly Majority are Pragmatists

Never stand outNever stand out

Goal is to make incremental, measurable Goal is to make incremental, measurable and predictable progress to remain and predictable progress to remain competitivecompetitive

Risk is a negative wordRisk is a negative word

Mainstream MarketsMainstream MarketsLate MajorityLate Majority

Late Majority are Conservatives and Late Majority are Conservatives and against innovationagainst innovation

As large as Early MajorityAs large as Early Majority

Against discontinuous innovations believe Against discontinuous innovations believe more in tradition than progressmore in tradition than progress

High tech companies are not sympatheticHigh tech companies are not sympathetic

Revised Technology Adoption Revised Technology Adoption Life CycleLife Cycle

2.5 %Innovators

13.5%Early

adopters

34%Early

majority

34%Late

majority

16%Laggards

Cracks in the ModelCracks in the Model

Innovator --Early AdopterInnovator --Early Adopter This crack exist when a new technology can This crack exist when a new technology can

not be readily translated into a major new not be readily translated into a major new benefit (neural networking, ADSEP/SHOT)benefit (neural networking, ADSEP/SHOT)

The key to winning the early adopter The key to winning the early adopter segment is to show that the technology segment is to show that the technology enables some strategic leap forward--enables some strategic leap forward--something never before possible--which something never before possible--which has intrinsic value to the firmhas intrinsic value to the firm

Cracks in the ModelCracks in the Model Early Majority--late MajorityEarly Majority--late Majority Early majority is willing to become Early majority is willing to become

technically competent enough to benefit technically competent enough to benefit from the technology. Late majority are from the technology. Late majority are much less so.much less so.

Product must be made increasingly easier Product must be made increasingly easier to adopt in order to reach the Late Majority to adopt in order to reach the Late Majority (e.g., DOS was too difficult for many “home (e.g., DOS was too difficult for many “home PC potential customers). Windows was PC potential customers). Windows was much easier.much easier.

The ChasmThe Chasm

Already have as many Visionaries as one Already have as many Visionaries as one can handle-cannot take on more custom can handle-cannot take on more custom projectsprojects

No credible reference for PragmatistsNo credible reference for Pragmatists

Wait and see lullWait and see lull

Revenue growth ceases-often recedesRevenue growth ceases-often recedes

Funding needs increaseFunding needs increase

Why Pragmatists do not Consider Why Pragmatists do not Consider Visionaries Credible ReferencesVisionaries Credible References

VisionariesVisionaries• AdventurousAdventurous• Early buyersEarly buyers• Think bigThink big• Go it aloneGo it alone• Spend bigSpend big• Think Pragmatists are Think Pragmatists are

pedestrianpedestrian

PragmatistsPragmatists• PrudentPrudent• Wait-and-see attitudeWait-and-see attitude• Manage expectationsManage expectations• Maintain relationshipsMaintain relationships• Spend to budgetSpend to budget• Think Visionaries are Think Visionaries are

dangerousdangerous

Catch 22

Marketing to PragmatistsMarketing to Pragmatists

Trying to cross the chasm without taking a Trying to cross the chasm without taking a niche marketniche market approach is trying to light a approach is trying to light a fire without kindling.fire without kindling.

Sole goal is to secure a beachhead in Sole goal is to secure a beachhead in mainstream market.mainstream market.

Create a pragmatist customer base that is Create a pragmatist customer base that is referenceable, people who can provide referenceable, people who can provide firm with access to other mainstream firm with access to other mainstream prospects.prospects.

Bowling Pin AnalogyBowling Pin Analogy


Provide whole productProvide whole product• Generic ProductGeneric Product• Expected ProductExpected Product• Augmented ProductAugmented Product• Potential ProductPotential Product

Form Form Tactical AlliancesTactical Alliances to develop whole to develop whole productsproducts


Establish strong Establish strong Word of Mouth Word of Mouth (WOM)(WOM)

• Develop critical mass of informed Develop critical mass of informed individuals in small number of segmentsindividuals in small number of segments

• Pragmatist communicate with industry Pragmatist communicate with industry and professional association colleaguesand professional association colleagues


Market LeadershipMarket Leadership

• Pragmatist customers prefer to buy from Pragmatist customers prefer to buy from market leadersmarket leaders

• Whole products grow form market Whole products grow form market leadersleaders

Use “Big Fish-Small Pond” approachUse “Big Fish-Small Pond” approach


Refocus away from selling products Refocus away from selling products toward creating relationshipstoward creating relationships

• Relationships buffer the shock of changeRelationships buffer the shock of change

• Marketing’s first deliverable is a Marketing’s first deliverable is a partnership that can deliver whole partnership that can deliver whole product solutions to the customerproduct solutions to the customer

Pursue Other Pragmatist Pursue Other Pragmatist SegmentsSegments

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The Technology Adoption Lifecycle: Marketing to Mainstream Customers