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Published on October 2, 2007

Author: Nivedi

Source: authorstream.com

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Diffusion of Innovation:  Diffusion of Innovation Innova- tors Early Adopters Early Majority Late Majority Laggards 2.5% 13.5% 34% 34% 16% Source: Rogers & Shoemaker, Communication of Innovations Slide2:  Product Life Cycle & Diffusion of Innovations 20% Source: Rogers & Shoemaker, Communication of Innovations Early Adopters/Opinion Leaders:  More innovative (& talk about it more) More alike than unlike their followers Demographically similar More technically competent More socially accessible, gregarious More cosmopolitan Higher media exposure Normally OL's for several related product classes (46% of OL's in 2+ product classes, 28% in 3+) Early Adopters/Opinion Leaders Source: Rogers & Shoemaker, Communication of Innovations Stages in the Adoption Process:  Stages in the Adoption Process Source: Everett Rodgers, Diffusion of Innovations 1. Awareness First learns of new product, but unaware of benefits 6. Confirmation Continues to seek confirmation of adoption decision Six Steps in the Consumer Adoption Process Source: Rogers & Shoemaker, Communication of Innovations Factors Affecting Speed of Adoption:  Factors Affecting Speed of Adoption Time Delivered value (relative advantage) financial time satisfaction entertainment, etc. Compatibility with existing values Complexity Trialability Communicability Best new product? What’s the relationship between “value” and “price”? Customer Value:  Customer Value Value = Benefits - Price Technology’s Innovators:  Technology is a central interest in their lives, regardless of its function Are less interested in the application than the technology itself Pursue new technologies aggressively Sometimes buy even before formal marketing has been launched Intrigued by any fundamental technological advance Often buy just for the pleasure of exploring a new device’s properties Technology’s Innovators Source: Geoffrey Moore, Crossing the Chasm So … Why Have These Innovations Not Yet Succeeded? Or taken so long to succeed?:  So … Why Have These Innovations Not Yet Succeeded? Or taken so long to succeed? High definition TV RCA’s video laser disk (LD) VCD , DVD LS120 floppy disks Unix, Linux, Geoworks, OS/2 Electronic, on-line, banking “Artificial Intelligence” (now called “expert systems” and “object-oriented programming”) The Adoption “Chasm”:  The Adoption “Chasm” 13.5% Early Adopters 2.5% Innova- tors The Diffusion of Innovation cycle is not continuous; it is discontin-uous since the different segments buy for different reasons Source: Geoffrey Moore, Crossing the Chasm Technology's Early Adopters:  Are more interested in applications than technologies per se Are people who easily appreciate the benefits of new technology Are ready to buy whenever they find a strong match between application needs & a technological solution Do not rely on well-established references in making buying decisions Are the key to opening up any high-tech market segment Technology's Early Adopters Source: Geoffrey Moore, Crossing the Chasm Visionaries vs Pragmatists:  Visionaries vs Pragmatists Source: Geoffrey Moore, Inside the Tornado Visionaries vs Pragmatists:  Visionaries vs Pragmatists “Wait a minute-- aren’t you supposed to be improving my productivity?” “Great, let’s get together & build the other 20% together.” Pragmatists Visionaries When you have 80% of the solution to their problem Technology’s Early Majority:  Also somewhat interested in technology, but … Driven by a strong sense of practicality Know that many new inventions end up as passing fads Take a “wait & see” attitude toward buying Want to see well-established references before buying A large segment, so winning their business is the key to success Technology’s Early Majority Source: Geoffrey Moore, Crossing the Chasm Technology’s Late Majority:  Share all the concerns of the early majority But also, while the Early Majority is comfortable with technology, the Late Majority is not, so … They wait until the technology is an established standard before buying They want to see lots of support before they buy and tend to buy from well-established companies Technology’s Late Majority Source: Geoffrey Moore, Crossing the Chasm Technology’s Laggards:  Don’t want anything to do with new technology They will buy a technological product only when in is buried inside another product (e.g., microprocessors in cars) They are generally not considered worth pursuing by technology firms Technology’s Laggards Source: Geoffrey Moore, Crossing the Chasm Technology’s Adoption Cycle:  Don’t want anything to do with new technology Will buy a technological product only when buried inside another product They are generally not considered worth pursuing by technology firms Technology’s Adoption Cycle Source: Geoffrey Moore, Crossing the Chasm Share all the concerns of the early majority Not comfortable with technology They buy when the technology an established standard They want lots of support & buy from well-established companies Interested in technology but... Strong sense of practicality Fearful of tech-nology fads “Wait & see” attitude Want well-established references before buying They are the key to success Interested in applica-tions Appreciate benefits of technology Buy when they find a strong match Don’t rely on established references Are a key to penetration Technology a central interest Uninterested in app’n Pursue new tech’s aggressively Buy early Intrigued by any basic advance Buy to explore a device’s properties The “Competitive-positioning Compass”:  The “Competitive-positioning Compass” Supporters Low interest in technology Skeptics High interest in technology Generalists Low under- standing of technology Specialists High under- standing of technology Visionaries Technology Enthusiasts Pragmatists Conservatives Source: Geoffrey Moore, Crossing the Chasm The “Competitive-Positioning Compass”:  The “Competitive-Positioning Compass” Visionaries Technology Enthusiasts Pragmatists Conservatives Product- directed Market- directed Company- directed Technology- directed Developing the early market Crossing the Chasm Developing the mainstream market Supporters Low interest in technology Skeptics High interest in technology Generalists Low under- standing of technology Specialists High under- standing of technology Source: Geoffrey Moore, Crossing the Chasm Source: Geoffrey Moore, Crossing the Chasm The “Competitive-Positioning Compass”:  The “Competitive-Positioning Compass” Generalists Low under- standing of technology Specialists High under- standing of technology Market- directed Technology- directed Architecture Schematics Trial Technology press coverage Guru endorsements Revenue & profits Strategic partners Top tier customers Full product line Business press coverage Financial analyst endorsements Market share 3rd part support Standards certif’n App’ns proliferation Vertical press cov’ge Industry analyst endorsements Visionaries Technology Enthusiasts Pragmatists Conservatives Company- directed The Chasm Benchmarks Product reviews Design wins Initial sales volumes Trade press coverage Visionary endorsements Supporters Low interest in technology Skeptics High interest in technology Product- directed Source: Geoffrey Moore, Crossing the Chasm Crossing the Chasm Requires a Shift in Delivered Values:  Crossing the Chasm Requires a Shift in Delivered Values From Product-Centric Values: Fastest/smallest/ lightest etc product Most elegant “architecture” Product price Unique product functionality Meeting these values is essential to obtain initial market penetration To Market-Centric Values: Largest installed base Most 3rd party supporters De facto standard Cost of ownership Quality of support Meeting these values is essential to cross the chasm Crossing the Chasm Requires a Shift from the Core Product to the Augmented Product:  Benefits Offered Benefits Offered Crossing the Chasm Brand Image, Warranty & Services, Large Installed Base, 3rd Party Support, Low Ownership Cost, Plug & Play, Quick Learning Curve, Add-on Hardware & Software, System Integration, Training & Support, Installation & Debugging, etc. Tangible Product Features Vision of Product Benefits Crossing the Chasm Requires a Shift from the Core Product to the Augmented Product The Technology Adoption Landscape:  The Technology Adoption Landscape Source: Geoffrey Moore, Inside the Tornado Early Market The Bowling Alley Bowling Alley Market Development:  Seg 1 App 1 Seg 1 App 2 Seg 2 App 1 Seg 3 App 1 Seg 2 App 2 Seg 1 App 3 Product Source: Geoffrey Moore, Inside the Tornado Bowling Alley Market Development For many main- stream customers, there is no reason to move to your product. Though you have crossed provided a whole product for one niche, you have yet to prove that your product is generalizable Why not just leap into the tornado? Examples? “Bubble” memory--now in compact flash cards Identronix modules Electronic shelf tags Pagers--doctors, on-call s’people Cellular modems Key Bowling Alley Target Criteria:  Key Bowling Alley Target Criteria Never attack a segment whose current expenditures on your product category is larger than your annual volume You want 40% of the segment’s purchases in the first year Choose a segment that has a compelling reason to buy is not currently well served by any competitor Focus your market development on the end-users, not on the IT department You want to capture the economic buyer The IT dept will resist your product; it is a new paradigm & means extra work for them Source: Geoffrey Moore, Inside the Tornado Rewards from a Bowling Alley Strategy:  Rewards from a Bowling Alley Strategy You can make money now Your priorities are to grow your business, increase profits, & further develop your whole product You can accumulate credits toward being declared a market leader in a future tornado Your name will have become increasingly familiar, building equity in your product category The Case Against a Bowling Alley Strategy:  The Case Against a Bowling Alley Strategy People are in too much of a hurry to execute a bowling alley strategy Companies fall in love with their first niches & forget all about the tornado E.g., pen-based computing, GIS Companies love the service revenues (like training classes) of their current niches Over time, these need to be designed into the product to reduce overall product cost Bowling alley strategies don’t work with consumer markets Consumers like low-cost, commodity-oriented channels, not VARs The Technology Adoption Landscape:  The Technology Adoption Landscape Source: Geoffrey Moore, Inside the Tornado Early Market The Tornado The Bowling Alley The Bowling Alley vs The Tornado:  The Bowling Alley vs The Tornado Bowling Alley Tornado Focus on the economic buyer & the end user Ignore economic buyer & user; focus on infrastructure buyer Principles of Tornado Marketing:  Principles of Tornado Marketing Attack the competition Lose a customer & you lose it for life Expand your distribution channels as fast as possible If you can’t take the order someone else will “Ignore the customer” Don’t customize … ship your product as a commodity Focus shipping your product as quickly & cheaply as possible The Technology Adoption Landscape:  The Technology Adoption Landscape Source: Geoffrey Moore, Inside the Tornado Early Market The Tornado The Bowling Alley Main Street The Tornado vs Main Street:  The Tornado vs Main Street Tornado Main Street Sell to the infrastructure buyer; focus on infrastructure Sell to the end user; gratify their individual needs The Technology Adoption Landscape:  The Technology Adoption Landscape Source: Geoffrey Moore, Inside the Tornado Early Market The Tornado The Bowling Alley Main Street End of Life

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