Copyright © 2010 John Wiley & Sons, Inc. 15-1

Why is the marketing of technology

innovation different from traditional

marketing?

The two components of innovation

marketing – diffusion and adoption

How do different types of customers adopt

at different rates?

Based on these frameworks, how do I

develop a marketing plan to stimulate

customer adoption of new solutions?

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Innovation is the creation of new and better:

effective products,

processes,

services,

technologies, or

business models

That are accepted by markets, governments, and

society

Not the same as invention or improvement 3

1. There is a natural tendency for organizations to keep

doing what they’re doing and resist changes. In the

absence of a force, they will continue to do what

they’ve always done.

2. Larger organizations require more force to change

what they are doing than smaller organizations.

3. For every force there is a reaction force that is equal in

size, but opposite in direction. When someone exerts a

force on an organization, he or she gets pushed

back in the opposite direction equally hard.

4

Persuading a customer, or user, to adopt your

innovation requires them to:

switch from using an existing product / service

adopt an entirely new product or service

Changing behaviours means motivating customers, or

users, to change – how do you motivate them?

2

5

Need to inform, by understanding diffusion

Need to compel use, by understanding motivation

First - create a compelling value proposition – this drives

both

Embed a communication strategy

Maximize value and minimize perceived risks

(uncertainties)

Understanding first users and predict their behaviours

and decisions

Identify how early adopters will drive future customers

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The diffusion of innovation looks at the spread of

information about an innovation (or new idea)

throughout a community or user base

Innovation adoption looks at what motivates an

individual to actually adopt an innovation

Diffusion is about understanding how ideas are

communicated - what influences speed and geography

Adoption is about understanding how to persuade use –

what influences individual decisions

Stimulating customer adoption requires understanding

all three7

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Awareness - exposed to innovation through diffusion

Interest - seeks additional information about it

Evaluation – apply to present / future situation, to make

decision to try

Trial – uses the innovation for intended purpose

Adoption - decides to continue with full use

Rogers (1995)

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Understand how information about a new idea

or solution is communicated:

What is communicated and who with

Which channels are used

How the information is received

What motivates people to share information

The newness of an idea gives diffusion its special

character and ensures a degree of uncertainty

Uncertainty is reduced through information that

explains cause-effect relationships9

Understand how the innovation offers a relative

advantage over existing technologies)

Show how compatible the innovation is with

existing uses

Reduce the complexity (perceived degree of

difficulty)

Enable trialability (through allowing

experimentation)

Show observability (results visible to others)

10

11

Individual personalities segment markets

Innovativeness degree to which an individual is

relatively earlier in adopting an innovation

Risk taking link to personality profile and incentives

within organization

Novelty seeking – willing to experiment

Leadership and community

Understanding these items will focus on first, and

second, customers

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Market Uncertainty

Ambiguity about type and extent of customer needs

Consumer fear, uncertainty and doubt (FUD) including

standards

Technology uncertainty

Not knowing if company can deliver on promise

Whether innovation will function as promised

Uncertainty over timetables and obsolescence

Competitive volatility

Changes in competitors, offerings, strategies

Uncertainty over “the rules of the game”

Uncertainty over “product form” competition

12

The driving force for company growth will come from

innovation (greater value added)

This means launching new products and services that

are adopted by customers

Diffusion is critical to make potential users aware of the

innovation

Adoption is critical if we are to turn innovation into a

value added process

We must focus on both to:

Achieve the potential of innovation

Develop strategies to improve innovation outcomes

13

Diffusion is a process where an innovation is

communicated through certain channels over

time among members of a social system:

1. an innovation (perceived as new)

2. is communicated through certain channels

(mechanism and parties involved)

3. over time

4. among members of a social system

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Perceived attributes of innovation

Type of innovation decision

Communication channels

Nature of social system

Impact of change agents

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16

Benefits

Impact on performance

Impact on utility

Impact on reputation

Costs

Initial costs

Long-term costs

Increased risks (uncertainties)

This is linked to the value proposition

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Two factors influence the decision

Whether the decision is made freely and

implemented voluntarily.

Who makes the decision (where in the organization)

Three types of innovation decision

Optional Innovation-Decision made by an individual

who is in some way distinguished from others.

Collective Innovation-Decision made collectively by

all participants.

Authority Innovation-Decision made for the entire

social system by individuals in positions of influence

or power.17

Means by which messages get from one individual to

another

Nature of the information-exchange relation

determines the conditions under which source will/will

not transmit innovation to receiver and transfer effect

Individuals do not evaluate innovations on the basis of

a scientific assessment of its consequences – rather

depend on subjective peer assessment.

Understanding how innovation information is dispersed

is critical to success

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The culture of the organization

The external pressure that drives innovation

Communication activities

Community leadership

The network (Metcalfe) effect

Effect of role models and opinion leaders

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Most innovative member of a system

perceived as deviant from social system

Those that influence change are not

always who you expect

In the world of technological innovation,

these opinion leaders may be in a variety

of places, from institutions, to social

bloggers

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20Copyright © 2010 John Wiley & Sons, Inc. 20

2121

Innovators

Technology Enthusiasts

Early Adopters

Visionaries

Late Majority

Conservatives

Early Majority

Pragmatists

Laggards

Skeptics

{ { { { {

Th

e C

hasm

!

34% 34% 16%2.5% 13.5%

2222Geoffrey Moore Crossing the Chasm, 1991

Innovators appreciate technology for its own sake

Motivated by idea of being a change agent

Will tolerate initial glitches

Will develop make-shift solutions

Willing to alpha/beta test and work with technical personnel in compensation with lower pricing

Early Adopters revolutionize their industry

Attracted by high-risk/high-reward projects

Not necessarily very price sensitive

Demand customized solutions and intensive tech support

Opinion leaders, change agents

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Early majority comfortable with evolutionary changes

Risk aversion to disruptions in their operations

Want proven applications, reliable service

Seek the convenient “whole product” design

Buy only with a reference from a trusted colleague

Late majority are risk averse, technology shy

Very price sensitive

Require completely pre-assembled, bullet-proof (reliable performance) solutions

Motivated by need to keep up with competitors

Rely on single, trusted advisor

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Gap between Visionaries and Pragmatists

Visionary market saturated, mainstream not ready to buy

Visionary marketing not effective with pragmatists

Limit to number of visionaries than can be handled

Consequences for marketing to pragmatists

Assume responsibility for complete, end-to-end solution

Customer services vital (seeking the useful applications)

Focus on best solution possible (rather than best possible

solution)

Simplify complex product features 2525

Relative advantage

Understand customer perception of cost/benefit

Compatibility

Educate customers to overcome concerns and

embed migration path

Complexity

Simplify the user experience to facilitate use

Trialability

Design products that are standalone/ easy to trial

Observability/visibility

Identify how to demonstrate performance 2626

Build a communication strategy (initial and

secondary)

Foster chasm crossing

Provide compelling reasons for adoption, - overcome

FUD through educating users about benefits and use

Understand who is likely to be an early adopter and

how they differ from the mainstream market

Choose initial market segment wisely

Focus on understanding the adoption decision

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Problem

Recognition

Information

Search

Evaluate

Alternatives

Purchase

Decision

Post-purchase

Evaluation

Pain killer vs

vitamin

Customer vs

employee vs

government

Active search,

vs reactive

searchRelative

importance

Consequence of

decision vs non-

decision

Existing

relationships

Industry sources

WOM

Existing

customers

Standards or

norms

Endorsements

Direct

competition

Indirect

competition

Do nothing

Compete on

price

Compete on

value

Compete on

quality/service

Buy vs lease

Pay for

performance

Product or

service

Internal or

external support

Implementation

and training

Timing

Measure

performance

Re-examine

assumptions

Evaluate

decision process

Determine

satisfaction

Follow up – (add

additional units)

Recommend

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Degree of need

Including competitor pressures

Anticipated utility

Pain killer vs vitamin, value proposition

Characteristics of market segment

Used to adoption of new technologies

Supply chain issues

Where the decision is made2929

Parts Suppliers Car Manufacturers Car

Dealers

Customers

- raw material

- components

- production equip.

- services

-personal users (features and benefits)

-business use (fleets, etc.)

- legislation

- automation tech.

- materials

- mrp systems

- retail technology

- service technology

- crm systems

- business models

Each of theses stages has different decision processes Changing buyer decisions in automotive manufacturers quite

different from changing buyer behavior of users

Integral technology a different challenge than after market

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New medical treatment improves patient outcomes

What complex issues influence the decision to adopt

How are benefits quantified?

Are there just patient benefits?

What changes required to dispense product?

Who will pay:

Insurance companies

Doctors

Patients

Hospitals

Employers

3131

Identify initial market segment that is most likely to

become an early customer

Understand the value proposition for those customers as

well as the barriers to adoption

Develop a diffusion/communication strategy to address

that market segment

Make it easy for Trialability, and Observability (for

example with a new business model)

Use feedback and recommendations from first customers

to drive further adoption

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Consider different market segments (i.e. applications

Consider different types of customers in those segments

Prioritize based on need, speed of decision making and

referenceability

Only pursue a limited number of early adopters (to conserve

resources)

Need to consider how each option influences long term viability :

How long will it take to get the early adopters on board, and how fast will

they influence the mainstream?

What is the size of the initial market, and the mainstream market?

Are there available partners who might influence rate of adoption?

What are the financial implications of pursuing a specific market

segment? (Too fast maybe worse than too slow)3333

Identify pain vs gain

Find ways to measure improvement in performance

Understand decision process and barrier to change

Understand what motivates behaviors within organization

Develop ways to manage uncertainties and mitigate risks

Identify how value is perceived in different parts of

organization

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How will you make potential early adopters aware of

your solution?

How will you motivate them to adopt?

How will you lower the costs (and risks) of adoption?

How will you persuade them benefits exceed costs?

How do you persuade them that your benefits are

greater than the alternatives?

How will you make early adopters your best sales

people?3535

The challenges of stimulating adoption are quite different

from traditional marketing

Need to understand:

Diffusion of information

Adoption decisions

Recognize that different market segments look for

different reasons to adopt

Be prepared to change and adapt your strategy, if the

first one does not work, or when you enter a new

segment

Thank you

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