We can see the axis down here relates to the time cycle of the product, it can be years or monthsThe vertical line here relates to the Percentage of SalesWe can see down here that 2.5% who buy the products are the category Rogers called the innovators, because they adopt it earlier than others.The differentiation between the categorization is based on demographical features, personal characteristics, communication behavior and social relationships.
As we can see in the graph he divided the segments in percentages, 2.5% of the buyers are innovators, the next 13.5% are early adopters, then the next 34% are early majority, then 34 % are late majority, then the last 16% are the laggards.
Geoffry Moore argued that there exists an transition between the early adopters and early majority “the Chasm”, many high technology companies fail to cross this chasm line.He argued that in order for a product to be really deemed succesful, it has to cross the line.Moore’s studies have largely contributed for creating new approaches for marketing high-tech industriesHe argues that once a technology meets the need of the customer, they no longer care about the underlying technology.
Paul Trott, Innovation Management and New Product development 4th Edition, Chapter 2: Innovation Diffusion Theories
Innovation Diffusion Theories
What is meant by diffusion theories? • Theories that try to explain how an innovation is “diffused” spreads in a social system over time.• The adoption of an innovation is part of a wider diffusion process.
Why are we interested in diffusion theories? The Study of how and why consumer buy goods and services falls within the area of consumer buyer behavior, and there many textbooks that deals with the subject in details. The reason is just to introduce the reader to the body of research of how and why some new innovation products are successful and some are not.
Rogers Diffusion Theory Everett Rogers: credited of introducing the diffusion theory to the Business community. He applied his theory to new product innovations in the market He was able to demonstrate different categories of consumers on the basis of relative time of adoption.
Cont. Rogers Diffusion Theory He plotted his theory on the s-curve cumulative basis
Cont. Rogers Diffusion Theory Rogers classified different adopters based on their standard deviation positions from the mean time of innovation He utilized the average and a normal distribution of adopters in order to group them into five categories
Pause for thought Given that internet banking has been available for over ten years do you thinkinternet banking has crossed the ‘chasm’? Isit always just a matter of time and so long as you are patient products will always eventually succeed?
Given that internet banking has been available for over ten years do you think internet banking has crossed the ‘chasm’? No, I don’t think it has crossed the “chasm”, because in my opinion it is still in its early stages, it has more time to expand, in addition to that still it has not been popular because of mistrust that exists among people about doing their business online.
Is it always just a matter of time and so long as youare patient products will always eventually succeed? In theory this may be true or partly true at least but the main problem here of course is that firms and their shareholders do not have unlimited time and require a return on their investment. It is certainly true that many products have taken a long time to be successful. All the electronics goods in Figure 2.4, page 58 show that from launch to 70% penetration can be more than 20 years as is the case for the personal computer.