Rogers’ Five Factors

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Businesses have long been interested in the diffusion and adoption of product innovations. They are interested in understanding how innovations diffuse, so that they can better predict and manage this consumer adoption. A popular framework for this is the Consumer Adoption Lifecycle (or Product Lifecycle), which traces the adoption of a product as it passes through 5 categories of consumers. This is a viewpoint that focuses on people.

This document discusses a product-focused framework, called Rogers’ Five Factors. Developed by Everett Rogers, this framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors:
1. Relative advantage
2. Compatibility
3. Complexity
4. Trialability
5. Observability

This document explains the framework, provides examples, and includes PowerPoint templates that can be leveraged in your own analysis.

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Rogers’ Five Factors

  1. 1. Crowdsourced Business Presentation Design ServiceRogers’ Five FactorsProduct-focused Framework toInnovation AdoptionRogers’ Five Factors is a product-focused framework for analyzing innovationadoption and diffusion. It is often used in conjunction with the people-focusedframework, Consumer Adoption Lifecycle (or Product Lifecycle). This documentexplains Rogers’ Five Factors, provides examples, and templates to be used in yourown analysis. March 3, 2013ORIGINAL PROJECT DETAILShttp://pptlab.com/ppt/Innovation-Diffusion-Rogers-Five-Factors-15
  2. 2. PPT Lab (www.pptlab.com) is the only crowdsourced presentation design service. Get consulting-quality presentations at a fraction of the cost!www.PPTLab.comsupport@pptlab.com Each month, we will create well over 50 slides of for our members. As a member, you will drive what business slides we create by submitting your own presentation projects to our team. All presentations will be created by a team of management consultants and follow the Consulting Presentation Framework.PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 2
  3. 3. Contents  Overview 4  Rogers’ Five Factors 9  Case Example 17  Summary 21  Templates 24PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 3
  4. 4. Contents  Overview  Rogers’ Five Factors  Case Example  Summary  TemplatesPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 4
  5. 5. Rogers’ Five Factors is a product-focused framework for understanding thediffusion and adoption of new productsExecutive Summary Businesses have long been interested in the diffusion and adoption of product innovations. They are interested in understanding how innovations diffuse, so that they can better predict and manage this consumer adoption. A popular framework for this is the Consumer Adoption Lifecycle (or Product Lifecycle), which traces the adoption of a product as it passes through 5 categories of consumers. This is a viewpoint that focuses on people. This document discusses a product-focused framework, called Rogers’ Five Factors. Developed by Everett Rogers, this framework proposes that PARTIAL PREVIEW THIS IS A the rate of innovation diffusion is largely driven by 5 product-based factors: You can download the full document at http://PPTLab.com. 1 RelativePPT Lab is a crowdsourced presentation design service. • advantage 2 Compatibility • 3 Complexity • • 4 Trialability • 5 Observability This document explains the framework, provides examples, and includes PowerPoint templates that can be leveraged in your own analysis.PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 5
  6. 6. There are 2 popular frameworks for understanding consumer adoption— one that focuses on people and one that focuses on the product Production Adoption Lifecycle vs. Rogers’ Five Factors FOCUS ON PEOPLE FOCUS ON PRODUCT VS Product Adoption Lifecycle Rogers’ Five Factors • In the traditional, people-focused approach, innovation • Rogers’ Five Factors is a product-focused approach to adoption starts with the Innovators consumer group; then understanding which product attributes determine the moves to Early Adopters, Early Majority, etc. consumer adoption and innovation diffusion process THIS IS A PARTIALThese factors are intrinsic to the good or service being • Different strategists argue about whether there is a • PREVIEW “chasm” between Early Adopters and the Early Majority offered—the reason one product diffuses rapidly and You can download the full document at http://PPTLab.com. • This framework offers insight into customer another slowly largely can be found in a small handful of segmentation to accelerate the adoption process product characteristics (i.e. Rogers’ Five Factors) PPT Lab is a crowdsourced presentation design service.design to • This framework offers insight into product accelerate consumer adoption Relative Compatibility Advantage Observability Complexity Innovators Trialability Early Chasm Early Late Laggards Adopters Majority MajoritySource: Diffusion of Innovations, Rogers; Crossing the Chasm, MoorePPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 6
  7. 7. The diagram below illustrates the Production Adoption Lifecycle andshows the percentage of consumers that fall into each segmentProduct Adoption Lifecycle market share 50% THIS IS A PARTIAL PREVIEW 25% You can download the full document at http://PPTLab.com. PPT Lab is a crowdsourced presentation design service. Innovators Early Chasm Early Majority Late Majority Laggards time AdoptersPercentage ofConsumers 2.5% 13.5% 34% 34% 16%PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 7
  8. 8. This diagram captures the Rogers’ Five Factors framework Rogers’ Five Factors 1 2 Relative Compatibility Advantage THIS IS A PARTIAL PREVIEW Observability Complexity You can download the full document at http://PPTLab.com. 5 PPT Lab is a crowdsourced presentation design service. 3 Trialability 4 Research suggests 49% to 87% of the variance in the rate of new product adoption can be explained by these five factors.Source: Note on Innovation Diffusion: Rogers’ Five Factors, Harvard Business School PublishingPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 8
  9. 9. Contents  Overview  Rogers’ Five Factors  Case Example  Summary  TemplatesPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 9
  10. 10. The Five Factors that determine innovation diffusion are RelativeAdvantage, Compatibility, Complexity, Trialability, and ObservabilityRogers’ Five Factors – Definitions DEFINITION 1 • The degree to which a product is better than the product it replaces Relative Advantage 2 • The degree to which a product is consistent with existing values and Compatibility experiences THIS IS A PARTIAL PREVIEW 3 You can download •the degreedocument at is difficult to understand and use The full to which a product http://PPTLab.com. Complexity PPT Lab is a crowdsourced presentation design service. 4 • The degree to which a product may be experimented with on a limited basis Trialability 5 • The degree to which product usage and impact are visible to others ObservabilityPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 10
  11. 11. It is critical to realize the simple truth that perceptions matter—it is notwhat is true, but what is perceived to be trueRogers’ Five Factors – Important Considerations Relative Advantage Compatibility Observability Complexity Trialability THIS IS A PARTIAL PREVIEW You can download the thesedocumentis important to In considering full 5 factors, it at http://PPTLab.com. PPT Lab is a crowdsourced these two issues:design service. consider at least presentation 1 Perceptions matter. For instance, when evaluating 2 Innovation is relative to the consumer group. In “relative advantage,” you are really evaluating other words, the product or idea only has to be “relative advantage as perceived” by the potential perceived as new by a given set of people for it be adopter. Therefore, one must manage not only the considered an innovation for that set. For instance, a objective product characteristics, but also those product that is well entrenched in one culture could characteristics as perceived by consumers. be viewed as highly innovative in another culture if it’s perceived as new by them.PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 11
  12. 12. Relative Advantage measures the degree a new Relative Advantage Compatibility product is perceived being better Observability Complexity Trialability Factor 1. Relative Advantage DESCRIPTION EXAMPLES • Relative advantage is the degree to which an innovation is perceived as being better than • The Dvorack keyboard was an attempt to the idea it supersedes streamline the traditional QWERTY keyboard—while offering somewhat faster • It can take many forms: typing speed, the cost of transition to the • Perceived economic benefit (e.g. reduced costs; decrease in time, effort, or dollars) Dvorak keyboard was too great for adoption to successfully take place • Perceived increased or new benefits (e.g. greater productivity, greater efficacy, greater reach) • On the other hand, there are innovations that offer such drastic relative • A combination of the above, in which the perceived net benefit is positive relative to the advantages, they are deemed “no existing alternative THIS IS A PARTIAL PREVIEW brainers” • Non-economic, subject benefit (e.g. social status, prestige) • Andy Grove identifies these products You can download the full document at http://PPTLab.com. • Typically, relative advantage takes the form of increased economic benefit as offering 10x improvements • Clear examples exist in medicine— PPT Lab is a crowdsourced presentation design service. over heart bypass e.g. angioplasties surgeries; MRIs over traditional X- rays As the Relative Advantage of an innovation increases, the rate of adoption for the innovation also increases.Source: Note on Innovation Diffusion: Rogers’ Five Factors, Harvard Business School PublishingPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 12
  13. 13. Compatibility measures the degree a new product is Relative Advantage Compatibility consistent with existing ideas and beliefs Observability Complexity Trialability Factor 2. Compatibility DESCRIPTION EXAMPLES • Compatibility is the degree in which an innovation is perceived as consistent with existing • People expect that fine wines will be in values and experiences of the potential adopter sealed cork stoppers, despite the fact that about 10% of fine wines are spoiled due • This compatibility can be with any of the following: to faulty corks • Previously introduced ideas • As a result, there is limited • Values and beliefs acceptance of the twist-off metal cap, despite it reducing such spoilage • One’s needs • When concentrated liquid laundry • In short, being compatible with existing concepts is less threatening, seems more familiar, detergent (requiring half the dosage) THIS IS A PARTIAL PREVIEW and fits more closely with a person’s impressions of the way things ought to be came out, consumers were using more • It is important to note that we might want to avoid compatibility with previous innovations dosage than necessary that failed You can download the full document at http://PPTLab.com. their previous • They were locked into method of measuring laundry PPT Lab is a crowdsourced presentation design service. confident that the detergent and not newer product could be twice as effective As the Compatibility of an innovation with existing concepts, habits, and experiences increases, the rate of adoption also increases.Source: Note on Innovation Diffusion: Rogers’ Five Factors, Harvard Business School PublishingPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 13
  14. 14. Contents  Overview  Rogers’ Five Factors  Case Example  Summary  TemplatesPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 14
  15. 15. The telephone is one of the most revolutionary, impactful, and pervasive inventions—yet its adoption was incredibly slow… Case Study – Telephone Adoption (1 of 3) The telephone is an innovation that we now take for granted. It is an integral and necessary part of our daily lives. One would assume it was adopted very quickly. Yet, the reality proves otherwise. The telephone was invented by Alexander Graham Bell in 1876. By 1900, 25 years later, it would only be found in 10% of the households in the US. By 1935, 60 years after its invention, it could only be found in 30% of households. In fact, it wasn’t until the 1980s that the telephone reached 90% of US households. Why was the rate adoption for the telephone so slow? THIS IS A PARTIAL PREVIEW You can download the full document at http://PPTLab.com. 1 PPT Lab is a crowdsourcedservice today is inexpensive, in its service. • While telephone presentation design early years, the installation and usage fees made it unaffordable for most Relative Advantage Americans • While the benefits of calling people in other parts of the country are now taken for granted, people tended to interact mostly with others in the same town in the late 1800s and early 1900s • Furthermore, because so few people owned telephones, there was not enough people to call—it had not reached any critical mass of users • The net effect is the relative advantage of the telephone in 1900 was far from obviousSource: Note on Innovation Diffusion: Rogers’ Five Factors, Harvard Business School PublishingPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 15
  16. 16. … we see in its early years, it had no/minimal Relative Advantage, low Compatibility, high perceived Complexity, and very limited Trialability… Case Study – Telephone Adoption (2 of 3) 2 • Today, the telephone seems highly compatible with our values, norms, and ideas Compatibility • However, in the late 1800s, the thought of a voice emanating out of a metal box was unsettling—even frightening • Furthermore, the already adopted telegraph had the distinct advantage of a permanent “hard copy” of a loved one’s or client’s words THIS IS A PARTIAL PREVIEW 3 • While the telephone was simple to use, it was incredibly You can downloadcomplex to understand the full document at http://PPTLab.com. Complexity is a crowdsourced presentation design service. PPT Lab • The result was a set of concerns that could hinder adoption— e.g. Can it transmit diseases? Can I get electrocuted? Does it speak my language? 4 • Originally, the telephone was limited to the very wealthy and to high-end businesses Trialability • The typical consumer knew few people who owned a telephone, thus limiting the ability to test and learn about the telephoneSource: Note on Innovation Diffusion: Rogers’ Five Factors, Harvard Business School PublishingPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 16
  17. 17. … thus, it makes sense why the telephone took so long to be adopted by the majority of the US market Case Study – Telephone Adoption (3 of 3) 5 • Observability was fairly high for the telephone Observability • Since one needed to run a very visible wire to his or her home or place of business, it was very easy to identify who had access to a telephone and who did not THIS IS A PARTIAL PREVIEW You can download the full document at http://PPTLab.com. PPT Lab is a crowdsourced presentation design service. Given the analysis above, it is clear why the telephone was so slow to be adopted and diffuse—only with time, did the telephone improve on each of these factors.Source: Note on Innovation Diffusion: Rogers’ Five Factors, Harvard Business School PublishingPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 17
  18. 18. Contents  Overview  Rogers’ Five Factors  Case Example  Summary  TemplatesPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 18
  19. 19. For a holistic analysis to innovation adoption and diffusion, it is best to utilize both the people-focused and product-focused frameworks Holistic Approach to Adoption Rogers’ Five Factors Consumer Adoption Lifecycle THIS IS A PARTIAL PREVIEW • By focusing on product differences, we can better • Once You can download the full documentthe perceived characteristics ofdifferencesare at http://PPTLab.com. to understand and possibly enhance the appeal of a product determined, we can focus on people a product PPT Lab is a crowdsourced presentation design service. —independent of the consumers doing the adopting manage the adoption process • We achieve this by increasing its perceived relative • By knowing which consumers are predisposed to adopt advantage, increasing its perceived compatibility relative early and which are predisposed to lag the masses, a to values and norms, decreasing its perceived complexity, company can manage its limited resources to consumer increasing its trialability, and increasing its observability segments that will be most likely to adopt • At the very lease, we can passively anticipate the rate of adoption Rogers’ Five Factors and the Consumer Adoption Lifecycle are complementary tools strategists can use to manage and accelerate product adoption and diffusion.Source: Note on Innovation Diffusion: Rogers’ Five Factors, Harvard Business School PublishingPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 19
  20. 20. The diagram below summarizes how each of the Five Factors relates to product innovation Five Factors Relation to Adoption RELATION TO INNOVATION RELATIONSHIP 1 • As the Relative Advantage of a product increases, the Relative Advantage rate of adoption for the innovation also increases DIRECT 2 • As the Compatibility of a product with existing concepts, Compatibility habits, and experiences increases, the rate of product adoption also increases DIRECT THIS IS A PARTIAL PREVIEW 3 You can downloadAs the perceived complexity ofat innovation increases, • the full document an http://PPTLab.com. Complexity the rate of adoption decreases PPT Lab is a crowdsourced presentation design service. INVERSE 4 • As the trialability of a product increases, the rate of Trialability product adoption also increases DIRECT 5 • The more visible or observable the usage and ouctome of Observability an innovation, the greater the rate of product adoption DIRECTSource: Note on Innovation Diffusion: Rogers’ Five Factors, Harvard Business School PublishingPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 20
  21. 21. Contents  Overview  Rogers’ Five Factors  Case Example  Summary  TemplatesPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 21
  22. 22. HeadlineRogers’ Five Factors – Template STATUS 1 • Filler text Relative Advantage 2 • Filler text Compatibility THIS IS A PARTIAL PREVIEW 3 You can downloadFiller text document at http://PPTLab.com. • the full Complexity PPT Lab is a crowdsourced presentation design service. 4 • Filler text Trialability 5 • Filler text ObservabilityPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 22
  23. 23. HeadlineRogers’ Five Factors – Template (Alternate) 1 2 3 4 5 Relative Compatibility Complexity Trialability Observability Advantage • Filler text • Filler text • Filler text • Filler text • Filler text • Filler text • Filler text • Filler text • Filler text • Filler text • Filler text • Filler text THIS IS •A PARTIAL PREVIEW Filler text • Filler text • Filler text You can download the full document at http://PPTLab.com. PPT Lab is a crowdsourced presentation design service. MEDIUM MEDIUM MEDIUM MEDIUM MEDIUMPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 23
  24. 24. HeadlineRogers’ Five Factors – Template (Alternate) • Filler text • Filler text • Filler text • Filler text • Filler text • Filler text 1 2 Relative Compatibility Advantage THIS IS A PARTIAL PREVIEW You can download the full document at http://PPTLab.com. Observability Complexity PPT Lab is a crowdsourced presentation design service. 5 3• Filler text Trialability• Filler text • Filler text• Filler text 4 • Filler text • Filler text • Filler text • Filler text • Filler textPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 24
  25. 25. HeadlineConsumer Adoption Lifecycle - Template THIS IS A PARTIAL PREVIEW You Innovators can download the full document at http://PPTLab.com. PPT Lab is a crowdsourced presentation design service. Early Chasm Early Majority Late Majority Laggards time Adopters • Filler text • Filler text • Filler text • Filler text • Filler text • Filler text • Filler text • Filler text • Filler textPPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 25
  26. 26. PPT Lab (www.pptlab.com) is the only crowdsourced presentation design service. Get consulting-quality presentations at a fraction of the cost!www.PPTLab.comsupport@pptlab.com Each month, we will create well over 50 slides of for our members. As a member, you will drive what business slides we create by submitting your own presentation projects to our team. All presentations will be created by a team of management consultants and follow the Consulting Presentation Framework.PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 26

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