A Holistic Look at Product Adoption

Dave Tang
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Dave Tang

David Tang is the founder of Flevy.com, the marketplace for premium business documents (business frameworks, presentation templates, financial models, etc.).By "premium," we mean our documents are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, Bain, Accenture, BCG, and Deloitte.These documents are authored by senior executives and consultants who have more than 20 years of experience.

Prior to Flevy, David worked as a management consultant for 8 years. Domestic and international (EMEA and APAC) project experience. Has worked with clients across industries of Media & Entertainment, Telecommunications, Consumer Products, High-Tech, and Life Sciences.
Dave Tang
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The core to Corporate Marketing is to drive Product Adoption.  How do we do it?  Product Adoption is an art and a science.  It is a compelling topic that has been studied by numerous consulting firms, strategists, and business academics.

In fact, countless whitepapers, frameworks, and research focused on Product Adoption have been published by various business institutions.  In this article we take a look on various established frameworks to present a comprehensive, holistic look at Product Adoption.

 

Let’s begin at the highest level: The market.

 

1. Select the Right Market Segment

At the macro level, we have market forces at play.  This concept is best captured by the Product Life Cycle.  The essence of this framework is that a product will go through 4 stages of development from creation to obsolescence. The Product Life Cycle is often mapped against the Consumer Adoption Curve, one of the best known marketing frameworks.  This lets us determine the ideal market segment to pursue at each stage of the product’s lifecycle.

 

To use this framework, we need to determine two things:

  1. Which stage of the Product Life Cycle are we are in?
  2. Which segment on the Consumer Adoption Curve to pursue?

Each stage of the Product Life Cycle has a unique set of characteristics.  Likewise, different strategies are best suited for the different stages as shown here:

  • Introduction.  At the initial stage, pricing is critical.
  • Growth. At this stage, the focus shifts to Customer Satisfaction. Here, we can build customer loyalty and drive repeat purchases.
  • Maturity.  Depending on the industry’s competitive dynamics, companies will employ one of three strategies: Maintain, Defend, or Innovate.
  • Decline. At the final stage, we need to decide whether to focus on innovation or make a calculated exit.

By knowing which phase of the lifecycle we are in, we have successfully identified the general corporate strategy.  We can now also identify the prevailing customer group, as defined by the Consumer Adoption Curve.  There are five distinct customer groups, each characterized by a set of beliefs, motivations, and behaviors:

  • Innovators.  Innovators are the first to adopt a new product.
  • Early Adopters. This is the second fastest category of individuals who adopt an innovation.
  • Early Majority. Individuals in this category adopt our product after a varying degree of time.
  • Late Majority. Late Majority folks will adopt an innovation after the average member of society.
  • Laggards. The last to adopt. These individuals typically have an aversion to change and tend to be advanced in age.

Thorough Product Life Cycle analysis provides us with the backbone of our overall product marketing strategy.  The drawback of Product Life Cycle is that it is only a market-focused framework.  It does not address other critical drivers for adoption, such as the Product, and Consumer Psychology.  You may have an overarching marketing mix, but if you fail at the tactical and execution level, your product will not succeed.

 

2. Build or Design the Right Product

Which product attributes drive rapid market diffusion and consumer adoption?
We can answer this question by 5 product-based factors that drive adoption.

  • Relative Advantage.  How much better is our new product compared to the incumbent company?
  • Compatibility.  How consistent is our product with reference to customers’ existing values and experiences?
  • Complexity.  How easy it it to understand and use our product?
  • Trialability.   The degree to which users can experiment with our product on a limited basis.
  • Observability.  What can potential customers see when others use our product?

 

3. Understand the Customer

If you are targeting the right market with the right marketing mix, make sure you have a compelling product that fosters adoption. The third essential element to analyze is the customer.  To look deeper into Consumer Psychology, read my article three key principles of : Why People Won’t Buy Your Product Even Though It’s Awesome. Here

  • Losses Loom Larger than Gains
  • Reference Points Matter
  • The Endowment Effect

 

4. Complete the Customer Journey

In most cases, the product you are selling is not an impulse purchase.  The path to purchase is a long process, and can be a journey that can take between several days to months.  This journey is captured in a framework developed by McKinsey’ Customer Decision Journey. The Customer Decision Journey proposes that the customer goes through four phases in a cyclical process.    Each phase represents a potential marketing battleground where companies compete for customer’s purchase and loyalty. These phases along the customer’s journey are:

  • Initial Consideration.  When the customer first conceives the notion of buying a product, a few brands will come to mind initially.
  • Active Evaluation.
    In the evaluation phase, the customer is seeking information and shopping around to make an informed purchase decision.
  • Moment of Purchase.  This is the point in the time when the customer goes to the retailer to make a purchase.
  • Post-purchase Experience.  After the purchase, the customer builds expectations based on her experience that will impact his or her next purchase journey.  This creates the cyclical nature of the journey.  In this phase, our goal is to foster customer loyalty. This will drive repeat purchases and word-of-mouth marketing.

 

5. Maximize the Online Experience

The Internet is becoming more and more crucial in the Customer’s Decision Journey.  Because of the Internet, the number of customer touch points has increased significantly. In the online experience, there are 5 categories of customer touch points.  They have varying levels of importance along the path to purchase:

  • Paid.  This category includes paid display and search advertising.
  • Social.  This category refers to interactions with the customer though social media, namely, Facebook, Twitter, LinkedIn, and Youtube.
  • Email.  Email marketing typically takes the form of recurring newsletters.
    Newsletters are essentially the online form of an offline store circular.
  • Referral.  This category refers to external websites that “refer” customers to your website.
  • Direct. This refers to your own website.  It includes the customers who go directly to your website.

 

The relationship between the touch point and decision journey varies by industry, and geography.  Google created a useful tool that captures these differences. Take a look: Customer Journey to Online Purchase.

In summary, Product Adoption is driven by a number of factors. We need to:

  1. Select the Right Market Segment
  2. Build or Design the Right Product
  3. Understand the Customer
  4. Complete the Customer Journey
  5. Maximize the Online Experience.

 

Proper analysis involves both strategic and tactical planning and ties all efforts and thinking together.

Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.

 

As Sun Tzu proclaimed.

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