The Complete Guide to Product

Adoption: from Product Life Cycle

to Customer Decision Journey
Contributed by David Tang on May 27, 2013 in Strategy, Marketing, & Sales

Product Adoption is a compelling and important topic. It affects every single business.

There are numerous whitepapers, frameworks, and discussions focused on Product

Adoption. They discuss various elements, from market conditions to product attributes
to tactical engagement. The purpose of this article isnt to present anything
new. Rather, its an attempt to synthesize various established frameworks from
reputable strategists and businesses to present a comprehensive, holistic look at Product
Adoption.

Lets start at the highest levelthe market.

1. Select the Right Market Segment

At the macro level, we have market forces at play. This concept is captured best 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). By doing this, we can determine the ideal
market segment to go after at each stage of the products lifecycle.
 To use this framework, we need to determine two things:

1. What stage in the Product Life Cycle we are in.

2. What segment on the Consumer Adoption Curve to go after.
Each stage of the Product Life Cycle is typified with a unique set of
characteristics. Likewise, different strategies are best suited for the different
stages. They are as follows:

Introduction. In the initial stage, pricing is critical. We need to address the key
question that drives Pricing Strategy: do we want to penetrate or to skim the
market? Penetrating the market implies stronger consumer adoption, but at the trade
off of higher margins and possibly profits.
Growth. In this stage, the focus shifts to Customer Satisfaction, so that we can build
customer loyalty and drive repeat purchases. As portrayed in the diagram above, we are
now at the brink of breaching the Early Majority market.
Maturity. Depending on the competitive dynamics in the industry, companies will
elect to employ one of three strategies: Maintain, Defend, or Innovate.
Decline. In the final stage of the products lifecycle, we need to make the decision to
focus on innovation or make a calculated exit.
By knowing what phase of the lifecycle we are in, we have 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. They are willing to take
risks, youngest in age, have the highest social class, have great financial liquidity, are
very social and have closest contact to influential sources and interaction with other
innovators.
Early Adopters. This is the second fastest category of individuals who adopt an
innovation. Early Adopters have the highest degree of opinion leadership among the
other adopter categories. They are typically younger in age, have a higher social status,
have more financial lucidity, advanced education, and are more socially forward than
late adopters.
Early Majority. Individuals in this category adopt our product after a varying degree of
time. This time of adoption is significantly longer than the Innovators and Early
Adopters. Early Majority tend to be slower in the adoption process, have above average
social status, have contact with Early Adopters, and seldom hold positions of opinion
leadership or influence.
Late Majority. Late Majority folks will adopt an innovation after the average member
of society. They approach a new product with a high degree of skepticism and only after
the majority of society has adopted the product already. They are also typically skeptical
about an innovation, have below average social status, very little financial lucidity, in
contact with others in late majority and early majority, very little opinion leadership.
Laggards. These guys are the last to adopt. These individuals typically have an aversion
to change and tend to be advanced in age. Laggards typically tend to be focused on
traditions, likely to have lowest social status, lowest financial fluidity, be oldest of all
other adopters, in contact with only family and close friends.
Please note the customer group percentages displayed in the image above (e.g. 2.5% for
Innovators) are merely illustrative. These percentages are only accurate in the case of a
normal distribution and thus do not apply to all situations.

Thorough Product Life Cycle analysis provides us with the backbone to our overall
product marketing strategy.

The drawback of Product Life Cycle is that it is only a market-focused framework. It

doesnt address other critical drivers to adoption, such as the Product itself
and Consumer Psychology.

You may have your overarching marking mix right, but if you fail at the tactical and
execution level, your product will fail.

2. Architect the Right Product

What product attributes drive rapid market diffusion and consumer adoption? Tough
question.

But, good thing we have the Rogers Five Factors framework. Credit goes to Everett
Rogers, who also created the Consumer Adoption Curve.
 Rogers Five Factors proposes there are 5 product-based factors that drive adoption.

Relative Advantage. This is the degree to which our new product is better than the
incumbent. This advantage can be non-economic (e.g. social status, prestige). The
greater the relative advantage, the faster the adoption.
Compatibility. This factor accounts for the degree to which our product is consistent
with the customers existing values and experiences. The greater the compatibility, the
faster the adoption.
Complexity. This is the degree to which our product is difficult to understand and
use. The primary way to overcome complexity is education, but it is important to assess
how willing the customer is to be educated. The greater the complexity, the slower the
adoption.
Trialability. This factor measures the degree to which our product can be
experimented with on a limited basis. This factor is most important when our product is
in the early stage of its lifecyclewhen uncertainty about the products benefits are at its
highest. The greater the trialability, the faster the adoption.
Observability. This is the degree to which potential customers can see others using
our product. For instance, highly observable products include cars and cell
phones. Difficult to observe products include medicines and home appliances. Many
companies leverage social media marketingand specifically target influencersto
increase their observability factor. The greater the observability, the faster the adoption.
Lets walk through an example of this analysis. Look at the telephone. Every home has a
phone. Its something we take for granted, something thats necessary part of our daily
 lives, something we cant imagine living without. 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 wasnt until the 1980s
that the telephone reached 90% of US households.

Why was the adoption rate so exceedingly slow for this wonderful, useful invention?

A look at the Five Factors sheds some light. The Relative Advantage for the phone was
low when it was introduced. It was expensiveboth installation and ongoing fees were
highand you had few people you could call. It was also highly incompatible with the
norms of the time. The idea of speaking into a metal box was foreign and
frightening. The technology used in the phone was incredibly Complex and difficult to
understand. People wondered, can it transmit diseases? Can I get electrocuted? Does it
only speak English? Trialability was lowonly the very wealthy and businesses had
telephones installed. In fact, in its early years, the only factor the telephone had going
for it was Observability, since people could the telephone wire running into a house.
3. Understand the Customer
If you are targeting the right market with the right marketing mix, have a compelling
product that fosters adoption, the third essential element to analyze is the
customer. What makes the customer tick? Rogers Five Factors touched a bit on this
already, but let us take a deeper look into Consumer Psychology.

In my last article (Why People Wont Buy Your Product Even Though Its Awesome), we
discussed three key principles of behavioral economics that drive consumer adoption:
Losses Loom Larger than Gains
Reference Points Matter
The Endowment Effect
You can read that discussion here.
4. Complete the Customer Journey
In most cases, the product youre selling is not an impulse purchase. The path to
purchase is a long processits a journey that can take from several days to several
months. This journey is captured in a framework developed by McKinsey & Co called the
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 the customers purchase and loyalty.
 These phases along the customers journey are:

Initial Consideration. When the customer first conceives the notion of buying a
product, she will develop an initial set of brands to consider buying. Brands in the
initial-consideration set are three times more likely to be purchased than brands that
arent in it. This means that Brand Awareness is vital. In this phase, we should focus on
push marketing.
Active Evaluation. In the evaluation phase, the customer is seeking information and
shopping around to make an informed purchase decision. She will ask for
recommendations from friends and family, read reviews online, go to the store to test out
products, and so forth. This phase empowers both the customer and the company. How
are companies empowered? Companies have the opportunity to enter the consideration
setand even force out companies in the Initial Consideration Set. Big brands can no
longer take their position for granted. With increased online and social presences,
companies are increasing the number of touch points with the customerthus
increasing their influence over the customers purchase decision in the Active Evaluation
phase.
Moment of Purchase. This is the point in the time when the customer goes to the
retailer and makes the purchase. Even at stage of the journey, companies can still
influence the purchase. This is done through in-store marketing and influence of store
salesmen.
Post-purchase Experience. After the purchase, the customer builds expectations
based on her experience that will impact her next purchase journey. This creates the
circular nature of the journey. In this phase, our goal is to foster customer loyalty, which
 will drive repeat purchases and word-of-mouth marketing. Likewise, if the customer is
dissatisfied with the purchase, she will become a negative influence on the purchase
decisions of others. This is not limited to her immediate circle of friends and family
either. For instance, she can post a negative review on a prominent website, which will
be read by countless potential customers in the Active Evaluation stage.
If our goal is to reach an emerging market, there are certain nuances that should be
highlighted and understood. Though the overarching process is the same, the emphasis
in marketing is different when comparing a customer in an emerging market versus a
customer in an established market. For instance, in an established market, customers
often rely on online reviews when making purchase decisions. In emerging markets,
online sites are not yet trusted by the customer. Learn more about this topic in this
article: Craft a Successful Strategy for Emerging Markets.
5. Maximize the Online Experience
The Internet is becoming more and more crucial in the Customers 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 offline store circular.
Referral. This category refers to external websites that refer customers to your
website.
Direct. This refers to your own website. It encompasses the customers who go directly
to your website.
Here is the typical flow of online interaction with the customer through her journey. At
the start, the goal is to create Brand Awareness. This is typically achieved through
investments in paid advertisements. As the customer begins to actively evaluate her
various product choices, Social and Email begin to play a more important role. Through
social media, companies can directly engage and influence customers. Email marketing
is an effective method of building rapport with a customer. Once a customer has
subscribed to our newsletter, we can send regular newsletters to constantly remind her
of our company and products. The customers that are most likely to make a purchase
are Referral and Direct visitors. Afterwards, in the post-purchase phase, Social and
Email continue to play important roles in nurturing that customer bond.

Of course, the relationship between the touch point and decision journey varies by
industry and varies by geography. Google created a useful tool that captures these
differences: 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. Architect the Right Product;
3. Understand the Customer;
4. Complete the Customer Journey; and
5. Maximize the Online Experience.
Proper analysis involves both strategic and tactical planningand ties all efforts and
thinking together. As Sun Tzu proclaimed: