Monday, October 31, 2011

Innovating for the early majority

Here's an interesting question - one that the folks at P&G are obviously trying to grapple with:  what segments of the customer population is your idea or innovation targeted at?  Traditionally, many firms have segmented customers in terms of geographic location, or age, or educational status.  Over time we've developed far more detailed segmentation capabilities, using more subtle psychographic segmentations.  This customer segmentation allows a firm to create products that appeal to very specific, very targeted customer segments, or at least create marketing messages for me-too products that seem to resonate with specific customer needs.

But customers and their needs aren't stagnant.  Customers change as their needs and awareness changes.  Further, a customer may exist in one of several psychographic or demographic segments, or their needs may abruptly change - moving to a new location, taking a new job, getting married and so forth.  All of these "life events" may suggest a change in segmentation.  Further, as Geoffrey Moore pointed out in Crossing the Chasm, beyond demographic and psychographic segmentation, customers also exist in another spectrum - how eager they are to adopt new technologies.  These segments range from very early adopters who are willing to bear some challenges to learn and use a new product, to the late majority and laggards who don't adopt a new product until the vast majority of the population has tried it and in many cases moved on.

So, an interesting question is posed here.  Moore suggests that over 70% of the population is in the early/late majority and laggard segments.  That means, for volume sales or acquisition, we should target the needs and wants of these customers, who, while slow to adopt new things, represent the largest portion of the market.  Many innovators, however, believe that their needs and wants represent the market as a whole and target the early adopters.  Early adopters represent that small segment of the population who eagerly await new technologies and are happy to adjust their thinking and habits to incorporate new technology. 

And, perhaps, we come at last to the true genius of Steve Jobs.  He was able to package his "iProducts" as shiny new technology for the early adopters, while creating products that were simple and accessible for the early/late majority.  With many innovations, the technology and learning hurdles are simply too great for the majority and laggards.  Thus, a good product or service experiences rapid initial adoption which flattens out, as the majority waits for more testing, more documentation, more simplification.  Jobs and Apple squared the circle by creating products that were attractive to the early adopter and easily acquired and used by the early/late majority.  Apple didn't create the iPod or iPhone or iPad for technologists, although the technologists and early adopters snapped them up.  They created them for the high school student, the soccer mom and the grandparent, who would normally be adverse to new products and technologies.

There's a lesson here.  New products and new technologies are always interesting to the small subset of early adopters, but real innovation value happens at the intersection of new technologies that are easy to adopt and use by the majority.  This means that innovation scaled to the majority of the market must be new and interesting, but also combine insights into customer experience and even business model innovation, to smooth the way for fast adoption by the early/late majority.  Far too often innovators focus on product innovation but neglect customer experience innovation and business model innovation, leaving adoption barriers for the early and late majority.

So, the question remains - do you want to innovate for the technology fan boys and get locked into a niche, or do you want to understand the needs and challenges of the early and late majority and create a new product that is easy to adopt and easy to use, which will attract the majority of the market much more quickly.
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posted by Jeffrey Phillips at 5:35 AM


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