Product Life Cycle

Companies often state their marketing is aimed at Innovators or Early Adopters. Rarely do they say their marketing is aimed at the Early or Late Majority or Laggards. These are the 5 phases of a product life cycle and are divided into percentages.

Innovators represent the first 2.5% of those who will adopt the product or service. Innovators are obsessive about trying new products and are not particularly concerned about cost, ease of use or reliability. They can afford a higher standard of living than average and view experiencing new products as the essential education which keeps them ahead of the game. Such people are often leaders, are focused, and are less sympathetic to those who do not share the same aspirations or views as they do.

Early Adopters represent the next 13.5% of purchasers who will adopt the product. They are less likely to purchase on a whim and more likely to seek other opinions before committing to purchase. Often, they will not purchase until the press have written reports on the product they are considering adopting. They will be concerned with cost of ownership, reliability, return on investment etc. Whilst Early Adopters will be opinion leaders and peer group leaders, they will rarely be as single minded as Innovators.

Early Adopters are critical to the long term success of a product or service. In the past, many companies have considered the important thing is to be first in the market. But the companies that succeed are those who have a successful strategy for Early Adopters.

The Early Majority represent the next 34% to adopt. They will not adopt until the press have written reports about people or companies who have used the product or service. They will be impressed with case studies and want to speak to reference sites.

Often, the Early Majority will not purchase a new product until another company has entered the market with a similar product so that a comparison can be made and, perhaps, some horse trading can be done on price. In the case of components and chips, an Early Majority purchaser will not purchase until the product can be second source’d. The Early Majority are important for long term success and profitability as they represent the start of the next 84% of the market.

The Late Majority are those who are sceptical and only adopt the product after their friends and colleagues have adopted the product and can report the benefits in a personalised way. It may be that they purchase when they have no choice but to purchase (or be left behind by their peer groups).

Laggards are those people who buy products when they are so old they have been superseded and are thus available at tremendous price savings. They take comfort from the fact that everyone else has got the product and therefore understand it well and they can easily get assistance in using the product, anyone can help. Laggards like second hand Ford Sierra’s because they are cheap to run, you can buy spares anywhere and anyone can fix them.

Innovators are usually animated and energetic. In business they are more concerned about starting things than the attention to detail to sustain the success of a product or service. Because they like new ideas, are so keen, energetic and enthusiastic, they tend to be good at winning sales. However, they are not interested in whether the system sold will actually do what the customer wants at the mundane level! So whilst they may start companies and enjoy success during the Innovator and Early Adopter stages of growth, they may not adapt to managing the latter stages of the product life cycle or adapt the profile of the company to sell products which become established.

Innovators build companies based on a gap in the market fulfilled by a new product. They may like the product so much, that they never seek replacement products to sustain the company. As profit margins decline so the company declines.

Spend some time looking at the people employed by your company and see if you can identify the Innovators, Early Adopters, Early Majority, Late Majority and Laggards.

In my experience, successful Vars have the Innovators looking at new products and developing the products and services to be sold by their company. They are often the product leaders. The Early Adopters are usually in senior management and understand what the Innovators are trying to achieve. They act as a moderating force, keeping development on track and within budget, they are the ones who ensure established products are managed well so the company remains profitable, producing the cash necessary to develop new products and services. They ensure the company’s stability.

The Early Majority are key employees who know much about the company and the way things are done. They take care of the routine and much of the administration and mundane work, leaving the Innovators and Early Adopters free to do their thing. The Late Majority are the plodders whilst the Laggards take care of deliveries, premises, vehicles, so on and so forth.

Understanding the adoption process of your target market enables you to determine your pricing, and plan your marketing communications. Understanding where in the life cycle each of your products is, helps you manage your portfolio of products, so you always have new and profitable ps, or they do not have the time.

 
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