Marketing is a science rather than gambling with blind trials. Managers should understand its dimensions and analyse it using scientific methods. The first step to marketing is segmentation of targeted market for positioning the product.
We can use different segmentation methods according to our convenience, targeted users and nature of the product; however the most important method is segmentation based on the adoption curve. Adoption curve gives diffusion of innovation in a market with the following segments
Innovator - Innovators are the first to purchase a product and make up 2.5% of all purchases of the product. Innovators purchase the product at the beginning of the life cycle. Sales to innovators are not usually an indication of future sales as innovators simply buy because the product is new.
Early Adopters - Early Adopters make up 13.5% of purchases. This group of purchasers adopts early, but unlike innovators adoption is after careful thought. Early Adopters are usually opinion leaders in their circle, so adoption by this group is crucial for the success of the product.
Early Majority - The Early Majority is a cautious group of purchasers, making up 34% of purchases. They will not buy a product until it has become "socially acceptable". Early adopter purchases are needed for the product to achieve widespread acceptance.
Late Majority - Late Majority makes up another 34% of sales and usually purchase the product during the late stages of the product's life cycle. They are more cautious than the early majority and will only buy after the majority of people have purchased the product.
Laggards - Laggards makes up 16% of total sales and usually purchase the product near the end of its life. Some laggards will never purchase a product, Laggards may wait to see if the product will get cheaper and by the time they purchase the product a new version is already on the market.
The graphical representation of these segments is
So when "early majority" starts purchasing, then we can conclude that the product is successful
How to identify segments
The easiest and most common procedure is classify first 2.5% to innovators and the next 13.5% to early adopters and so on. This method may be good for products where brand value is not relevant. but it's not good for products where brand value is high, especially for premium and luxury products. In this context the product manager should identify these segments from markets and sell product to them. Target innovators and early adopters first, the rest will follow them. Again the major task is to identify these segments. The approach can be behavioural segmentation. Segment the market using a psychological approach by asking questions related to buyer's behavior, their purchasing habits in similar products, etc. a comprehensive procedure to be adopted, then sell to them. It’s very difficult to execute. However, this method should be followed in luxury products.
The practical method to analyse segmentation in premium product is, introduce the product and do the feedback survey based on behavior approach, then find out the percentage of innovators and early adopters who are using the product. based on these outcome the product manager can assess in what stage the product is now. If the product move to late majority fast, then the market penetration will be low and product will fail in financial terms. More precisely, if the survey finds that late majority is using the product more or equal to early majority, then the product is in the mature stage of product life cycle and going to die soon!!
Market innovators and early adopters are the influencers of any market, others will follow their footsteps. So every product should pass through these segments when it enters into a market, otherwise it will fail even though the product is innovative
..............add science to art of marketing !!
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