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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
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 lifecycle–when uncertainty about the product’s 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 marketing–and specifically target “influencers”—to increase their observability factor. The greater the observability, the faster the adoption.
Let’s walk through an example of this analysis. Look at the telephone. Up through the late 2000s, every home had a phone. It’s something we take for granted, something that’s necessary part of our daily lives, something we can’t 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 wasn’t 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 expensive–both installation and ongoing fees were high–and 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 low—only 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 see 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.
If you have a great product, but the product adoption is poor, it is imperative to understand some key concepts in behavioral economics. Here are three important principles to be cognizant of.
Principle 1. Losses Loom Larger than Gains
Every new product provides perceived gains and losses for the customer. These gains and losses need not be financial. For example, let’s say you are starting an online grocery store for your municipality. With the promise of groceries delivered to the door, the perceived gains could be convenience, time savings, and effort savings. On the other hand, you are altering the way the customer performs a certain process–buying groceries. This change will translate to perceived losses (i.e. financial and non-financial costs), which can include the inability to handpick produce and meat, delivery fees, and having to be home during the delivery window.
When we look at this objectively, online groceries is a clear superior choice. Convenience, time savings, and effort savings are great value propositions, after all.
However, when the customer evaluates options subjectively, it becomes unclear whether online groceries is still the better choice. In fact, it is likely the customer views online grocery shopping as the poorer choice. This is because losses loom larger than gains.
A consumer has an inherent Consumer Bias. This bias weighs a loss three times that of a benefit. To put it another way, the objective value of a gain needs to exceed the objective value of a loss by three times for the customer to perceive the new product as better than the existing.
What's the solution? One tactic is to apply "the 10X rule."
If losses loom larger than gains, then we need to create a product where the gains greatly dwarf the losses. Create one where the benefits are 10X that of the losses, so that all economic and psychological switching costs are overcome. This is also known as Andy Grove’s 10X Rule. Andy Grove, Intel’s third employee and former CEO, had stated, for widespread adoption, a new product has to offer a 10X improvement over the incumbent product.
Of course, this strategy is easier said than done.
Principle 2. Reference Points Matter
The second principle to understand is different people have different reference points. These reference points matter. The reference point simply refers to the person’s current state of being.
Continuing our online grocer example, the reference point of a typical customer is someone who currently goes to the physical supermarket to pick up groceries. This process may already be part of the customer’s weekly routine. Gains and losses are relative to this state of being.
For two people with different reference points, a gain for one person may be perceived as a loss for the other. To illustrate this concept, let’s look at the price of gas. Assume the average price for a gallon of gas in the US is $3, whereas it’s $10 in the UK. If a US customer came upon a gas station charging $6.50/gallon, she would be furious. If a UK customer came upon the same situation, she would be ecstatic. (Also, note that even though the objective difference is the same for both customers, the US customer’s sentiment would be more affected than that of the UK customer, because losses loom greater than gains.)
The Value Function Illustrates Objective vs. Subjective Values
By understanding your customer’s reference point, you can determine her perceived gains and losses. In most cases, your reference point is different from that of your customer. This is because you have already used and experienced your product, whereas your customer has not. Your product has become part of your state of being. This disparity in judgment is captured in the concept known as the Innovator’s Curse.
What's the solution? One effective strategy is a reference point pivot.
Since reference points dictate how customers perceive gains and losses, it makes sense to seek out customers with favorable reference points. Think about it this way. In one market, your product may have fulfilled the 10X Rule. In another, your same product may be perceived as 10X worse!
During its earlier years, Walmart opened stores only in rural areas to compete against local mom and pops. Compared with these incumbent retailers, Walmart was a clear 10X improvement. If Walmart had started off launching stores in metropolitan areas instead, where large department store chains were already established, Walmart’s growth would have been hindered.
Ideal markets are ones filled with first time buyers. For the first time buyer, her reference point is neutral. She doesn’t have any preconceived biases over existing benefits lost and new costs incurred, because she doesn’t currently use the incumbent solution. Thus, for many products, it is easiest to launch in emerging markets. This is because emerging markets (e.g. BRICS nations) are filled with first time buyers.
Principle 3. Endowment Effect
According to the Endowment Effect, people value items in their possession (i.e. part of their endowment) more than items not in their possession. This is because people are loss averse.
This behavior sheds some light on why losses loom larger than gains. If a customer is already accustomed to an existing product or existing way of doing things, it becomes hard for her to give that up and change–even if the alternative presents greater benefits.
An easy and common method companies leverage to take advantage of this psychological principle is to offer free samples, so the customer gets hooked on their products. Once the customer begins using the product, he or she will appreciate the benefits it offers and is likely to spend money to retain these benefits. This is, in essence, an example of Reference Point Pivot.
Similarly, a popular business model adopted by many Internet SaaS companies is the “freemium” model. In the freemium model, the customer is first presented with a free version of the product. Then, the customer is offered (or forced) to a premium version.
In most cases, the product you’re selling is not an impulse purchase. The path to purchase is a long process–it’s 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 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, 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 aren’t 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 set—and even force out companies in the Initial Consideration Set. Big brands can no longer take their position for granted. In fact, due to this phenomenon, we have seen the successful rise direct-to-consumer startups. A popular influencer or creator with a small team can launch their own brands and compete against established, billion dollar companies. With increased online and social presences, companies are increasing the number of touch points with the customer—thus increasing their influence over the customer’s purchase decision in the Active Evaluation phase.
Moment of Purchase. This is the point in time when the customer goes to the retailer and makes the purchase. Even at this late 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.
For more information on Customer Journey, take a look at these frameworks:
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 through 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 the 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.
Source: Product Lifecycle, Rogers' Five Factors, Psychology of Product Adoption
[Full source materials below]
Click main image to view in full screen.
Please login here to save this document to a list.
All products mature through 5 stages of development. The length of each period varies tremendously. Some products have very short cycles, whereas others can take decades or even centuries to go through the cycle. This framework details a 5-phase approach to proper Product Lifecycle Analysis and draws out key strategic insights at each stage of the lifecycle.
Specific topics covered include the Consumer Adoption Curve, Bass Diffusion Model, Lifecycle-Performance Matrix, Strategic Positioning, among others.
Rogers' Five Factors is a framework for analyzing and understanding the diffusion and adoption of product innovations. Whereas the Product Lifecycle (above) focuses on people, Rogers' Five Factors is focuses on the product. This framework proposes that the rate of innovation diffusion is largely driven by 5 product-based factors.
This document explains the Rogers' Five Factors, provides examples, shows how to use this framework in conjunction with the Production Adoption Lifecycle.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
"Last Sunday morning, I was diligently working on an important presentation for a client and found myself in need of additional content and suitable templates for various types of graphics. Flevy.com proved to be a treasure trove for both content and design at a reasonable price, considering the time I
saved. I encountered a download issue during the ordering process. However, a quick email to Flevy's support team, even on a Sunday (!!!), resulted in assistance within less than an hour, allowing me to download the content I needed. Fantastic job, Flevy! I give 5 stars for both content/price and customer service. Thank you!
"
– M. E., Chief Commercial Officer, International Logistics Service Provider
"[Flevy] produces some great work that has been/continues to be of immense help not only to myself, but as I seek to provide professional services to my clients, it gives me a large "tool box" of resources that are critical to provide them with the quality of service and outcomes they are expecting."
– Royston Knowles, Executive with 50+ Years of Board Level Experience
"FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The
quality of the decks available allows me to punch way above my weight – it's like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.
"
– Roderick Cameron, Founding Partner at SGFE Ltd
"As a consultant requiring up to date and professional material that will be of value and use to my clients, I find Flevy a very reliable resource.
The variety and quality of material available through Flevy offers a very useful and commanding source for information. Using Flevy saves me time, enhances my expertise and ends up being a good decision."
– Dennis Gershowitz, Principal at DG Associates
"Flevy is our 'go to' resource for management material, at an affordable cost. The Flevy library is comprehensive and the content deep, and typically provides a great foundation for us to further develop and tailor our own service offer."
– Chris McCann, Founder at Resilient.World
"If you are looking for great resources to save time with your business presentations, Flevy is truly a value-added resource. Flevy has done all the work for you and we will continue to utilize Flevy as a source to extract up-to-date information and data for our virtual and onsite presentations!"
– Debbi Saffo, President at The NiKhar Group
"Flevy.com has proven to be an invaluable resource library to our Independent Management Consultancy, supporting and enabling us to better serve our enterprise clients.
The value derived from our [FlevyPro] subscription in terms of the business it has helped to gain far exceeds the investment made, making a subscription a no-brainer for any growing consultancy – or in-house strategy team."
– Dean Carlton, Chief Transformation Officer, Global Village Transformations Pty Ltd.
"As an Independent Management Consultant, I find Flevy to add great value as a source of best practices, templates and information on new trends. Flevy has matured and the quality and quantity of the library is excellent. Lastly the price charged is reasonable, creating a win-win value for
the customer, Flevy and the various authors. This is truly a service that benefits the consulting industry and associated clients. Thanks for providing this service.
Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: A boutique hotel chain operating in the competitive leisure and hospitality sector is struggling to optimize its pricing strategy amidst fluctuating demand and intense competition.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Scenario: The organization, a direct-to-consumer fitness apparel company, is grappling with the challenge of setting prices in a highly competitive market.
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
Integrating Customer Journey Mapping with corporate culture promotes Organizational Change and Customer-Centric Innovation by aligning Strategy, improving Operational Efficiency, and driving employee engagement towards customer satisfaction and business growth. [Read full explanation]
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
The AIDA model guides marketing strategies by structuring consumer engagement through Attention, Interest, Desire, and Action, ultimately driving sales and brand loyalty. [Read full explanation]
The growing emphasis on sustainability is reshaping global pricing strategies, driven by consumer preferences, regulatory pressures, and sustainability costs, leading to higher-priced sustainable products and innovative pricing models across industries. [Read full explanation]
Click main image to view in full screen.
Please login here to save this document to a list.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
"Flevy is our 'go to' resource for management material, at an affordable cost. The Flevy library is comprehensive and the content deep, and typically provides a great foundation for us to further develop and tailor our own service offer."
– Chris McCann, Founder at Resilient.World
"I have found Flevy to be an amazing resource and library of useful presentations for lean sigma, change management and so many other topics. This has reduced the time I need to spend on preparing for my performance consultation. The library is easily accessible and updates are regularly provided. A wealth of great information."
– Cynthia Howard RN, PhD, Executive Coach at Ei Leadership
"As a young consulting firm, requests for input from clients vary and it's sometimes impossible to provide expert solutions across a broad spectrum of requirements. That was before I discovered Flevy.com.
Through subscription to this invaluable site of a plethora of topics that are key and crucial to consulting, I
have been able to exceed expectations and deliver quality advice and solutions to my clients. The quality and expertise of the authors are exemplary and gives me great confidence to use as part of my service offerings.
I highly recommend this company for any consultant wanting to apply international best practice standards in their service offerings.
"
– Nishi Singh, Strategist and MD at NSP Consultants
"My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me
in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.
"
– Bill Branson, Founder at Strategic Business Architects
"FlevyPro provides business frameworks from many of the global giants in management consulting that allow you to provide best in class solutions for your clients."
– David Harris, Managing Director at Futures Strategy
"As a consultant requiring up to date and professional material that will be of value and use to my clients, I find Flevy a very reliable resource.
The variety and quality of material available through Flevy offers a very useful and commanding source for information. Using Flevy saves me time, enhances my expertise and ends up being a good decision."
– Dennis Gershowitz, Principal at DG Associates
"As an Independent Management Consultant, I find Flevy to add great value as a source of best practices, templates and information on new trends. Flevy has matured and the quality and quantity of the library is excellent. Lastly the price charged is reasonable, creating a win-win value for
the customer, Flevy and the various authors. This is truly a service that benefits the consulting industry and associated clients. Thanks for providing this service.
"
– Jim Schoen, Principal at FRC Group
"I have used Flevy services for a number of years and have never, ever been disappointed. As a matter of fact, David and his team continue, time after time, to impress me with their willingness to assist and in the real sense of the word. I have concluded in fact
that it is not at all just a repository of documents/resources but, in the way that David and his team manage the firm, it is like dealing with consultants always ready to assist, advise and direct you to what you really need, and they always get it right.
I am an international hospitality accomplished senior executive who has worked and lived during the past 35 years in 23 countries in 5 continents and I can humbly say that I know what customer service is, trust me.
Aside from the great and professional service that Flevy's team provide, their wide variety of material is of utmost great quality, professionally put together and most current.
Well done Flevy, keep up the great work and I look forward to continue working with you in the future and to recommend you to a variety of colleagues around the world.
"
– Roberto Pelliccia, Senior Executive in International Hospitality
Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: A boutique hotel chain operating in the competitive leisure and hospitality sector is struggling to optimize its pricing strategy amidst fluctuating demand and intense competition.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Scenario: The organization, a direct-to-consumer fitness apparel company, is grappling with the challenge of setting prices in a highly competitive market.
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
Integrating Customer Journey Mapping with corporate culture promotes Organizational Change and Customer-Centric Innovation by aligning Strategy, improving Operational Efficiency, and driving employee engagement towards customer satisfaction and business growth. [Read full explanation]
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
The AIDA model guides marketing strategies by structuring consumer engagement through Attention, Interest, Desire, and Action, ultimately driving sales and brand loyalty. [Read full explanation]
The growing emphasis on sustainability is reshaping global pricing strategies, driven by consumer preferences, regulatory pressures, and sustainability costs, leading to higher-priced sustainable products and innovative pricing models across industries. [Read full explanation]
Click main image to view in full screen.
Please login here to save this document to a list.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
"One of the great discoveries that I have made for my business is the Flevy library of training materials.
As a Lean Transformation Expert, I am always making presentations to clients on a variety of topics: Training, Transformation, Total Productive Maintenance, Culture, Coaching, Tools, Leadership Behavior, etc. Flevy
It is well worth the money to purchase these presentations. Sure, I have the knowledge and information to make my point. It is another thing to create a presentation that captures what I want to say. Flevy has saved me countless hours of preparation time that is much better spent with implementation that will actually save money for my clients.
"
– Ed Kemmerling, Senior Lean Transformation Expert at PMG
"Flevy is our 'go to' resource for management material, at an affordable cost. The Flevy library is comprehensive and the content deep, and typically provides a great foundation for us to further develop and tailor our own service offer."
– Chris McCann, Founder at Resilient.World
"As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."
– Michael Evans, Managing Director at Newport LLC
"The wide selection of frameworks is very useful to me as an independent consultant. In fact, it rivals what I had at my disposal at Big 4 Consulting firms in terms of efficacy and organization."
– Julia T., Consulting Firm Owner (Former Manager at Deloitte and Capgemini)
"I have used Flevy services for a number of years and have never, ever been disappointed. As a matter of fact, David and his team continue, time after time, to impress me with their willingness to assist and in the real sense of the word. I have concluded in fact
that it is not at all just a repository of documents/resources but, in the way that David and his team manage the firm, it is like dealing with consultants always ready to assist, advise and direct you to what you really need, and they always get it right.
I am an international hospitality accomplished senior executive who has worked and lived during the past 35 years in 23 countries in 5 continents and I can humbly say that I know what customer service is, trust me.
Aside from the great and professional service that Flevy's team provide, their wide variety of material is of utmost great quality, professionally put together and most current.
Well done Flevy, keep up the great work and I look forward to continue working with you in the future and to recommend you to a variety of colleagues around the world.
"
– Roberto Pelliccia, Senior Executive in International Hospitality
"Last Sunday morning, I was diligently working on an important presentation for a client and found myself in need of additional content and suitable templates for various types of graphics. Flevy.com proved to be a treasure trove for both content and design at a reasonable price, considering the time I
saved. I encountered a download issue during the ordering process. However, a quick email to Flevy's support team, even on a Sunday (!!!), resulted in assistance within less than an hour, allowing me to download the content I needed. Fantastic job, Flevy! I give 5 stars for both content/price and customer service. Thank you!
"
– M. E., Chief Commercial Officer, International Logistics Service Provider
"FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The
quality of the decks available allows me to punch way above my weight – it's like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.
"
– Roderick Cameron, Founding Partner at SGFE Ltd
"I like your product. I'm frequently designing PowerPoint presentations for my company and your product has given me so many great ideas on the use of charts, layouts, tools, and frameworks. I really think the templates are a valuable asset to the job."
– Roberto Fuentes Martinez, Senior Executive Director at Technology Transformation Advisory
Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: A boutique hotel chain operating in the competitive leisure and hospitality sector is struggling to optimize its pricing strategy amidst fluctuating demand and intense competition.
Scenario: The organization, a direct-to-consumer fitness apparel company, is grappling with the challenge of setting prices in a highly competitive market.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
The AIDA model guides marketing strategies by structuring consumer engagement through Attention, Interest, Desire, and Action, ultimately driving sales and brand loyalty. [Read full explanation]
Integrating Customer Journey Mapping with corporate culture promotes Organizational Change and Customer-Centric Innovation by aligning Strategy, improving Operational Efficiency, and driving employee engagement towards customer satisfaction and business growth. [Read full explanation]
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
The growing emphasis on sustainability is reshaping global pricing strategies, driven by consumer preferences, regulatory pressures, and sustainability costs, leading to higher-priced sustainable products and innovative pricing models across industries. [Read full explanation]
Click main image to view in full screen.
Please login here to save this document to a list.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
"One of the great discoveries that I have made for my business is the Flevy library of training materials.
As a Lean Transformation Expert, I am always making presentations to clients on a variety of topics: Training, Transformation, Total Productive Maintenance, Culture, Coaching, Tools, Leadership Behavior, etc. Flevy
It is well worth the money to purchase these presentations. Sure, I have the knowledge and information to make my point. It is another thing to create a presentation that captures what I want to say. Flevy has saved me countless hours of preparation time that is much better spent with implementation that will actually save money for my clients.
"
– Ed Kemmerling, Senior Lean Transformation Expert at PMG
"As a young consulting firm, requests for input from clients vary and it's sometimes impossible to provide expert solutions across a broad spectrum of requirements. That was before I discovered Flevy.com.
Through subscription to this invaluable site of a plethora of topics that are key and crucial to consulting, I
have been able to exceed expectations and deliver quality advice and solutions to my clients. The quality and expertise of the authors are exemplary and gives me great confidence to use as part of my service offerings.
I highly recommend this company for any consultant wanting to apply international best practice standards in their service offerings.
"
– Nishi Singh, Strategist and MD at NSP Consultants
"If you are looking for great resources to save time with your business presentations, Flevy is truly a value-added resource. Flevy has done all the work for you and we will continue to utilize Flevy as a source to extract up-to-date information and data for our virtual and onsite presentations!"
– Debbi Saffo, President at The NiKhar Group
"Flevy.com has proven to be an invaluable resource library to our Independent Management Consultancy, supporting and enabling us to better serve our enterprise clients.
The value derived from our [FlevyPro] subscription in terms of the business it has helped to gain far exceeds the investment made, making a subscription a no-brainer for any growing consultancy – or in-house strategy team."
– Dean Carlton, Chief Transformation Officer, Global Village Transformations Pty Ltd.
"As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."
– Michael Evans, Managing Director at Newport LLC
"Last Sunday morning, I was diligently working on an important presentation for a client and found myself in need of additional content and suitable templates for various types of graphics. Flevy.com proved to be a treasure trove for both content and design at a reasonable price, considering the time I
saved. I encountered a download issue during the ordering process. However, a quick email to Flevy's support team, even on a Sunday (!!!), resulted in assistance within less than an hour, allowing me to download the content I needed. Fantastic job, Flevy! I give 5 stars for both content/price and customer service. Thank you!
"
– M. E., Chief Commercial Officer, International Logistics Service Provider
"[Flevy] produces some great work that has been/continues to be of immense help not only to myself, but as I seek to provide professional services to my clients, it gives me a large "tool box" of resources that are critical to provide them with the quality of service and outcomes they are expecting."
– Royston Knowles, Executive with 50+ Years of Board Level Experience
"As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor
the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant's toolbox.
"
– Michael Duff, Managing Director at Change Strategy (UK)
Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Scenario: A boutique hotel chain operating in the competitive leisure and hospitality sector is struggling to optimize its pricing strategy amidst fluctuating demand and intense competition.
Scenario: The organization, a direct-to-consumer fitness apparel company, is grappling with the challenge of setting prices in a highly competitive market.
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
The AIDA model guides marketing strategies by structuring consumer engagement through Attention, Interest, Desire, and Action, ultimately driving sales and brand loyalty. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
Integrating Customer Journey Mapping with corporate culture promotes Organizational Change and Customer-Centric Innovation by aligning Strategy, improving Operational Efficiency, and driving employee engagement towards customer satisfaction and business growth. [Read full explanation]
The growing emphasis on sustainability is reshaping global pricing strategies, driven by consumer preferences, regulatory pressures, and sustainability costs, leading to higher-priced sustainable products and innovative pricing models across industries. [Read full explanation]
Click main image to view in full screen.
Please login here to save this document to a list.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
"Flevy is our 'go to' resource for management material, at an affordable cost. The Flevy library is comprehensive and the content deep, and typically provides a great foundation for us to further develop and tailor our own service offer."
– Chris McCann, Founder at Resilient.World
"Flevy is now a part of my business routine. I visit Flevy at least 3 times each month.
Flevy has become my preferred learning source, because what it provides is practical, current, and useful in this era where the business world is being rewritten.
many challenges and there is the need to make the right decisions in a short time, with so much scattered information, we are fortunate to have Flevy. Flevy investigates, selects, and puts at our disposal the best of the best to help us be successful in our work.
"
– Omar Hernán Montes Parra, CEO at Quantum SFE
"As a young consulting firm, requests for input from clients vary and it's sometimes impossible to provide expert solutions across a broad spectrum of requirements. That was before I discovered Flevy.com.
Through subscription to this invaluable site of a plethora of topics that are key and crucial to consulting, I
have been able to exceed expectations and deliver quality advice and solutions to my clients. The quality and expertise of the authors are exemplary and gives me great confidence to use as part of my service offerings.
I highly recommend this company for any consultant wanting to apply international best practice standards in their service offerings.
"
– Nishi Singh, Strategist and MD at NSP Consultants
"FlevyPro provides business frameworks from many of the global giants in management consulting that allow you to provide best in class solutions for your clients."
– David Harris, Managing Director at Futures Strategy
"The wide selection of frameworks is very useful to me as an independent consultant. In fact, it rivals what I had at my disposal at Big 4 Consulting firms in terms of efficacy and organization."
– Julia T., Consulting Firm Owner (Former Manager at Deloitte and Capgemini)
"[Flevy] produces some great work that has been/continues to be of immense help not only to myself, but as I seek to provide professional services to my clients, it gives me a large "tool box" of resources that are critical to provide them with the quality of service and outcomes they are expecting."
– Royston Knowles, Executive with 50+ Years of Board Level Experience
"As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."
– Michael Evans, Managing Director at Newport LLC
"I have found Flevy to be an amazing resource and library of useful presentations for lean sigma, change management and so many other topics. This has reduced the time I need to spend on preparing for my performance consultation. The library is easily accessible and updates are regularly provided. A wealth of great information."
– Cynthia Howard RN, PhD, Executive Coach at Ei Leadership
Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Scenario: A boutique hotel chain operating in the competitive leisure and hospitality sector is struggling to optimize its pricing strategy amidst fluctuating demand and intense competition.
Scenario: The organization, a direct-to-consumer fitness apparel company, is grappling with the challenge of setting prices in a highly competitive market.
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
The AIDA model guides marketing strategies by structuring consumer engagement through Attention, Interest, Desire, and Action, ultimately driving sales and brand loyalty. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
Integrating Customer Journey Mapping with corporate culture promotes Organizational Change and Customer-Centric Innovation by aligning Strategy, improving Operational Efficiency, and driving employee engagement towards customer satisfaction and business growth. [Read full explanation]
The growing emphasis on sustainability is reshaping global pricing strategies, driven by consumer preferences, regulatory pressures, and sustainability costs, leading to higher-priced sustainable products and innovative pricing models across industries. [Read full explanation]
Click main image to view in full screen.
Please login here to save this document to a list.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
"As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."
– Michael Evans, Managing Director at Newport LLC
"As a young consulting firm, requests for input from clients vary and it's sometimes impossible to provide expert solutions across a broad spectrum of requirements. That was before I discovered Flevy.com.
Through subscription to this invaluable site of a plethora of topics that are key and crucial to consulting, I
have been able to exceed expectations and deliver quality advice and solutions to my clients. The quality and expertise of the authors are exemplary and gives me great confidence to use as part of my service offerings.
I highly recommend this company for any consultant wanting to apply international best practice standards in their service offerings.
"
– Nishi Singh, Strategist and MD at NSP Consultants
"Last Sunday morning, I was diligently working on an important presentation for a client and found myself in need of additional content and suitable templates for various types of graphics. Flevy.com proved to be a treasure trove for both content and design at a reasonable price, considering the time I
saved. I encountered a download issue during the ordering process. However, a quick email to Flevy's support team, even on a Sunday (!!!), resulted in assistance within less than an hour, allowing me to download the content I needed. Fantastic job, Flevy! I give 5 stars for both content/price and customer service. Thank you!
"
– M. E., Chief Commercial Officer, International Logistics Service Provider
"I have used FlevyPro for several business applications. It is a great complement to working with expensive consultants. The quality and effectiveness of the tools are of the highest standards."
– Moritz Bernhoerster, Global Sourcing Director at Fortune 500
"Flevy is our 'go to' resource for management material, at an affordable cost. The Flevy library is comprehensive and the content deep, and typically provides a great foundation for us to further develop and tailor our own service offer."
– Chris McCann, Founder at Resilient.World
"My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me
in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.
"
– Bill Branson, Founder at Strategic Business Architects
"As a consultant requiring up to date and professional material that will be of value and use to my clients, I find Flevy a very reliable resource.
The variety and quality of material available through Flevy offers a very useful and commanding source for information. Using Flevy saves me time, enhances my expertise and ends up being a good decision."
– Dennis Gershowitz, Principal at DG Associates
"As an Independent Management Consultant, I find Flevy to add great value as a source of best practices, templates and information on new trends. Flevy has matured and the quality and quantity of the library is excellent. Lastly the price charged is reasonable, creating a win-win value for
the customer, Flevy and the various authors. This is truly a service that benefits the consulting industry and associated clients. Thanks for providing this service.
Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Scenario: A boutique hotel chain operating in the competitive leisure and hospitality sector is struggling to optimize its pricing strategy amidst fluctuating demand and intense competition.
Scenario: The organization, a direct-to-consumer fitness apparel company, is grappling with the challenge of setting prices in a highly competitive market.
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
The AIDA model guides marketing strategies by structuring consumer engagement through Attention, Interest, Desire, and Action, ultimately driving sales and brand loyalty. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
Integrating Customer Journey Mapping with corporate culture promotes Organizational Change and Customer-Centric Innovation by aligning Strategy, improving Operational Efficiency, and driving employee engagement towards customer satisfaction and business growth. [Read full explanation]
White labeling allows organizations to sell externally produced goods or services under their own brand, facilitating market expansion and operational efficiency. [Read full explanation]
Click main image to view in full screen.
Please login here to save this document to a list.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
"FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The
quality of the decks available allows me to punch way above my weight – it's like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.
"
– Roderick Cameron, Founding Partner at SGFE Ltd
"FlevyPro provides business frameworks from many of the global giants in management consulting that allow you to provide best in class solutions for your clients."
– David Harris, Managing Director at Futures Strategy
"I have found Flevy to be an amazing resource and library of useful presentations for lean sigma, change management and so many other topics. This has reduced the time I need to spend on preparing for my performance consultation. The library is easily accessible and updates are regularly provided. A wealth of great information."
– Cynthia Howard RN, PhD, Executive Coach at Ei Leadership
"Flevy is our 'go to' resource for management material, at an affordable cost. The Flevy library is comprehensive and the content deep, and typically provides a great foundation for us to further develop and tailor our own service offer."
– Chris McCann, Founder at Resilient.World
"As a young consulting firm, requests for input from clients vary and it's sometimes impossible to provide expert solutions across a broad spectrum of requirements. That was before I discovered Flevy.com.
Through subscription to this invaluable site of a plethora of topics that are key and crucial to consulting, I
have been able to exceed expectations and deliver quality advice and solutions to my clients. The quality and expertise of the authors are exemplary and gives me great confidence to use as part of my service offerings.
I highly recommend this company for any consultant wanting to apply international best practice standards in their service offerings.
"
– Nishi Singh, Strategist and MD at NSP Consultants
"Flevy.com has proven to be an invaluable resource library to our Independent Management Consultancy, supporting and enabling us to better serve our enterprise clients.
The value derived from our [FlevyPro] subscription in terms of the business it has helped to gain far exceeds the investment made, making a subscription a no-brainer for any growing consultancy – or in-house strategy team."
– Dean Carlton, Chief Transformation Officer, Global Village Transformations Pty Ltd.
"The wide selection of frameworks is very useful to me as an independent consultant. In fact, it rivals what I had at my disposal at Big 4 Consulting firms in terms of efficacy and organization."
– Julia T., Consulting Firm Owner (Former Manager at Deloitte and Capgemini)
"As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."
Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Scenario: A boutique hotel chain operating in the competitive leisure and hospitality sector is struggling to optimize its pricing strategy amidst fluctuating demand and intense competition.
Scenario: The organization, a direct-to-consumer fitness apparel company, is grappling with the challenge of setting prices in a highly competitive market.
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
The AIDA model guides marketing strategies by structuring consumer engagement through Attention, Interest, Desire, and Action, ultimately driving sales and brand loyalty. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
Integrating Customer Journey Mapping with corporate culture promotes Organizational Change and Customer-Centric Innovation by aligning Strategy, improving Operational Efficiency, and driving employee engagement towards customer satisfaction and business growth. [Read full explanation]
White labeling allows organizations to sell externally produced goods or services under their own brand, facilitating market expansion and operational efficiency. [Read full explanation]
Click main image to view in full screen.
Please login here to save this document to a list.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
"I have used Flevy services for a number of years and have never, ever been disappointed. As a matter of fact, David and his team continue, time after time, to impress me with their willingness to assist and in the real sense of the word. I have concluded in fact
that it is not at all just a repository of documents/resources but, in the way that David and his team manage the firm, it is like dealing with consultants always ready to assist, advise and direct you to what you really need, and they always get it right.
I am an international hospitality accomplished senior executive who has worked and lived during the past 35 years in 23 countries in 5 continents and I can humbly say that I know what customer service is, trust me.
Aside from the great and professional service that Flevy's team provide, their wide variety of material is of utmost great quality, professionally put together and most current.
Well done Flevy, keep up the great work and I look forward to continue working with you in the future and to recommend you to a variety of colleagues around the world.
"
– Roberto Pelliccia, Senior Executive in International Hospitality
"Flevy is our 'go to' resource for management material, at an affordable cost. The Flevy library is comprehensive and the content deep, and typically provides a great foundation for us to further develop and tailor our own service offer."
– Chris McCann, Founder at Resilient.World
"I have used FlevyPro for several business applications. It is a great complement to working with expensive consultants. The quality and effectiveness of the tools are of the highest standards."
– Moritz Bernhoerster, Global Sourcing Director at Fortune 500
"My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me
in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.
"
– Bill Branson, Founder at Strategic Business Architects
"I have found Flevy to be an amazing resource and library of useful presentations for lean sigma, change management and so many other topics. This has reduced the time I need to spend on preparing for my performance consultation. The library is easily accessible and updates are regularly provided. A wealth of great information."
– Cynthia Howard RN, PhD, Executive Coach at Ei Leadership
"Last Sunday morning, I was diligently working on an important presentation for a client and found myself in need of additional content and suitable templates for various types of graphics. Flevy.com proved to be a treasure trove for both content and design at a reasonable price, considering the time I
saved. I encountered a download issue during the ordering process. However, a quick email to Flevy's support team, even on a Sunday (!!!), resulted in assistance within less than an hour, allowing me to download the content I needed. Fantastic job, Flevy! I give 5 stars for both content/price and customer service. Thank you!
"
– M. E., Chief Commercial Officer, International Logistics Service Provider
"As an Independent Management Consultant, I find Flevy to add great value as a source of best practices, templates and information on new trends. Flevy has matured and the quality and quantity of the library is excellent. Lastly the price charged is reasonable, creating a win-win value for
the customer, Flevy and the various authors. This is truly a service that benefits the consulting industry and associated clients. Thanks for providing this service.
"
– Jim Schoen, Principal at FRC Group
"As a young consulting firm, requests for input from clients vary and it's sometimes impossible to provide expert solutions across a broad spectrum of requirements. That was before I discovered Flevy.com.
Through subscription to this invaluable site of a plethora of topics that are key and crucial to consulting, I
have been able to exceed expectations and deliver quality advice and solutions to my clients. The quality and expertise of the authors are exemplary and gives me great confidence to use as part of my service offerings.
I highly recommend this company for any consultant wanting to apply international best practice standards in their service offerings.
"
– Nishi Singh, Strategist and MD at NSP Consultants
Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Scenario: A boutique hotel chain operating in the competitive leisure and hospitality sector is struggling to optimize its pricing strategy amidst fluctuating demand and intense competition.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: The organization, a direct-to-consumer fitness apparel company, is grappling with the challenge of setting prices in a highly competitive market.
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
AI and ML enhance New Product Development (NPD) by providing insights, automating processes, predicting trends, optimizing design and supply chains, and improving decision-making and efficiency for competitive advantage and rapid innovation. [Read full explanation]
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
White labeling allows organizations to sell externally produced goods or services under their own brand, facilitating market expansion and operational efficiency. [Read full explanation]
The growing emphasis on sustainability is reshaping global pricing strategies, driven by consumer preferences, regulatory pressures, and sustainability costs, leading to higher-priced sustainable products and innovative pricing models across industries. [Read full explanation]
Click main image to view in full screen.
Please login here to save this document to a list.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
"[Flevy] produces some great work that has been/continues to be of immense help not only to myself, but as I seek to provide professional services to my clients, it gives me a large "tool box" of resources that are critical to provide them with the quality of service and outcomes they are expecting."
– Royston Knowles, Executive with 50+ Years of Board Level Experience
"As a consultant requiring up to date and professional material that will be of value and use to my clients, I find Flevy a very reliable resource.
The variety and quality of material available through Flevy offers a very useful and commanding source for information. Using Flevy saves me time, enhances my expertise and ends up being a good decision."
– Dennis Gershowitz, Principal at DG Associates
"I have used Flevy services for a number of years and have never, ever been disappointed. As a matter of fact, David and his team continue, time after time, to impress me with their willingness to assist and in the real sense of the word. I have concluded in fact
that it is not at all just a repository of documents/resources but, in the way that David and his team manage the firm, it is like dealing with consultants always ready to assist, advise and direct you to what you really need, and they always get it right.
I am an international hospitality accomplished senior executive who has worked and lived during the past 35 years in 23 countries in 5 continents and I can humbly say that I know what customer service is, trust me.
Aside from the great and professional service that Flevy's team provide, their wide variety of material is of utmost great quality, professionally put together and most current.
Well done Flevy, keep up the great work and I look forward to continue working with you in the future and to recommend you to a variety of colleagues around the world.
"
– Roberto Pelliccia, Senior Executive in International Hospitality
"I have used FlevyPro for several business applications. It is a great complement to working with expensive consultants. The quality and effectiveness of the tools are of the highest standards."
– Moritz Bernhoerster, Global Sourcing Director at Fortune 500
"As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value."
– David Coloma, Consulting Area Manager at Cynertia Consulting
"As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."
– Michael Evans, Managing Director at Newport LLC
"Flevy is our 'go to' resource for management material, at an affordable cost. The Flevy library is comprehensive and the content deep, and typically provides a great foundation for us to further develop and tailor our own service offer."
– Chris McCann, Founder at Resilient.World
"One of the great discoveries that I have made for my business is the Flevy library of training materials.
As a Lean Transformation Expert, I am always making presentations to clients on a variety of topics: Training, Transformation, Total Productive Maintenance, Culture, Coaching, Tools, Leadership Behavior, etc. Flevy
It is well worth the money to purchase these presentations. Sure, I have the knowledge and information to make my point. It is another thing to create a presentation that captures what I want to say. Flevy has saved me countless hours of preparation time that is much better spent with implementation that will actually save money for my clients.
"
– Ed Kemmerling, Senior Lean Transformation Expert at PMG
Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Scenario: A boutique hotel chain operating in the competitive leisure and hospitality sector is struggling to optimize its pricing strategy amidst fluctuating demand and intense competition.
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
AI and ML enhance New Product Development (NPD) by providing insights, automating processes, predicting trends, optimizing design and supply chains, and improving decision-making and efficiency for competitive advantage and rapid innovation. [Read full explanation]
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
White labeling allows organizations to sell externally produced goods or services under their own brand, facilitating market expansion and operational efficiency. [Read full explanation]
Developing an effective go-to-market strategy involves thorough Market Research, a clear Value Proposition, strategic Channel Selection, and disciplined Execution aligned with organizational objectives. [Read full explanation]
Click main image to view in full screen.
Please login here to save this document to a list.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
"Flevy is now a part of my business routine. I visit Flevy at least 3 times each month.
Flevy has become my preferred learning source, because what it provides is practical, current, and useful in this era where the business world is being rewritten.
many challenges and there is the need to make the right decisions in a short time, with so much scattered information, we are fortunate to have Flevy. Flevy investigates, selects, and puts at our disposal the best of the best to help us be successful in our work.
"
– Omar Hernán Montes Parra, CEO at Quantum SFE
"Last Sunday morning, I was diligently working on an important presentation for a client and found myself in need of additional content and suitable templates for various types of graphics. Flevy.com proved to be a treasure trove for both content and design at a reasonable price, considering the time I
saved. I encountered a download issue during the ordering process. However, a quick email to Flevy's support team, even on a Sunday (!!!), resulted in assistance within less than an hour, allowing me to download the content I needed. Fantastic job, Flevy! I give 5 stars for both content/price and customer service. Thank you!
"
– M. E., Chief Commercial Officer, International Logistics Service Provider
"As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value."
– David Coloma, Consulting Area Manager at Cynertia Consulting
"As a consultant requiring up to date and professional material that will be of value and use to my clients, I find Flevy a very reliable resource.
The variety and quality of material available through Flevy offers a very useful and commanding source for information. Using Flevy saves me time, enhances my expertise and ends up being a good decision."
– Dennis Gershowitz, Principal at DG Associates
"The wide selection of frameworks is very useful to me as an independent consultant. In fact, it rivals what I had at my disposal at Big 4 Consulting firms in terms of efficacy and organization."
– Julia T., Consulting Firm Owner (Former Manager at Deloitte and Capgemini)
"As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor
the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant's toolbox.
"
– Michael Duff, Managing Director at Change Strategy (UK)
"I have used Flevy services for a number of years and have never, ever been disappointed. As a matter of fact, David and his team continue, time after time, to impress me with their willingness to assist and in the real sense of the word. I have concluded in fact
that it is not at all just a repository of documents/resources but, in the way that David and his team manage the firm, it is like dealing with consultants always ready to assist, advise and direct you to what you really need, and they always get it right.
I am an international hospitality accomplished senior executive who has worked and lived during the past 35 years in 23 countries in 5 continents and I can humbly say that I know what customer service is, trust me.
Aside from the great and professional service that Flevy's team provide, their wide variety of material is of utmost great quality, professionally put together and most current.
Well done Flevy, keep up the great work and I look forward to continue working with you in the future and to recommend you to a variety of colleagues around the world.
"
– Roberto Pelliccia, Senior Executive in International Hospitality
"FlevyPro provides business frameworks from many of the global giants in management consulting that allow you to provide best in class solutions for your clients."
– David Harris, Managing Director at Futures Strategy
Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Scenario: A boutique hotel chain operating in the competitive leisure and hospitality sector is struggling to optimize its pricing strategy amidst fluctuating demand and intense competition.
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
AI and ML enhance New Product Development (NPD) by providing insights, automating processes, predicting trends, optimizing design and supply chains, and improving decision-making and efficiency for competitive advantage and rapid innovation. [Read full explanation]
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
White labeling allows organizations to sell externally produced goods or services under their own brand, facilitating market expansion and operational efficiency. [Read full explanation]
Developing an effective go-to-market strategy involves thorough Market Research, a clear Value Proposition, strategic Channel Selection, and disciplined Execution aligned with organizational objectives. [Read full explanation]
Click main image to view in full screen.
Please login here to save this document to a list.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
"FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The
quality of the decks available allows me to punch way above my weight – it's like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.
"
– Roderick Cameron, Founding Partner at SGFE Ltd
"I am extremely grateful for the proactiveness and eagerness to help and I would gladly recommend the Flevy team if you are looking for data and toolkits to help you work through business solutions."
– Trevor Booth, Partner, Fast Forward Consulting
"FlevyPro provides business frameworks from many of the global giants in management consulting that allow you to provide best in class solutions for your clients."
– David Harris, Managing Director at Futures Strategy
"As an Independent Management Consultant, I find Flevy to add great value as a source of best practices, templates and information on new trends. Flevy has matured and the quality and quantity of the library is excellent. Lastly the price charged is reasonable, creating a win-win value for
the customer, Flevy and the various authors. This is truly a service that benefits the consulting industry and associated clients. Thanks for providing this service.
"
– Jim Schoen, Principal at FRC Group
"Flevy.com has proven to be an invaluable resource library to our Independent Management Consultancy, supporting and enabling us to better serve our enterprise clients.
The value derived from our [FlevyPro] subscription in terms of the business it has helped to gain far exceeds the investment made, making a subscription a no-brainer for any growing consultancy – or in-house strategy team."
– Dean Carlton, Chief Transformation Officer, Global Village Transformations Pty Ltd.
"As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor
the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant's toolbox.
"
– Michael Duff, Managing Director at Change Strategy (UK)
"As a consultant requiring up to date and professional material that will be of value and use to my clients, I find Flevy a very reliable resource.
The variety and quality of material available through Flevy offers a very useful and commanding source for information. Using Flevy saves me time, enhances my expertise and ends up being a good decision."
– Dennis Gershowitz, Principal at DG Associates
"I have used FlevyPro for several business applications. It is a great complement to working with expensive consultants. The quality and effectiveness of the tools are of the highest standards."
– Moritz Bernhoerster, Global Sourcing Director at Fortune 500
Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Scenario: The organization, a direct-to-consumer fitness apparel company, is grappling with the challenge of setting prices in a highly competitive market.
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
AI and ML enhance New Product Development (NPD) by providing insights, automating processes, predicting trends, optimizing design and supply chains, and improving decision-making and efficiency for competitive advantage and rapid innovation. [Read full explanation]
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
White labeling allows organizations to sell externally produced goods or services under their own brand, facilitating market expansion and operational efficiency. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
Developing an effective go-to-market strategy involves thorough Market Research, a clear Value Proposition, strategic Channel Selection, and disciplined Execution aligned with organizational objectives. [Read full explanation]
Click main image to view in full screen.
Please login here to save this document to a list.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
"Last Sunday morning, I was diligently working on an important presentation for a client and found myself in need of additional content and suitable templates for various types of graphics. Flevy.com proved to be a treasure trove for both content and design at a reasonable price, considering the time I
saved. I encountered a download issue during the ordering process. However, a quick email to Flevy's support team, even on a Sunday (!!!), resulted in assistance within less than an hour, allowing me to download the content I needed. Fantastic job, Flevy! I give 5 stars for both content/price and customer service. Thank you!
"
– M. E., Chief Commercial Officer, International Logistics Service Provider
"I like your product. I'm frequently designing PowerPoint presentations for my company and your product has given me so many great ideas on the use of charts, layouts, tools, and frameworks. I really think the templates are a valuable asset to the job."
– Roberto Fuentes Martinez, Senior Executive Director at Technology Transformation Advisory
"I have used FlevyPro for several business applications. It is a great complement to working with expensive consultants. The quality and effectiveness of the tools are of the highest standards."
– Moritz Bernhoerster, Global Sourcing Director at Fortune 500
"As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor
the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant's toolbox.
"
– Michael Duff, Managing Director at Change Strategy (UK)
"FlevyPro provides business frameworks from many of the global giants in management consulting that allow you to provide best in class solutions for your clients."
– David Harris, Managing Director at Futures Strategy
"If you are looking for great resources to save time with your business presentations, Flevy is truly a value-added resource. Flevy has done all the work for you and we will continue to utilize Flevy as a source to extract up-to-date information and data for our virtual and onsite presentations!"
– Debbi Saffo, President at The NiKhar Group
"The wide selection of frameworks is very useful to me as an independent consultant. In fact, it rivals what I had at my disposal at Big 4 Consulting firms in terms of efficacy and organization."
– Julia T., Consulting Firm Owner (Former Manager at Deloitte and Capgemini)
"I am extremely grateful for the proactiveness and eagerness to help and I would gladly recommend the Flevy team if you are looking for data and toolkits to help you work through business solutions."
Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: The organization, a direct-to-consumer fitness apparel company, is grappling with the challenge of setting prices in a highly competitive market.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
AI and ML enhance New Product Development (NPD) by providing insights, automating processes, predicting trends, optimizing design and supply chains, and improving decision-making and efficiency for competitive advantage and rapid innovation. [Read full explanation]
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
White labeling allows organizations to sell externally produced goods or services under their own brand, facilitating market expansion and operational efficiency. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
Developing an effective go-to-market strategy involves thorough Market Research, a clear Value Proposition, strategic Channel Selection, and disciplined Execution aligned with organizational objectives. [Read full explanation]
Click main image to view in full screen.
Please login here to save this document to a list.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
"Flevy.com has proven to be an invaluable resource library to our Independent Management Consultancy, supporting and enabling us to better serve our enterprise clients.
The value derived from our [FlevyPro] subscription in terms of the business it has helped to gain far exceeds the investment made, making a subscription a no-brainer for any growing consultancy – or in-house strategy team."
– Dean Carlton, Chief Transformation Officer, Global Village Transformations Pty Ltd.
"I have used FlevyPro for several business applications. It is a great complement to working with expensive consultants. The quality and effectiveness of the tools are of the highest standards."
– Moritz Bernhoerster, Global Sourcing Director at Fortune 500
"I like your product. I'm frequently designing PowerPoint presentations for my company and your product has given me so many great ideas on the use of charts, layouts, tools, and frameworks. I really think the templates are a valuable asset to the job."
– Roberto Fuentes Martinez, Senior Executive Director at Technology Transformation Advisory
"My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me
in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.
"
– Bill Branson, Founder at Strategic Business Architects
"I have found Flevy to be an amazing resource and library of useful presentations for lean sigma, change management and so many other topics. This has reduced the time I need to spend on preparing for my performance consultation. The library is easily accessible and updates are regularly provided. A wealth of great information."
– Cynthia Howard RN, PhD, Executive Coach at Ei Leadership
"FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The
quality of the decks available allows me to punch way above my weight – it's like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.
"
– Roderick Cameron, Founding Partner at SGFE Ltd
"[Flevy] produces some great work that has been/continues to be of immense help not only to myself, but as I seek to provide professional services to my clients, it gives me a large "tool box" of resources that are critical to provide them with the quality of service and outcomes they are expecting."
– Royston Knowles, Executive with 50+ Years of Board Level Experience
"As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."
Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: The organization, a direct-to-consumer fitness apparel company, is grappling with the challenge of setting prices in a highly competitive market.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
AI and ML enhance New Product Development (NPD) by providing insights, automating processes, predicting trends, optimizing design and supply chains, and improving decision-making and efficiency for competitive advantage and rapid innovation. [Read full explanation]
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
White labeling allows organizations to sell externally produced goods or services under their own brand, facilitating market expansion and operational efficiency. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
Developing an effective go-to-market strategy involves thorough Market Research, a clear Value Proposition, strategic Channel Selection, and disciplined Execution aligned with organizational objectives. [Read full explanation]
Click main image to view in full screen.
Please login here to save this document to a list.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
"As an Independent Management Consultant, I find Flevy to add great value as a source of best practices, templates and information on new trends. Flevy has matured and the quality and quantity of the library is excellent. Lastly the price charged is reasonable, creating a win-win value for
the customer, Flevy and the various authors. This is truly a service that benefits the consulting industry and associated clients. Thanks for providing this service.
"
– Jim Schoen, Principal at FRC Group
"As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor
the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant's toolbox.
"
– Michael Duff, Managing Director at Change Strategy (UK)
"Flevy is now a part of my business routine. I visit Flevy at least 3 times each month.
Flevy has become my preferred learning source, because what it provides is practical, current, and useful in this era where the business world is being rewritten.
many challenges and there is the need to make the right decisions in a short time, with so much scattered information, we are fortunate to have Flevy. Flevy investigates, selects, and puts at our disposal the best of the best to help us be successful in our work.
"
– Omar Hernán Montes Parra, CEO at Quantum SFE
"As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."
– Michael Evans, Managing Director at Newport LLC
"If you are looking for great resources to save time with your business presentations, Flevy is truly a value-added resource. Flevy has done all the work for you and we will continue to utilize Flevy as a source to extract up-to-date information and data for our virtual and onsite presentations!"
– Debbi Saffo, President at The NiKhar Group
"FlevyPro provides business frameworks from many of the global giants in management consulting that allow you to provide best in class solutions for your clients."
– David Harris, Managing Director at Futures Strategy
"I like your product. I'm frequently designing PowerPoint presentations for my company and your product has given me so many great ideas on the use of charts, layouts, tools, and frameworks. I really think the templates are a valuable asset to the job."
– Roberto Fuentes Martinez, Senior Executive Director at Technology Transformation Advisory
"FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The
quality of the decks available allows me to punch way above my weight – it's like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.
Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Scenario: The organization, a direct-to-consumer fitness apparel company, is grappling with the challenge of setting prices in a highly competitive market.
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
AI and ML enhance New Product Development (NPD) by providing insights, automating processes, predicting trends, optimizing design and supply chains, and improving decision-making and efficiency for competitive advantage and rapid innovation. [Read full explanation]
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
White labeling allows organizations to sell externally produced goods or services under their own brand, facilitating market expansion and operational efficiency. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
Developing an effective go-to-market strategy involves thorough Market Research, a clear Value Proposition, strategic Channel Selection, and disciplined Execution aligned with organizational objectives. [Read full explanation]
Click main image to view in full screen.
Please login here to save this document to a list.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
"The wide selection of frameworks is very useful to me as an independent consultant. In fact, it rivals what I had at my disposal at Big 4 Consulting firms in terms of efficacy and organization."
– Julia T., Consulting Firm Owner (Former Manager at Deloitte and Capgemini)
"I like your product. I'm frequently designing PowerPoint presentations for my company and your product has given me so many great ideas on the use of charts, layouts, tools, and frameworks. I really think the templates are a valuable asset to the job."
– Roberto Fuentes Martinez, Senior Executive Director at Technology Transformation Advisory
"FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The
quality of the decks available allows me to punch way above my weight – it's like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.
"
– Roderick Cameron, Founding Partner at SGFE Ltd
"Flevy is our 'go to' resource for management material, at an affordable cost. The Flevy library is comprehensive and the content deep, and typically provides a great foundation for us to further develop and tailor our own service offer."
– Chris McCann, Founder at Resilient.World
"[Flevy] produces some great work that has been/continues to be of immense help not only to myself, but as I seek to provide professional services to my clients, it gives me a large "tool box" of resources that are critical to provide them with the quality of service and outcomes they are expecting."
– Royston Knowles, Executive with 50+ Years of Board Level Experience
"FlevyPro provides business frameworks from many of the global giants in management consulting that allow you to provide best in class solutions for your clients."
– David Harris, Managing Director at Futures Strategy
"As an Independent Management Consultant, I find Flevy to add great value as a source of best practices, templates and information on new trends. Flevy has matured and the quality and quantity of the library is excellent. Lastly the price charged is reasonable, creating a win-win value for
the customer, Flevy and the various authors. This is truly a service that benefits the consulting industry and associated clients. Thanks for providing this service.
"
– Jim Schoen, Principal at FRC Group
"As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."
Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Scenario: The organization, a direct-to-consumer fitness apparel company, is grappling with the challenge of setting prices in a highly competitive market.
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
AI and ML enhance New Product Development (NPD) by providing insights, automating processes, predicting trends, optimizing design and supply chains, and improving decision-making and efficiency for competitive advantage and rapid innovation. [Read full explanation]
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
White labeling allows organizations to sell externally produced goods or services under their own brand, facilitating market expansion and operational efficiency. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
Developing an effective go-to-market strategy involves thorough Market Research, a clear Value Proposition, strategic Channel Selection, and disciplined Execution aligned with organizational objectives. [Read full explanation]
Click main image to view in full screen.
Please login here to save this document to a list.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
"Flevy is our 'go to' resource for management material, at an affordable cost. The Flevy library is comprehensive and the content deep, and typically provides a great foundation for us to further develop and tailor our own service offer."
– Chris McCann, Founder at Resilient.World
"I have used Flevy services for a number of years and have never, ever been disappointed. As a matter of fact, David and his team continue, time after time, to impress me with their willingness to assist and in the real sense of the word. I have concluded in fact
that it is not at all just a repository of documents/resources but, in the way that David and his team manage the firm, it is like dealing with consultants always ready to assist, advise and direct you to what you really need, and they always get it right.
I am an international hospitality accomplished senior executive who has worked and lived during the past 35 years in 23 countries in 5 continents and I can humbly say that I know what customer service is, trust me.
Aside from the great and professional service that Flevy's team provide, their wide variety of material is of utmost great quality, professionally put together and most current.
Well done Flevy, keep up the great work and I look forward to continue working with you in the future and to recommend you to a variety of colleagues around the world.
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Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Scenario: The organization, a direct-to-consumer fitness apparel company, is grappling with the challenge of setting prices in a highly competitive market.
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
AI and ML enhance New Product Development (NPD) by providing insights, automating processes, predicting trends, optimizing design and supply chains, and improving decision-making and efficiency for competitive advantage and rapid innovation. [Read full explanation]
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
White labeling allows organizations to sell externally produced goods or services under their own brand, facilitating market expansion and operational efficiency. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
Developing an effective go-to-market strategy involves thorough Market Research, a clear Value Proposition, strategic Channel Selection, and disciplined Execution aligned with organizational objectives. [Read full explanation]
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Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
This presentation discusses the topics of Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It further distills these concepts into Six Product Launch Strategies.
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Scenario: The organization is a high-end hospitality chain facing challenges in maintaining a consistent and personalized Customer Journey across its global properties.
Scenario: The company is a high-end luxury retailer facing stagnation in market share growth due to a static pricing model that has not adapted to evolving consumer behaviors and competitive market dynamics.
Scenario: A boutique hotel chain, renowned for personalized guest experiences, faces the challenge of adapting customer journey mapping to meet evolving consumer expectations.
Scenario: A prominent digital banking institution is at a critical juncture in optimizing its customer decision journey, facing a 20% decline in user engagement and a 15% increase in customer acquisition costs over the past year.
Scenario: An emerging online gambling platform in Europe is facing a strategic challenge with its pricing strategy, struggling to balance profitability and market competitiveness.
Scenario: A prominent high-end restaurant chain faces challenges in optimizing its pricing strategy to stay competitive while maintaining profitability.
Scenario: The company is a specialty retailer in the consumer packaged goods industry, grappling with margin compression in an increasingly competitive landscape.
Scenario: The organization, a player in the AgriTech sector, specializes in smart farming solutions, integrating IoT devices and AI-driven analytics for precision agriculture.
Scenario: The organization, a direct-to-consumer fitness apparel company, is grappling with the challenge of setting prices in a highly competitive market.
Global economic fluctuations significantly influence pricing strategies in various industries, necessitating businesses to adapt through dynamic pricing, understanding market and consumer behavior changes, and leveraging advanced analytics for competitive advantage and profitability. [Read full explanation]
Companies must adapt their Consumer Decision Journey strategies to cater to Baby Boomers' preference for traditional media and in-person experiences and Generation Z's inclination towards digital platforms, social responsibility, and personalized experiences to effectively engage these diverse demographics. [Read full explanation]
Integrating Customer Journey Mapping (CJM) with Agile methodologies enhances product and service development through a dynamic, customer-centric approach, prioritizing features based on customer experience and encouraging continuous feedback, leading to improved customer satisfaction and operational performance. [Read full explanation]
AI and ML enhance New Product Development (NPD) by providing insights, automating processes, predicting trends, optimizing design and supply chains, and improving decision-making and efficiency for competitive advantage and rapid innovation. [Read full explanation]
Companies can gain Competitive Advantage by leveraging AI and machine learning to analyze data across the Consumer Decision Journey, enabling personalized marketing strategies and improved customer satisfaction. [Read full explanation]
White labeling allows organizations to sell externally produced goods or services under their own brand, facilitating market expansion and operational efficiency. [Read full explanation]
Employee training is crucial for optimizing the customer decision journey, enhancing customer satisfaction and loyalty through skills development and strategic training programs aligned with company objectives. [Read full explanation]
Developing an effective go-to-market strategy involves thorough Market Research, a clear Value Proposition, strategic Channel Selection, and disciplined Execution aligned with organizational objectives. [Read full explanation]
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Designed by a firm of ex-consultants from McKinsey, E&Y, and Bearing Point, this presentation discusses the Psychology of Product Adoption. It covers important concepts like Prospect Theory, Innovator's Curse, and Endowment Effect.
This product (Psychology of Product Adoption) is a 46-slide PPT PowerPoint presentation slide deck (PPT), which you can download immediately upon purchase.
Some innovations are truly spectacular, but consumers are slow or just refuse to adopt. In fact, over 70% of all new products fail in the marketplace—and innovative, new products fail at an even higher rate.
Why is this the case? And, how do companies overcome this?
This document discusses the psychology of product adoption. Topics include Prospect Theory, Endowment Effect, Loss Aversion, Give and Get Dynamics, Innovator's Curse, Product-Behavior Value Matrix, among other topics. It distills these concepts into Six Product Launch Strategies.
This presentation has instructional slides and examples.
The foundation of this consumer adoption discussion is around the difference between objective gains and losses vs. subjective gains and losses. This fundamental consumer bias results in psychological switching costs, in addition to economic ones. Studies have shown that, psychologically, losses loom larger than gains by two to three times.
The document delves into the intricacies of consumer psychology, emphasizing how reference points influence perceived gains and losses. It explains that consumers evaluate gains and losses relative to their current status quo, which can vary significantly across different markets. For instance, a price change in one region may be perceived differently in another, highlighting the importance of understanding local consumer reference points.
The presentation also covers the Endowment Effect, illustrating how consumers place higher value on items they already possess compared to new acquisitions. This psychological bias means that consumers are more likely to invest resources in retaining what they have rather than acquiring new products. The implication for businesses is clear: new offerings must significantly outperform existing solutions to overcome this inherent bias.
In addition, the document addresses the "Give and Get Dynamics," where consumers must give up an existing benefit to gain a new one. This trade-off is crucial in product adoption, as the perceived value of the new product must exceed the value of the old by a substantial margin. Companies are advised to ensure their new products offer at least three to ten times the value of existing ones to successfully navigate this psychological hurdle.
Got a question about the product? Email us at support@flevy.com or ask the author directly by using the "Ask the Author a Question" form. If you cannot view the preview above this document description, go here to view the large preview instead.
Source: Best Practices in Behavioral Economics, Product Strategy, Psychology, Product Launch Strategy PowerPoint Slides: Psychology of Product Adoption PowerPoint (PPT) Presentation Slide Deck, PPT Lab
This PPT slide illustrates a significant gap in understanding between innovators and customers, termed the "Curse of Knowledge." It contrasts the perspectives of insiders—those who develop or promote a product—and outsiders, the potential customers.
From the insider’s viewpoint, the innovator is characterized by extensive experience with the product or technology, often spanning 5 to 20 years. They have a clear understanding of the benefits and needs associated with their offering. This perspective leads to a strong trust in the product, as insiders are self-selected believers who view the status quo as inclusive of new features. Their familiarity can create a blind spot regarding the actual customer experience.
On the other hand, the outsider’s view highlights the customer’s initial encounter with the product. Customers are often seeing the product for the first time, which means their needs are not immediately apparent. They approach with skepticism, questioning claims made by the innovator. This skepticism is compounded by a moderate valuation of promised benefits, as customers weigh these against their existing solutions. The status quo for them includes familiar features, making it challenging to appreciate the new offering.
The slide emphasizes that the core issue lies not in the customer's inability to understand, but rather in the innovator's perspective. This disconnect can hinder effective communication and adoption strategies. Recognizing this divide is crucial for innovators aiming to bridge the gap and enhance customer engagement. Understanding both perspectives allows for more effective messaging and product positioning, ultimately leading to better market acceptance.
This PPT slide presents the concept of the "Innovator's Curse," highlighting the inherent biases that innovators face regarding their own products. It outlines 3 key aspects: Self-Selection, Clash in Perspectives, and Curse of Knowledge.
Self-Selection emphasizes that innovators and early adopters often hold a skewed perception of their innovations. They are likely to believe strongly in the value of their creations, which can lead to a disconnect with the broader market. The slide raises an important question: Are these positive perceptions shared by the wider audience? This is crucial for innovators to consider, as their self-selected group may not represent the views of potential customers.
The second point, Clash in Perspectives, addresses the differing viewpoints between innovators and their target customers. Innovators may have a unique understanding of their product, shaped by their experiences and expectations. However, the current state of potential customers may differ significantly, leading to misaligned perceptions. The mention of the Endowment Effect serves as a reminder that innovators often have a personal stake in their products, which can cloud their judgment.
Lastly, the Curse of Knowledge suggests that once individuals acquire information about a product, it becomes challenging for them to revert to their previous state of ignorance. This can hinder their ability to empathize with customers who have not yet experienced the product. Understanding these biases is essential for innovators to effectively communicate their product's value and align it with customer needs. Overall, the slide underscores the importance of recognizing these biases in order to enhance product adoption strategies.
This PPT slide outlines 2 primary approaches to managing behavioral change during product launches: accepting resistance and minimizing resistance. It emphasizes that behavioral change is often unavoidable when introducing innovations, which means companies must strategically navigate customer resistance.
Under the "Accept Resistance" section, the slide suggests that if resistance is anticipated, organizations should embrace it and manage it effectively. This approach includes 2 strategies: "Brace for the Long Haul," which implies a commitment to enduring initial pushback, and "The 10X Improvement," suggesting that demonstrating significant value can help overcome resistance over time.
On the other side, the "Minimize Resistance" section presents strategies aimed at reducing customer pushback. This includes "Make It Behaviorally Compatible," which focuses on aligning the new product with existing behaviors to ease the transition. "Seek out the Unendowed" suggests targeting those who lack the current solution, potentially minimizing resistance from those already accustomed to a different product. "Find Believers" emphasizes identifying early adopters who can champion the product, while "Eliminate the Old" indicates the need to phase out outdated solutions that may hinder acceptance.
Overall, the slide provides a framework for understanding how to approach behavioral change in product launches. It highlights the necessity of anticipating resistance and offers actionable strategies for both accepting and minimizing it. This insight can be crucial for executives looking to enhance their product adoption strategies and ensure smoother transitions for their innovations.
This PPT slide presents the Product-Behavior Value Matrix, a strategic tool designed to analyze how innovations generate value through product changes. It highlights the essential relationship between product changes and the necessary behavioral changes for successful adoption. The core issue identified is that product adoption is often impeded by the requirement for these behavioral adjustments.
The matrix is structured as a 2x2 grid, categorizing innovations based on the level of behavioral change required and the potential for value capturing. The quadrants are labeled: "Dead Zone," "Long Haul," "Tinkering," and "Home Run." Each quadrant represents a different scenario for product innovations.
In the "Dead Zone," high behavioral change is required,, but the potential for value capturing is low, indicating a lack of viability for product adoption. Conversely, the "Long Haul" quadrant suggests that while behavioral change is necessary, the innovation may still provide some value over time, albeit with challenges.
The "Tinkering" quadrant indicates a scenario where minimal behavioral change is required,, but the value capturing is also low, suggesting that the innovation may not significantly impact the market. The "Home Run" quadrant is the ideal scenario, where innovations maximize value creation while minimizing the need for behavioral change, leading to successful adoption and market impact.
This matrix serves as a guide for executives to evaluate their innovations and strategize on how to enhance product adoption by understanding the behavioral dynamics at play. It emphasizes the need for aligning product changes with user behavior to effectively capture value.
This PPT slide presents the Prospect Theory Value Function, which highlights the disparity between subjective and objective evaluations of gains and losses. It illustrates how consumers perceive value not just based on actual monetary outcomes, but also on psychological impacts. The graph is divided into 4 quadrants, with the x-axis representing objective gains and losses, while the y-axis reflects subjective gains and losses.
In the upper right quadrant, the example indicates that a gain of $100 is perceived as a direct match to the actual gain, showing that subjective and objective values align in this scenario. However, the lower left quadrant reveals a crucial insight: a loss of $40 is psychologically felt as a much greater loss, equivalent to a $100 loss in terms of its emotional impact. This discrepancy illustrates the principle that losses loom larger than gains in consumer psychology.
The reference point marked on the graph indicates the current wealth state, serving as a baseline for evaluating gains and losses. The slide emphasizes that even when the net objective value is positive—$60 in this case—the net subjective value can drop to zero due to the psychological weight of perceived losses. This suggests that understanding consumer behavior requires a nuanced approach, recognizing that emotional responses can significantly influence decision-making.
The insights derived from the Prospect Theory Value Function are vital for strategizing product adoption and marketing approaches, as they reveal how consumers might react to pricing, promotions, and overall value propositions. Recognizing these psychological biases can help in tailoring strategies that resonate more effectively with target audiences.
This PPT slide presents the concept of the Endowment Effect, illustrating how people assign greater value to items they possess compared to those they do not. It is structured into 2 main sections: one for when individuals currently have an item and another for when they do not.
In the left section, labeled "WHEN WE CURRENTLY DO HAVE IT," the graph shows a positive correlation between the value perception (V) of the item and the ability to pause live TV. As individuals possess the ability to pause live TV, their valuation increases, indicating a strong emotional attachment to the feature. The curve suggests that the more they engage with this capability, the more they appreciate its value.
Conversely, the right section, "WHEN WE CURRENTLY DON’T HAVE IT," depicts a different scenario. Here, the graph indicates that individuals who do not possess the ability to pause live TV perceive its value differently. The curve reflects a less steep increase in value perception, suggesting that the absence of the feature leads to a diminished valuation. The text notes that individuals are more likely to spend resources—time, money, or effort—on items they currently own, reinforcing the idea that possession significantly influences perceived value.
The implication is clear: understanding the Endowment Effect can inform strategies for product adoption and customer retention. By recognizing how ownership impacts value perception, businesses can tailor their offerings and marketing approaches to enhance customer engagement and loyalty. This insight is crucial for any organization looking to optimize its product strategies.
This PPT slide presents an overview of the "freemium" business model, emphasizing its reliance on the Endowment Effect. This model allows users to access a basic version of a product or service for free, while charging for enhanced features or functionalities. The text indicates that this approach is particularly effective in the context of Internet Software as a Service (SaaS) companies.
Three tiers of offerings are outlined: Small, Medium, and Enterprise, with corresponding price points of $0, $10, and $100. The Small tier is highlighted as free, which likely serves as an entry point for users. The Medium and Enterprise tiers introduce costs, suggesting a structured path for users to upgrade as their needs grow.
The slide also references the Prospect Theory, which posits that it is more challenging to persuade a customer to make that initial financial commitment compared to subsequent spending. This insight is crucial for understanding consumer behavior in the freemium model. The model's effectiveness is attributed to its ability to shift the customer's point of reference, making them more likely to perceive value in the paid options after experiencing the free offering.
Overall, the slide succinctly captures the essence of the freemium model and its psychological underpinnings, making it a valuable resource for executives considering this approach in their own businesses. It highlights strategic pricing and the importance of user experience in driving conversions from free to paid tiers.
This PPT slide presents a structured comparison of recent innovations, highlighting the trade-offs consumers face when adopting new technologies or services. It categorizes each innovation into 2 columns: "What you give up" and "What you get." This format effectively illustrates the dual nature of innovation, where benefits often come at a cost.
For instance, the entry for DVR/TiVo indicates that users sacrifice the ability to play rentals in exchange for the convenience of easy recording. Similarly, electric cars require consumers to give up easy refueling, but offer environmental benefits. The online grocery section shows that while users lose the ability to select the freshest items in-store, they gain the convenience of home delivery.
The slide also addresses various sectors, including entertainment, healthcare, and energy. Video rentals by mail trade spontaneity for increased selection, while new drugs present a lower cost at the expense of fewer side effects. Satellite radio offers free music, but enhances selection quality. In healthcare, new medical procedures improve outcomes, but may compromise comfort during the procedure. Wind energy exemplifies a shift from unobstructed views to clean, renewable energy sources.
This analysis emphasizes the importance of understanding consumer psychology in product adoption. It suggests that businesses must clearly communicate both the sacrifices and benefits associated with their innovations. By doing so, they can better align their offerings with consumer expectations and enhance the likelihood of successful adoption.
This PPT slide presents a critical insight into consumer behavior, emphasizing the disparity between objective and psychological evaluations of a product's net value. It highlights a fundamental bias where the objective net value, derived from measurable economic benefits, does not align with the psychological net value perceived by consumers. This distinction is crucial for understanding how consumers make decisions regarding product adoption.
On the left side, the "Objective" section suggests that when assessing a new product's economic value, one might arrive at a straightforward net benefit. However, this calculation often overlooks the psychological factors influencing consumer perception. The right side, labeled "Psychological," indicates that consumers tend to irrationally favor existing products, overestimating their benefits while undervaluing new alternatives. This cognitive bias can lead to resistance against adopting new products, despite their potential advantages.
The slide also hints at the importance of considering economic switching costs alongside psychological factors. This suggests that a comprehensive evaluation of product adoption must account for both tangible and intangible elements influencing consumer choices.
Overall, the content serves as a reminder for businesses to not only focus on the measurable benefits of their offerings, but also to understand and address the psychological barriers that may hinder consumer acceptance. Recognizing this duality can inform marketing strategies and product development, ultimately leading to more effective engagement with potential customers.
Designed by a firm of ex-consultants from McKinsey, E&Y, and Bearing Point, this presentation discusses the Psychology of Product Adoption. It covers important concepts like Prospect Theory, Innovator's Curse, and Endowment Effect.
PPT Lab is a presentation design firm specializing in business frameworks and PowerPoint templates. Our team is comprised of ex-consultants from McKinsey, E&Y, Bearing Point, and boutique consulting firms. We have worked with hundreds of clients globally, ranging from mid-size manufacturing companies to global Fortune 500 conglomerates.
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... [read more] same quality produced by top-tier consulting firms and utilize the Consulting Presentation Framework.
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