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Posted: April 21, 2010
Early Adopters
The spread of new products and practices though a given population has been a topic of scholarly research as far back as the late 19th century. Its study owes a considerable intellectual debt to the science of epidemiology. But in his landmark 1962 book, Diffusion of Innovations, sociologist and Iowa native Everett Rogers popularized the concept. He focused on the results of a study conducted by his graduate school adviser concerning the rate at which Iowa farmers transitioned to higher-yield hybrid corn. He categorized the farm population as: Innovators (2.5%), Early Adopters (13.5%), Early Majority (34%), Late Majority (34%) and Laggards (16%), at least as it applied to their hybrid corn use.
But a similar breakdown applies to most other population groups as well, and somewhat different marketing approaches may be appropriate for each of them. Innovators – who are the first to try a new product or practice – are at the cutting edge. They are considered to be venturesome, technically sophisticated, and wealthy enough to handle the downside risk associated with trying something new. Early adopters, the second group to embrace a novel product or practice, are more mainstream and typically younger, higher in social status, more financially astute, better educated, and more social than later adopters.
Geoffrey Moore’s 1991 book Crossing the Chasm applies Everett Rogers’ theory to technology markets where the seller’s most difficult step – the chasm – is the transition between early adopters and the early majority.
Posted: March 24, 2010
Market Segmentation
From roughly the first decade of the 20th century until the early 1960s, the prevailing model for product promotion was mass marketing. All customers were seen as being essentially the same, resulting in a largely undifferentiated approach to selling. Although basic demography, like gender, income and age, always played some role in marketing to consumers, the effects of differences in customer needs, experience, and motivations on people’s buying patterns were mostly unappreciated.
However, starting around 1963, articles began appearing in various scholarly publications asserting the importance of those variables as well as of lifestyles, attitudes, values, and aesthetics in affecting consumer behavior. Daniel Yankelovich, J.M. Rathmell and others made the case for elevating those qualities into criteria for segmenting markets.
In the years that followed, social changes and a growing economy continued expanding the number of groups with specialized product needs and buying power. More recently, value-based segmentation schemes have emerged. Unlike classical segmentation models, which segment customers by who they are, value-based methods segment customers according to the benefits they perceive.
Today, market segmentation is an integral part of almost every company’s business plan, and it applies to more than just consumer products. B2B market segmentation is even more finely differentiated than most consumer markets. And new schemes for disaggregating markets along various lines in order to target specific customer groups are constantly being introduced. But don’t be confused by several analogous concepts, also referred to as Market Segmentation, which are widely used in bond pricing and labor markets – they have nothing to do with marketing.
Posted: February 11, 2010
The Four P’s of Marketing
During the 1960s, according to the Free Encyclopedia of E-commerce, as the role of product management began to emerge in many business organizations, Harvard Business School professor Neil Borden introduced the notion of controllable variables in marketing as The Four P's: Product creation and development; how the product would be Priced; how it would be Promoted; and the Places where the product would be sold – a reference to traditional stores where, at that time, retail sales were mainly concentrated. Today, that final ‘P’ is more broadly understood to mean ‘distribution’ or ‘sales.’ Borden’s model of marketing, often referred to as the Marketing Mix Model, soon emerged as a standard approach to marketing planning in business classes and businesses.
Posted: January 12, 2010
Product Management
The concept of product management, according to the Free Encyclopedia of E-commerce, can be traced back to Proctor & Gamble in the early 1930s. At the time, it was called Brand Management, and it grew from the competition between two P&G products. Ivory soap was a top seller. Camay soap, however, was not. So the company appointed a manager to focus specifically on the product properties, pricing, merchandising and distribution of its Camay line. That approach proved successful and was soon adopted by other consumer packaged goods firms to manage their own products. As a dynamic concept, the practice of product management has evolved over time to include far more than the consumer packaged goods products it was originally applied to, and the approaches of product management today vary significantly from one organization to another.
Posted: December 8, 2009
How SOFT Hardened Into SWOT
Starting in the 1960s, Stanford University Management Professor and business consultant Albert Humphrey (1926-2005), using data from various Fortune 500 companies, developed a method to identify the factors which had influenced the companies’ ability to achieve their stated business objectives. His analysis, which examined each company’s operating environment, resulted in a grid representing its Strengths, Opportunities, Flaws and Threats, which became known by the acronym SOFT. Over the following decade, as the technique grew more refined and started moving from academia into corporate strategic planning sessions, the grid was refined to represent the company’s internal environment – renamed Strengths and Weaknesses, as well as its external environment – its Opportunities and Threats. Today, SWOT analysis is an important strategic management tool for matching a firm’s resources and capabilities against potential projects or ventures within its specific competitive environment.
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