in this video we're going to be talking
about the
product adoption cycle now this is a
helpful tool particularly at the early
stage of a venture when we're trying to
kind of identify our markets
understanding this process
simply helps to kind of convey the
importance of strategy early on and
really
what the process is like from the early
stages
to later on when the business is
obviously on a more stable footing and
so
we're going to be walking through this
particular cycle here
and this is really something that has
sort of been adopted from jeffrey moore
who
wrote a very popular book called
crossing the chasm which is all about
migrating to kind of the later stages of
the adoption cycle and really how
challenging it
is now if you've taken a business course
before you're probably familiar with the
product life cycle this is very similar
to that
although the focus here really is on
primarily the customer
so let's talk about this particular
cycle here we're going to go through the
different stages
and really what's important for the
entrepreneur
at the various stages of the cycle
so to start us off here we're going to
be kind of in this
area which is where we start
and to give you a little bit of a
description of each of the particular
stages and who we're
targeting right when we first start
a business it's really important for us
to focus on
those people who are most in need of our
product and service
the conventional wisdom early on for
many people is i want to focus
on the biggest market i want to go after
the biggest fish because that's where i
can get
the most money in return that's the
biggest opportunity
but really that's challenging because
one of the things
that's particularly problematic at the
early stages of a venture
is you don't have a lot of resources
right you don't have unlimited
distribution channels you don't have
unlimited manufacturing capabilities
your reach isn't very significant
and so you don't have enough resources
to go after those
really really big players those large
markets and so instead
what we want to do is we want to focus
on a smaller group of customers
right people that have the problem we're
trying to solve that are
fanatical about the things that we're
doing and we want to focus on those
people
so at the bottom here of the cycle this
is where i'm going to list some of the
different groups and so you have here
five different stages and i'm going to
list
as we go on who we're going to be
focusing on
at these different stages and so at the
beginning this is what we call
the innovators and the innovators are
really characterized by people that love
to try new things
right if there's a new technology a new
product that's out
they could know absolutely nothing about
it and hey it's cool it's new
i want to try it so these people are
generally what businesses try to target
at the very very early stage because
what's great about innovators
is they typically are willing to pay a
lot to be a part of something new
and they're usually pretty accepting of
faults
which is really important early on when
we haven't necessarily
built like the perfect product it's good
but it's got some kinks in it that we're
trying to work out
and innovators really understand that
they accept the fact that as a condition
of being first
at something it's not going to be
perfect and so they're much more
forgiving and willing
to provide feedback now as we kind of
get through
these particular stages here i mentioned
that we're going to start
and then we're kind of kind of work our
way sort of
this way and
here this area is what we call
the first
crack fall and
this is between the innovators and what
we call the
early adopters and so early adopters are
people that are
generally willing to be the first to try
something they're
not necessarily as immediate as
obviously innovators are just by their
very nature wanting to try new things
but they tend to adopt much
sooner than the kind of main street vast
majority of consumers
and so the first crack fall here is
particularly problematic
because we need to be able to articulate
that our product has some type of
compelling benefits
right this is the first stage where
we're trying to assess
product market fit and this is a
term that i've mentioned before
but is really meant to kind of say my
product that
solves these benefits does it actually
solve a problem
if we're able to articulate that then we
can get into the early adopter stage
if we're unable to articulate that then
typically we don't make it past
this first crack here this is when we
fall and we don't get any
we can't progress through the product
adoption cycle because again
as we're moving here this represents
revenue
and so as we're able to cater to a wider
group of customers
obviously our revenue is going to expand
now one strategy early on
that's mentioned a lot and i want to
address it here
is what we call a beach head
and this got its kind of um name
from the famous world war ii battle of
normandy
and where the allied forces uh landed on
the beach of normandy
and eventually were able to gain control
and it really served
as a beachhead it served as a point for
resources and personnel and all these
different things to land in normandy and
then to kind of spread throughout europe
and was extremely pivotal in the battle
of world war
ii against germany so building a
beachhead
in business terms right we're not
storming physical beaches and that sort
of thing
but we are kind of in a way storming
beaches with regards to products and
markets and so building a beachhead
is all about finding those
small group of customers like innovators
that are more likely
to receive my product in a positive way
instead of going after the main market
i want to go after a small niche a small
group of customers
that love what i do that can help me
gain
revenue gain market feedback i can
improve and optimize
my product over time and make it better
and then when i'm in a
place where i've got the resources i've
got a little bit more brand recognition
i've built some systems and so i operate
a little bit better then i can focus on
new markets that's a beach head
strategy and it's really important early
on because one of the biggest issues
that many early ventures have
is we don't have access to a lot of
capital
and so we don't want to spread ourselves
too thin by launching 10 different
products
or focusing on three different markets
we want to
pour our energy and our resources into
one thing
and do that almost obsessively
and then if we're successful if we solve
a problem
then we can move to later stages now
kind of going back to the product
adoption cycle
this here is what we call
this is the chasm and in jeffrey moore's
book he talks a lot about crossing
the chasm which is this divide that
takes place between the early adopters
and the early majority
and this is the most difficult thing
for a business to get over it's
extremely
challenging to do because this is where
we're actually getting from the
people that you know there's a there's a
solid group of people that really love
what we
do and we're able to reach our primary
target market
and so notice that there's a lot more
opportunity here
right there's a lot more opportunity in
this stage here but the only way that we
can acquire the resources and get into a
position
where we have a product that's ready for
this for this group the early majority
is if we actually cross the chasm
so what are the things that we need to
do to actually cross the chasm well
there's a couple of things
right the first thing we need to do is
we need to
finalize our product i'm gonna make a
list over here
our product needs to be market ready it
can't be a beta
it can't be something that we're testing
we're still trying to work out the kinks
i mean this product is ready to go
so we have to be able to finalize our
product which is the value in the
innovator and early adopter stage is we
have a little bit more flexibility there
we can do market testing we can get
feedback
without completely tanking our brand if
we get into
trying to cross the chasm with a beta
version it's absolutely going to ruin us
if it's not ready the second thing we
need to do
is we need to work on positioning we
have to position our product
in a way that it appeals to the primary
target market
again going back to the early stages
this is the importance of testing and
experimentation right we can test
different messages
if we have a website we can change our
value proposition statements we can
figure out what
resonates more with customers and then
once we figure out the formula right
what works
then that's a matter of replicating that
over and over again
with our primary target market the last
thing that we need to do
is we need to work on the distribution
we have to be able to distribute through
the right channels and again
this all goes back to understanding our
customer because if we know who they
are then we're going to know what are
the channels that we have to distribute
through and so you're kind of seeing
kind of the importance of understanding
who our customer
is and all of those sorts of things play
out here
is it makes it a lot easier to address
these three questions we know the
feature set that needs to be included in
our products
we know the way that we need to market
it and we know the way that we need to
get it to consumers whether that's
through
third-party retail whether that's
through an e-commerce channel direct
we've finalized all those sorts of
things so addressing that
is what helps us to cross this divide
this chasm right here
and ultimately get us into the kind of
early majority of people which are
looking for
products that are functioning they want
things that work they won't accept
mediocrity it needs to actually work and
help us
get there and if we're able to do that
eventually we get through
this early majority stage and then
eventually at some point
all products start to get into the late
majority which are the people that
generally will adopt after everyone else
has for the most part
uh and they're now seeing it everywhere
they see their neighbors have
something like it and they realize well
maybe i should actually adopt
and then eventually you've got what we
call the laggards which are the last
people right these are the people
that generally once the product is being
phased out and something newer is coming
in
then they're finally adopting like the
old technology or the old product and so
we're not necessarily focusing
on them per se um but obviously
as we kind of progress through then you
know we can attract them
interesting thing is as we're moving
through this cycle our marketing
strategies often change and i don't want
to get into that too much because that's
a pretty
lengthy discussion but as we're kind of
progressing into the late majority and
then eventually kind of moving down
into the laggards things like promotion
things like pricing become even more
important and so when we get into the
late majority and the laggards we're
often reducing prices
because these people need lower barriers
to entry to adopt
and hopefully we've picked up some
market efficiencies and economies of
scale that allow us to execute on those
but that's really kind of the roughly
the product adoption cycle and so
understanding the stages that we go
through
is really important for understanding
what we need to do
at each and every stage what are the
things that are important
and then ultimately when our product
kind of makes its way through the cycle
how do we support it when we're in these
final stages here
and we cross into laggards we maybe
aren't going to spend a ton of money on
promotion and marketing and those sorts
of things because we've probably already
built a pretty visible brand
and really this kind of becomes in a way
if you were to look at it from the
boston consulting group the bcg matrix
this because comes almost like a cash
cow right so we want to reduce support
as much as possible
we're basically kind of harvesting this
product for as much cash
and then ideally we've got something
else that we're putting into the start
phase here
working its way through the cycle that
allows us to diversify
our revenue but that's getting way ahead
down the road of course
you know it could be uh you know years
to actually make it all the way through
although depending upon the technology
could be relatively quick for sure
so anyways just to recap here again the
product adoption cycle
is all about understanding what are the
important
activities that we need to do to be able
to attract different consumers
as we've discussed crossing the chasm
between early adopters and the early
majorities extremely important
and so to prepare for that we want to
spend plenty of time
testing our ideas testing hypotheses
testing our assumptions
trying to figure out what works
ultimately trying to finalize our
product
finalize our positioning work out our
distribution
and then hopefully once we do those
things then we're prepared
to appeal to a bigger market but until
then
we really want to focus on developing
this beachhead here
and going after the smaller subset group
of consumers
that are more gonna be more favorable to
our product
and then we can focus on trying to cross
the chasm
you