Stages of the Adoption Life Cycle and their Importance

What is the Technology Adoption Life Cycle? Why is it important to understand each stage of this cycle? and Why is it important to understand this cycle when developing a business model?

This week's blog will answer the above questions. We will also look at how we can apply what we learn from these answers in our entrepreneurship project.

Technology Adoption Life Cycle

Figure 1: Technology Adoption Life Cycle

The Technology Adoption Life Cycle (TALC) is shown in Figure 1 on the right. TALC is a model used to describe the types of consumers of a new and disruptive technological product that penetrates the market. The TALC classifies consumers into 5 groups. The groups are: Innovators, Early Adopters, Early Majority, Late Majority and Laggards.

As we can see from figure 1, the TALC model is shaped like a bell curve. Each group is roughly equivalent to the appropriate standard deviation. For example, the Early Majority and Late Majority groups fall within 1 standard deviation from the centre, therefore each group is approximately 34% in size. Additionally, in the TALC, shown in figure 1, we see a gap called the Chasm. This gap creates a challenge for companies to grow and capture the Majority markets. Additional information about the chasm, and how to cross it, will be provided in future blogs, so stay tuned!

The following is a brief summary of each of the 5 groups in the TALC:

• Innovators: The first group of people are the "techies". These are people who buy technological products at a very early stage. This group loves to play with new technology, trying out the different features and coming up with new applications for the technology. This group doesn't mind having "bugs" in what they buy, as a matter of fact, they enjoy finding the bugs and reporting them. 
• Early Adopters: The second group of consumers are the "visionaries". These are people who buy products relatively early on, dreaming, imagining, and envisioning the benefits that can stem from the technology or product. Unlike the Innovators, the Early Adopters are not technologists; they do not go into the technical details of the technology. 
• Early Majority: The third group of people are the "pragmatists". This group of people are driven by practicality. They do not want to buy into a technology that "might" one-day be mainstream. They buy products that have already proven useful, they like to see established examples of the technology or products before purchasing it. 
• Late Majority: The fourth group of consumers are the "conservatives". Unlike the Early Majority, this group of people are usually not very technologically competent. They tend to buy a product only when it has become mainstream. They like to have access to support, and they like to buy products that are easy to use.
• Laggards: The last group of people are the "skeptics". These are people who don't want to use new technology; they don't want anything to do with it. This group of people are the absolute last group of consumers to buy a product. From a marketing point of view, it is usually not worth pursuing this group.

It's very important to understand the differences between each group of consumers when marketing for a new technological product. Being able to adjust the marketing strategy as the product moves through the cycle is necessary for success. As Geoffrey Moore states in his book Crossing the Chasm: 

“Each Group represents a unique psychographic profile – a combination of psychology and demographics that makes its marketing responses different from those of the other groups.”

Additionally, it is important to understand that a product must go through one group of people before moving on to the next. Each group that has already adopted the product is used to "capture" the next group. Therefore it is important to understand how the profile of each group is related to the neighbouring group.

The Business Model Canvas and the TALC

Figure 2: Business Model Canvas

One of the tools used when developing a business is the Business Model Canvas. A picture of the canvas is shown in figure 2 (click here to download pdf). It is important to be aware of the five different groups in the TALC as we develop a business model using the canvas. The value propositions that innovators want are different than the value propositions that the Early Majority and Late Majority groups want. When building a business, the goal is long-term success and profitability. To be able to win over a large share of the market, it is necessary to win over the Early and Late Majorities. Therefore when building the business model canvas, we need to make sure that the value propositions are relevant for these two groups.

It is also important to keep in mind the five group profiles in TALC when developing other section of the Business Model Canvas. Mapping both the Canvas model with the TALC model is crucial for success. Channels, for example, might be different for each group in the TALC. Customer Relationship can also differ from the point of view of different groups. The Late Majority, for example, prefer to buy a product that has a proper support team, this is a specific customer relationship that other groups might not care for. 

Application: Entrepreneurship Project

We have recently began our entrepreneurship project for the Telfer Business School class of MBA6262. We have developed the first version of our Business Model Canvas, and now we are in the process of validating the assumptions that we have made. As we speak with potential clients, we need to be able to differentiate between the profiles of these people. We need to determine in which group each person falls under. If we only meet people who fall in the Innovators group, they might really like our ideas. This could lead us to believe that our idea is valid and has a lot of potential. But in reality, the idea might not prove successful. Additionally, knowing under which group a person belongs to, helps us to properly communicate to that person with the appropriate message. 

In conclusion, it is important to understand the Technology Adoption Life Cycle, and each of the groups within it. It is also crucial to keep in mind the concepts of this model as we develop our Business Model Canvas and as we validate our ideas. 

Sources

Moore, G. (2014). Crossing the chasm: Marketing and selling high-tech products to mainstream customers (3rd ed.). New York: HarperBusiness.

Business Model Canvas. From http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf