For explanation for the project life cycle, there was a guy called Edward Rogers who did all of this research in the early 1960’s and the research is just as valid today as it was in those days and whatever Rogers did, he looked at new products and how they get adopted over time. So if you actually look at this particular slide, you’ll see this time of adoption, if it were for example if it were a fad or a fashion it might be three months. If it’s something like microwave cookers it took 30 years before everybody got a microwave cooker. So clearly that’s not in this end point here is 100% which means that when everybody’s got it, everybody’s got it. So everybody’s got microwave cookers, everybody’s got dishwashers, everybody’s got car, everybody’s got washing machines and but it wasn’t always like that wasn’t it, everybody’s got mobile phones haven't they the diffusion of phones was a bit quicker than the all sort of who it was going to be.
But the interesting point about this is that if you look at this people when you launch something there are two and a half percent of consumers in every market that Edward Rogers called innovate, it's now this people you can launch or ignore them because they are kind of people who are a bit sort of off the map. The other kind of people who would buy anything because it’s new, you know the kind of person who—I mean a lady recently who got a pet rock. And I said to her “What do you with it?” she said “I talked it, take it for walks”. Now because this lady buys a pet rock you don’t set a fact pretty often produce millions of pet rocks do you? You will ignore them. And you will find that however, no matter what zany’s product you produce or service some loners will buy it you will ignore them.
Now the interesting group, is this next group and you will see that Edward Rogers called them the early adopters, they are called different things they call it opinion leaders, they are called—and I call them the “Jones Is” they are generally speaking if you look at them they are people who are totally independent, independent thinkers they tend to be higher source of economic groups, they’re well educated they’ve got money. But they really do not care what people think of and they’re the first to adapt to technology, they're the first to adopt sports game, that they're first to adopt fashion. And looking around this room I can see we've got no opinion leaders of fashion in here, but there were you’ll be allowed to insult me later on when we get to questions.
But the point about this people is they’re the ones who give a market credibility and the “Smiths” the next were not in that I mean if I bought a average golf, if I bought a fancy club or big bulb or the purple you know shaft and I went to the club they’d laugh at me. Where is it for club champion did they said “Where did you get from etcetera, etcetera” so them a very, very important group and the most interesting is when you actually launch a new product or service, ones you get about 8 or 9% of that curve that’s the point of which you can open the champagne bottles the rest is going to happened automatically.
So we move on to the next group and I will come back to that group later on. The early majority we call them well the “Smiths” most of us are in that group for most things we—it’s again. High access for economic groups we've got money, were well educated it's just that in the main we haven't original thought in our bodies. But if the gems is to it, if the opinion need is to it we will eventually follow on and do it and that gives a big, big kick to the market. Because quite clearly, when you get to this point here you will see that there is another group here, another 34% which I will come to in a moment. But this people are repeating and there are few and fewer new ones coming in so the rate of growth in the market must begin to decline.
Market is still growing but the weight of growth must begin to decline and so you get to the next group which is the late majority and this people tend it to be—and there are any tendencies this aren’t rules, tend to be low as economic groups and price tends to become important which I will come back to. And finally you get this group here which is the “Land Gods” people who put life through the rear mirror. I mean if you think about this whole concept of let say with the new drug in the medical market. There are some doctors who will prescribe a drug the moment it comes you know off that sort of registration circuit but there are other doctors who would wait eight or nine years before they’ve got the confidence to prescribe it.
Now that’s clearly important news isn't, it’s important information. So before I leave it if you look at the opinion leaders or the “Jones Is” when I’m helping companies launch new products that is the group that you always look for on the CRM system or on the Data Base and if they don’t know then there are ways of finding out. One way of finding out is to look at the new product and services you launch over the past decade. Find out who brought them first and profile them and look for more. Another way of doing is to ask the sales force etcetera, etcetera. But the point I'm making is when most companies launch new products they marmalade their efforts across the whole market when it’s quite clear isn't it.
But all of this are going to show precisely zero interest in it because they're not ready for it. Now if you spend less and you focus on this people here isn't it blindingly obvious that you can get much better return for your investment and promotion, you can move up that clove quicker and that is all I want to say about the diffusion of innovation. But you can see how that curve conjure ladies and gentleman goes with that one like that and this is the whole point when you get to this point here in the market the inflection point. And I've drawn an idealized product of life cycle here they tend to be lumpy but that’s not the point, in general this is what they look like. And again you will see that ones you pass the 50% point there that’s when the weight of growth begins to decline but the market is still growing.
So you tend to get over capacitated in the market to that point and the price is start coming down. Now the whole thesis I want to put over to this morning is that you do not need to drop your prices. And then the reason people companies drop their prices is because they don’t understand any of this and I can tell you there is nothing so practical as a good theory.
Transcription by:
Scribe4you Transcription Services