What You Need to Know About Strategy: Part II: Diffusion of Innovation Model and Brand Lifecycles
Everett Rogers created the Diffusion of Innovation Model in 1962. It explains how products gain momentum, which then spreads through different groups. Brand Lifecycle models have a similar-looking graph. The latter describes what is happening in the brand, and the former describes what is happening with consumers. For that reason we tend to favor the Diffusion of Innovation Model to develop language and concepts for customer marketing.
A great product or service and competent marketing will get most brands through the early stages. The first two groups of Innovators and Early Adopters are filled with self-starters. They want in early. However, the Early Majority has the potential of making a fortune for the brand. In order to get to the Promised Land, you have to cross the Chasm. Geoffrey Moore wrote the book Crossing the Chasm in 1991, detailing how it’s done.
The Early Majority is filled with pragmatists. They do not like change. Most do not move unless they are in pain. However, pragmatists are willing to consider disruptive approaches. So offer a solution to an intractable problem. If you can convert a few key influencers, momentum will build. As the Early Majority starts to research, they will begin to align themselves with their peers.
Moore uses the metaphor of a pin being toppled at bowling alley. One falls. It collides with another. Momentum builds. Moore describes this as a tornado that turns into a revolution.
Everyone appears to be doing it
It’s a stampede
No one wants to be left behind
The Diffusion of Innovation model is old, over 50 years old. Digital distribution has created scenarios in which brands never face the Chasm. How do you market an Early Adopter brand when the go-to-market strategy is to be bought out by a Late Majority/Early Majority company trying to reinvigorate growth? Anyone remember the dot-com bubble? If your plan is to get bought by Microsoft, you’ll never have to face the Chasm because Microsoft will carry you across it. Remember when Facebook bought Instagram?
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How do you market an Innovator brand that disrupts (reinvents) the business models for an entire category like news or the sharing economy? After redefining the category, you are immediately tasked with grabbing as much market share as fast as possible and then defending it like an Early Majority brand. Uber and Lyft are currently locked in this struggle. But if you are Uber or Lyft, you will never face the Chasm because you’ve redefined the category on your terms.
And what about freemium models, where brands give away most of the product for free and offer premium features for those who pay? Think of Pandora and now Microsoft Office. Because these products appeal to a majority in every segment, adoption is so high that the brand is profitable with only 5% of users paying. Again, where’s the Chasm?
Models from 100, 50, and even 25 years ago are good starting points. They need to be updated to address digital disruption, but they are very helpful when trying to develop language and concepts that appeal to consumers at different stages in the growth of a brand.