Knowing your potential customers not only means understanding and researching their demographics and psychographics but also being aware of the innovation adoption life-cycle. Simply put, if you intend to enter a market place with a new idea for a product or service you should have an understanding of how rapidly your customers may or may not take to something new.
If you get in too early, you may wait a long time before you make sales, if any. Enter the market too late and you may have missed the boat. Understanding market timing can help you with your decision-making.
Take, for example, the so-called green industries. Those entrepreneurs who acquired the skills to serve the green industry early are still waiting for the mass market to adopt green practices whether it be in energy efficiency, water efficiency including rainwater harvesting and using green or environmentally friendly building materials.
The early adopters in the green practice area have been the larger innovative companies who have been able to research options and obtain funding for implementing energy efficiency and water efficiency processes and equipment. These companies may have adopted these measures for financial savings but also to enhance their reputations as pioneers, innovators and leaders.
Small businesses and start-ups that have got into energy efficiency and green plumbing have acquired the necessary skills and have been able to serve the smaller yet lucrative market of customers who are innovators. This not only includes other smaller companies but also residential users of electricity, water and those wishing to design their homes in an environmentally friendly way using new building materials and purchasing equipment for better resource management.
Basically the innovation adoption life-cycle consists of innovators, early adopters, the early majority, late majority and laggards. The innovators section of the market is usually very small but the early adopters provide a possible entry point into the market. If you take a look at the innovation adoption life-cycle shown on the Rogers’ Bell curve, you will see that if you combine the early adopters and late majority that is where you find the bulk of customers. By the time you get to the laggards so many competitors are in the market and price competition is high. Possibly the optimum timing is to enter the market during the early adopters phase when you can establish a strong early position.
The innovation adoption life-cycle may help you to better understand customers who embrace new technology before most other people buy and that they are likely to pay more for the product than late adopters. But remember that this is only a model. With some products and services in a fast-paced market they may only get to the early adoption stage and some other product or service knocks them out of the running. Yet, get your timing right and you can harvest possibly rich rewards.