Factors Influencing the Rate of Adoption of a New Product

Marketers are faced with a number of challenges which arise from the environment. As a marketer at Microsoft with regard to new product development (Surface), I have ascertained that there are a number of productS factors that influence the rate of adoption of a new product (Evanschitzky et al. 21-37). The biggest worry in the marketing of a new product is whether the new product will be accepted by the chosen segments or not. Moreover, the rate at which the product will be accepted is also uncertain. Diffusion and adoption of a new product are affected by:

Product Factors Which Influence the rate of Diffusion

Relative Advantage      

            This factor dictates how improved a new product or innovation is over the previous product or generation. For example, is the new Surface Laptop much better than the existing ones? Relative advantage also relates to how the new product will offer more services than the existing ones. Relative advantage also lies in terms of whether a new product is modified (with better features, form, benefits or attributes) or it is going at a lower price (better terms of payment, warranty, exchange, deals) or more accessibility in terms of availability (physical store, electronic format) or better communication (Ozer, 2005; Wells W.D. and Prensky, D, 1996). Therefore, the relative advantage has the ability to increase the rate of adoption if the product has more attractive components of the marketing mix including place, promotion, and price.  In this case, Surface has a substantial relative advantage it is the lightest and most powerful PC ever.

Compatibility

            This factor determines the level of compatibility that an innovation can be assimilated into the ordinary individual’s life. If the new product is hard to be integrated into the daily life, it may not be adopted quickly. However, if the product is easy to be adopted, it will be adopted more quickly. Compatible products are adopted more fact than those which are hard to adopt.

 Complexity

            Complexity determines how hard or simple to use a particular innovation. If the new product is too difficult to be used it will be adopted at a very slow rate. Considering the touchscreen interfaces of Surface, some people who are in a hurry may not find it simple to use it as compared to the multiple menu laptops. The surface is so intuitive that toddlers can easily use it (“Home of the Microsoft Surface Device Family | Surface”, 2018).

Trialability

The easiness of experimenting an innovation determines its adoption. If the user finds it hard to experiment a new innovation, the individual is less likely to adopt it. Thinking of the Microsoft product Surface, the retail stores should have a sample to enable the customers to interact with it in a casual way before buying it (”Home of the Microsoft Surface Device Family | Surface”, 2018).

Observability

            The extent that a new product is visible to others determines its rate of adoption. An innovation that is more visible to others will drive the person to the peers and personal networks, this depending on whether they develop positive or negative reactions (Ozer, 2005). For Surface, I believe that people will observe the product and have positive reactions. This will go a long way in increasing the rate of adoption of the product.

Non-Product Factors Which Can Affect the Rate of Diffusion of Innovation

Cultural Factors

Culture defines an individual’s beliefs, perceptions and, on adoption of a new product. Some cultures encourage people to be conservatized while others encourage people to adopt an innovation. For me, I have found myself buying the latest phones brands in the market since I have been raised in an environment which embraces new innovation.

Technological factors

The level of technology dictates people rates of acceptance or rejection of new products.  For instance, the Surface tablet is the latest brand in the market coming at a time where there are various technological advancements in the state. I have found myself buying new products so that I cannot be left out of technology.

Legal Factors

            For a new product to gain quick acceptance, it must be acceptable by law. Fully legal products are more likely to be adopted fast than partially legal products.

Demographic Factors

            Demography dictates the age, occupations and income level of individuals. The young age, high-income individuals are more likely to be quick adopters than the middle class, low-income people.

Psychological Factors

Psychological factors can either make or break the adoption of an innovation or the introduction of new products. These factors relate to a person’s attitude, beliefs, perceptions, Lifestyle, culture or background. Some people find innovation threatening due to traditions barriers or image barriers while others welcome it.

Marketing Recommendations for Microsoft

The company should carry out a promotion campaign education on the use and importance of the new product.

Microsoft should set up retail stores that will have a sample of the Surface to enable the customers to interact with it in a casual way before buying it.

 A promotion policy should be set where if a customer introduces his or her peers, she or he should be given a discount on the next purchase. This will go a long way in increasing the rate of adoption of the product.

Better terms of payment, such as installment purchase or credit purchase and warranties should be advanced to regular and reliable retailers and customers so as to establish a better relationship with them.

The product should be availed as closer to the customers as possible. More accessibility in terms of availability (physical store, electronic format) or better communication will encourage the customers to adopt the product faster.

                                           3:2. Product Management Concepts

Factors that have contributed to Starbucks Success in Securing its Market

Strong Market Position and Global Brand Recognition

            Starbuck has grown to develop a very significant geographical presence around the world maintaining approximately 36.7% market share in the United States alone. It also has operations in more than 60 countries globally (”Starbucks – The Best Coffee And Espresso Drinks”).

 Products of the Highest Quality

            Starbucks continues to be recognized because of good quality coffee products it produces even in the midst of high production.

Appropriate location and Aesthetic Appeal of its Stores

            Starbucks is located in the most strategic and prime locations all over the world. The company has targeted, high visibility locations suburban retail centers and downtown away from heavy traffic and noises. This has earned them a significant competence and advantage to be able to penetrate prime markets and tap into customers convince factor.

Goodwill Among Consumers due to Social Responsibly Initiatives

            Since Starbuck is known to take part in CSR activities, consumers have developed goodwill attitude for the company as it activities are community friendly.

Diverse Product Mix

            Starbuck products portfolio has given it a high index that has enabled it to acquire customers of all age, gender, and income groups.

Starbucks Product Strategy

            In developing its popularity and brand image, Starbucks has emerged to have the strongest brand image in the coffee industry. I order to maintain its competitiveness the company has emphasized on product improvement using various aspects.

Product Concept - Coffee’s Products

            Starbucks continuously innovates its products in a bid to capture more of the market. The concept of marketing mix focuses on what is being offered to the customer. This product mix is a result of years of business innovation. Augmented products offered include the Wi-Fi service and the Starbuck card.

Generic Product: Coffee drink

Expected Product: Tea

Augmented Product: WI-FI and Starbuck card

Potential Product: Yet to be revealed.

Product Line

There are three main categories of the product. Namely Coffee, tea, Pastries, Smoothies, Merchandise and Frappuccino beverages. Since 1944 the company has been having an ongoing product innovation process aimed to offer new products to attract and keep the existing customers (”Starbucks – The Best Coffee And Espresso Drinks”). Thus, the product line of Starbucks’ product strategy mix involves beverages, food, and merchandise.

Branding Strategy for Starbucks

Starbucks does everything to protect any poisoning of its products since it is a provider of a premium coffee drinking experience in the industry. It does this by maintaining Global quality consistency, emphasizing on more certainty, co-branding, and usage of well-known brand names for the new products (”Starbucks – The Best Coffee and Espresso Drinks”). The main advantage of this strategy is that there is the building of a sustainable supply chain for the products. The main disadvantage is that it becomes difficult to deliver the right cultural expression for the customers.

How Starbucks Can Manage its Marketing Effort for the Existing and New Products

Differentiating its brand from those of the competitors and building a brand loyalty with the consumers around the world

Providing a premium coffee drinking experience

Improvement of the Augmented products offered such as the Wi-Fi service and the Starbuck card

Build A Common Brand Vision

Share its Vision with the retailers and customers

Product Life Cycle Stage for Starbuck Products

The products of Starbucks have undergone various stages from the time it was launched back in 1940’s as a new product to now approaching maturity. The products have grown in both quality and brand to acquire loyal users and build a very large market share. As of now, the products of Starbuck have earned its characteristics of a grown company nearly approaching maturity because the product line is still being improved. At this stage, the company needs to diversify its pricing, product strategies, distribution and communication strategies in a bid to attain the maturity stage and avoid coming back to the introduction stage.

3:3 Pricing Strategy

            Marketers have to price the company’s products using a strategy that fits the target market. The preferable price strategies for new products is Price skimming and Penetration price strategy. Price skimming is used when a product is first introduced in the market (Prasad, 1997 ; Utaka, 2014)). When a product is first introduced, it can be offered at a higher price and lowered later in case there is competition.

Advantages of Skimming Price Strategy

To the Organisation

Helps in establishing the Brand by establishing a strong connection to the market

Assists in creation of perceived quality which consumers often seek in new products

Attracts Status-conscious consumers, since price is equated with quality

It presents an opportunity to get hold of Early Adopters Brand Evangelists who are willing to pay more for a new product

Skimming price strategy enables the company to recoup costs of goods sold which includes salaries, marketing costs, purchasing of supplies and advertisement expenses.

Maximize revenue and profits for the company.

To the customer

Customers can be assured of high quality for the new products 

Disadvantages of Skimming Price Strategy

 To the Organisation

High prices may not attract quick sales

Since a few people would buy the product, the brand loyalty of the product may not grow

Customers may shift their loyalty to cheaper goods in the long run.

Getting high profits may lure other companies to come up with the same product thereby creating competition

As a result of low demand for the products, benefits arising from economies of large scale may not be realized.

To the Customer

The customer has to pay more to get the product.

The new product may not be of the best quality commensurate with the price of the product or service

Penetration Pricing Strategy

            This is a pricing strategy that is used when a company wants to enter the market for the first time. Under this price strategy, the company initially sets low price for its product or service and then gradually increases it once the product has developed a good customer base or having being adopted (Schiffman, L.G., and Kanuk, L.L., 2004) Below are the advantages and disadvantages of penetration pricing

Advantages of Penetration Pricing Strategy

To the Organisation

Price penetration creates a quick customer base due to a low price of a product because all other factors are not important when price offered by the company for a product is low since the majority of customers are price conscious.

This pricing enables the company to capture the market share from the competitors since, under this strategy, the price set for the products is low.

This pricing strategy compels the employees to be efficient since they are aware that the products will be fixed at a low price, therefore, they should target cost reduction.

This method helps in eliminating competitors from the market because a number of producers are not able to produce and sell a product at a low price.

To the Customer

The customer is able to get the new product at a reduced price.

Disadvantages of Penetration Pricing Strategy

 To the Organisation

The company is forced to sacrifice some of the profits at the initial phase when the product is being introduced.

Penetration pricing is not ideal for technologically driven products which are because the main idea behind this strategy is to create long-term customer base which is not possible for technological products.

The strategy may not create a pool of loyal customer because it may attract only the customers who are after profitable deals rather than quality and brand consciousness.

To the Customer

The customer can be supplied with a substandard quality since a lot of production efficiency is desired

Reference

Evanschitzky, Heiner et al. ”Success Factors Of Product Innovation: An Updated Meta-Analysis.” Journal of Product Innovation Management 29 (2012): 21-37. Web

Home of the Microsoft Surface Device Family | Surface. (2018). Microsoft.com. Retrieved 22 February 2018, from https://www.microsoft.com/en-ca/surface

Loudon, D.L. and Bitta A.J. Della, Consumer Behavior, Fourth Edition, 2002, Tata McGraw-

Hill, New Delhi.

Ozer, Muammer. ”Factors Which Influence Decision Making In New Product

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 Peter, P.J. and Olson, J.C., Consumer Behavior and Marketing Strategy, Seventh Edition,2005, McGraw-Hill Higher Education.

Prasad, B. (1997). Analysis of pricing strategies for new product introduction. Pricing Strategy And Practice, 5(4), 132-141. http://dx.doi.org/10.1108/09684909710184626

Schiffman, L.G. and Kanuk, L.L., Consumer Behavior, Eight Edition, 2004, Prentice Hall, India.

‘‘Starbucks – The Best Coffee And Espresso Drinks.” Starbucks Coffee Company. N.p., 2018. Web. 23 Feb. 2018.

Wells W.D. and Prensky, D., Consumer Behavior, 1996, John Wiley & sons, Inc.

Utaka, A. (2014). High Price Strategy and Quality Signalling. Japanese Economic Review, 66(3), 408-420. http://dx.doi.org/10.1111/jere.12054