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Business Psychology - Latest Findings |
Article No. 101Business Practice Findings, by James Larsen, Ph.D.A New Marketing MetaphorCalifornia researcher contributes a fresh insight that compels marketers to reconsider their approach when introducing innovations.Robert Winsor, a researcher at Loyola Marymount University in Los Angeles, recently startled the marketing world by correcting an error nearly all marketing researchers have repeated for decades; and by correcting this error, he revealed a new marketing metaphor we can use to visualize the way people influence each other to adopt new products and services. Winsor presented his paper to the 1994 Southwestern Marketing Association Conference, and you can imagine how those in attendance must have felt: You're carrying on business as usual and a young fellow points out a mistake you're making (like using division instead of multiplication in a calculation you've performed countless times). You pause to consider his words and realize he's right. What would you do? . . . throw him out? . . . give him your keys and retire?! They gave Winsor a distinguished paper award. Of course Winsor had the advantage of fresh knowledge in mathematics and physics which revealed the mistake. Eventually, someone would have noticed. In the past researchers had assumed a level of stability in market conditions that simply doesn't exist, and they had assumed a level of trial-and-error marketing practice that is unrealistic. These assumptions had been required by research designs they used to figure adoption forecasts, the relative influence of advertising and other marketing factors, and to understand the role imitation plays in adopting new products. The formulas they used demanded it, but now that has changed. Winsor uses the term percolation to explain his understanding of how product innovations actually spread through a market, and he uses the example of a forest fire to illustrate it. The chance that an individual tree will be consumed in a fire depends upon neighboring trees, how many of them burn, how long the tree is exposed to high temperatures, and if the tree is isolated without nearby burning trees to provide a source of ignition. In dense forests, most trees will burn, but in sparse forests, few trees will burn. Translated into marketing insights, if potential customers are surrounded by people who have adopted a product innovation, and if this adoption is repeatedly brought to their attention, it's likely they will also adopt the innovation. Multiplied over an entire market, this innovation will be a success. But if the reverse conditions prevail, the innovation will not reach a level of acceptance necessary to remain in production. It will fail. Carrying the forest fire analogy one step further, one way to enhance the chance of market success is to introduce numerous ignition points simultaneously . . . rather than a single lightning strike starting a fire, 1,000 simultaneous lightning strikes. Rather than a few adopters of an innovation concentrated in a small market segment, many simultaneous adopters scattered throughout the target market, adopters visible to nearby potential customers. Also, when competing brands introduce the same innovation, an adoption of one brand not only reduces the potential market for other brands, it also eliminates the imitative value those customers could have offered others. This analogy vividly highlights the importance of being first to introduce a product innovation. Ideas to keep in mind, thanks to Robert Winsor. Reference: Winsor, Robert D. (1995). Marketing Under Conditions of Chaos - Percolation Metaphors and Models. Journal of Business Research, 34 (1995), pp. 181-189. www.businesspsych.org © Management Resources |