Technology in Business (MGT-111)

BBA Program, Session 2K22

Fall’23

Technological Adoption & Diffusion

(Week 03)
 Distribution of Adopters

Normal distribution is the most common pattern of adoption of new

products and services
Innovators: adopt new technology
immediately

Early adopters: follow the

innovators

Early majority: adopt new technology

just before the average for the market

Late majority: adopt after other

customers have adopted the
technology successfully

Laggards: prefer to avoid adoption as

long as possible

MGT-111; BBA; NBS 2

 S-Curves of Adoption

The S-shaped pattern indicates that

there is an acceleration point at which
a market “takes off” by:

• Pointing out customer behaviour , that

different groups of customers adopt new
products at different points in time for
different reasons
• Providing information about the right
promotional strategy
• Indicating appropriate pricing strategy
• Providing estimated demand growth
over time
• Providing information about the
financial attractiveness of a market at
different points in time

MGT-111; BBA; NBS 3

 The Chasm

• An early on point in a company’s life where things have stopped working,

when you’re desperately searching for a second wind.
• The Chasm is the stalled growth your company experiences while you figure
out how to sell to the Early Majority
• One must cross the chasm to sell to the mass market and achieve an adequate
return on investment.

Can you think of a product that died in Chasm?

MGT-111; BBA; NBS 4

 How to cross the Chasm?

Develop a beachhead strategy- focus your efforts on a small, well-defined

segment of the Early Majority that is underserved by existing products. Target
the one that has the greatest need for the new product by estimating the
product’s value to different markets

Emphasize the Value Proposition- develop a complete solution to

customers’ problems and show how it provides value to customers . The
point here is to consider what outcome your beachhead wants to create,
then supplement your technology with whatever is needed to create that
outcome—support, consulting services, additional features,
complementary solutions, etc.

Compare and Contrast- Make it easy for the beachheads to compare and
contrast your product to other options that they recognize. This helps
mainstream buyers understand which budget dollars you’re going after.

MGT-111; BBA; NBS 5

 Demand Forecasts

1. Determine how much to produce

2. Projects future costs in businesses based on economies of scale

3. Determines the payback on your investment in product

development

4. Makes pricing and advertising decisions

5. Determines the competitiveness of the market

MGT-111; BBA; NBS 6

 Information Diffusion Models

• In all markets, some people are innovators and adopt new products
independently of learning information from others, while most
people are imitators, and adopt new products when they learn that
others have adopted them.
• The functional form of diffusion is primarily a distribution of
innovators and imitators
- When there are few innovators and many imitators, diffusion follows an S-
shaped pattern
- When there are more innovators and less imitators, diffusion curve looks
like a convex

How to estimate the size of the market? Or diffusion rate?

MGT-111; BBA; NBS 7

 The Bass Model

A quantitative tool for forecasting the diffusion of new technology

products

• Based on the size of the market, the rate of adoption by innovators and
imitators, and the proportion of adopters in the previous time period

• Can be modified to include a variety of factors that affect the diffusion of new
technology products

• Most accurate at predicting the diffusion of consumer durables

MGT-111; BBA; NBS 8

 The Delphi Technique

An important tool to identify potential technological trends that might

impact the development of new products and services

• Experts are selected and asked anonymously for their estimates of the
likelihood of particular outcomes occurring

• Participants return their estimates to a coordinator, who compiles them

• Summary data outlining the mean and range of viewpoints is then returned to
the respondents who are asked again for new estimates in light of the
information presented by the other experts

MGT-111; BBA; NBS 9

 Read about the limitations and weaknesses of

1. Demand Forecasting

Reading Assignment 2. The Bass Model

3. The Delphi Technique

MGT-111; BBA; NBS 10

 Product Diffusion Models

Look at product characteristics to explain their rate of diffusion

1. The greater the benefit and the lower its cost, the faster it will diffuse

2. The provision of information about a new product and the

opportunity to test it enhance the rate of diffusion

3. Perceived risk of a new product lowers its rate of diffusion

4. The characteristics of adopters affect the rate of diffusion

5. Aspects of the environment affect the rate of diffusion

6. Social and political factors affect the diffusion of a new product

MGT-111; BBA; NBS 11

 Complements & Substitutes

Complementary Technologies- New products based on systemic

technologies employ ways to make certain that complementary
technologies will develop.
Substitution- Achieving the same objective by replacing one technology
for another.

• influences the competition between incumbent firms and new

entrants
• Implementation is difficult because they can be multi-level, face
political opposition, be partial, and take a long or a short time
• Companies take risks by deliberately developing new products to
substitute for old ones

MGT-111; BBA; NBS 12

 • Read through Chapter 4 from Shane (2009) and
Chapter 2 from Schilling (2020)

• Prepare the Case: What’s the Big Idea? (A) (HBS)

• Read the Article: New year’s resolutions for tech in

2023
Preparation for Next https://www.mckinsey.com/capabilities/mckinsey-
Week digital/our-insights/new-years-resolutions-for-
tech-in-2023

• Watch the Video: Innovating on a shoestring

https://hbr.org/2009/06/innovating-on-a-
shoestring

• Prepare for Quiz 01.

MGT-111; BBA; NBS 13

 Discuss, Prepare and Present the summary

G1- What are the important characteristics of

technological changes that damage established
companies?

G2- Explain the concept of performance trajectory?

Article How different types of technological innovations affect
___ performance trajectory?

Disruptive Technologies: G3- How a company’s revenue and cost structures play
Catching the wave. a critical role in evaluating proposed technological
innovation?

G4- Explain the critical elements for cultivating

disruptive technologies.

MGT-111; BBA; NBS 14

 Discuss, Prepare and Present the Case

G5- What is the Apple watch? Describe it in terms of

product attributes, functions and customer benefits.
G6- At the time of launch, Apple watch was a
complementary product to iPhones. Who among
iPhone owners would buy the Watch and for what
Case reason(s)? Consider and describe potential market
___ segments.
G7- Analyze the adoption behavior of potential Apple
Apple Watch: Watch buyers using diffusion of innovation model.
Would you Bet on it? G8- Which factor(s) would favour diffusion of
smartwatches? If Apple or any other player wants the
market to develop fully, which factors should it pay
attention to now?
G9- Putting aside the non-adopters (normally included
in laggard category), how long would it take to
complete the adoption of Apple Watch (e.g., 100% of
those who will eventually adopt) in you
“guesstimation”?

MGT-111; BBA; NBS 15