SBIR Proposal Writing Basics: It’ll Take Years to be an Overnight Success
Gail
& Jim Greenwood,
Copyright © 2007 by
Whether
it’s a Phase I or II proposal, we often read comments in the commercialization
section like “immediate Phase III success is assured” and “virtually
everyone will be a customer for our product.”
These sorts of comments are naïve at best, reflecting a writer who does
not understand the challenges facing a new product or service in the market
place.
There
are a number of such challenges. This
month, we want to focus on one in the context of the “Adoption Curve.”
This market concept basically suggests that different sorts of people
will “adopt” a new idea or product at different times after it is introduced
into the market place.
There
are basically five types of people, according to the Adoption Curve.
The first is the INNOVATOR. These
are the folks who are eager to try out a new idea, take the risk of it being a
flop, and even pay more than if they waited a while.
The second is the EARLY ADOPTER, who is someone who wants to purchase
something before most other customers, but waits for the INNOVATORS to find the
bugs, and waits to see if the new idea will have some traction in the market
place.
The
third category of people, per the adoption curve, is the EARLY MAJORITY.
They are waiting to see what the EARLY ADOPTERS think of the new product.
While EARLY ADOPTERS are often opinion leaders, EARLY MAJORITY folks are
waiting to hear what those opinions look like.
The
fourth category of people is the LATE MAJORITY.
They are cautious about new ideas and products, and find it hard to let
go of whatever they are using now. They
are less likely to be influenced by the opinion leaders, but may cave into peer
pressure if those around them start to adopt a new product.
The
fifth and final type of person, per the Adoption Curve, is the LAGGARD or
NON-ADAPTER. As the title implies,
this person clings to the status quo and won’t let go even when peer pressure,
technology advances, and other forces urge them to change what they buy.
Therefore,
when you are describing the timing of customers jumping on board to buy your
product or service, you need to realize that not everyone will jump at the same
time (and some may not jump at all). This
also becomes very important when you project your annual revenues for the first
5-10 years of your product or service. It
also should influence your marketing efforts—how you appeal to an INNOVATOR is
not the same way you will appeal to a LATE ADOPTER.
“So,”
you ask, “how many people fall into each
of the five categories of the Adoption Curve?
I’m hoping 99% are INNOVATORS so I can assume large sales right after I
introduce my Phase III product.”
Unfortunately,
that’s not the way it usually works. Certainly,
the percentages of consumers who fall into each of the five categories will
change over time, will be different from one group of buyers to another, and may
be different for one type of product/service than another.
But one reference we use suggests that INNOVATORS are only about 5% of a
typical group of consumers. EARLY
ADOPTERS make up another 15%, while the EARLY MAJORITY and LATE MAJORITY each
equal about 35%. The
LAGGARDS/NON-ADOPTERS bring up the
balance, or about 10%.
Therefore,
when estimating the market for your Phase III product or service, be realistic
about how quickly this new idea might catch on with potential customers.
And even if you do a great job defining the market for your
product/service, the Adoption Curve suggests some customers in that market will
never buy, and others will wait a while before they lay down their money.
Even
if there is only one possible customer (like NASA or the Army) for your Phase
III product, you will want to know if he or she is an INNOVATOR, LATE MAJORITY,
or another category as this will give you a better idea of how quickly they will
adopt your innovation and what type of marketing effort may be required with
them. Of course, in such big
entities there likely will be multiple players in the buying decision, but
that’s a topic for a future article…