Article written by William “Bob” Norris and Mark Kopec, principals of iMS2 LLC and Aerotek Sales, Robolliance Experts
Robotic products achieve success through rapidly leveraging innovation to bring products to market. Though technology is important to success, the most essential aspect of a robotics business is the business case. Understanding concepts, such as diffusion, modeling/forecasting sales rates, and developing marketing and business strategy to improve system adoption are imperative in successfully building these businesses.
The concept of diffusion of innovation suggests that every market has groups of customers who differ in their readiness and willingness to adopt a new product. As an innovative product spreads (or diffuses) through a market in successive, overlapping waves, most markets show the following patterns in the adoption of new consumer goods: innovators (2 percent of population), early adopters (14 percent), early majority (34 percent), late majority (34 percent), and laggards (16 percent).
Article written by William “Bob” Norris and Mark Kopec, principals of iMS2 LLC and Aerotek Sales. *
*Wikipedia https://commons.wikimedia.org/wiki/File:Diffusion of ideas.svg
One way to model the diffusion rate in order to provide sales forecasts is the Bass model. The Bass model is a very useful tool for forecasting the adoption of an innovative new product for which no closely competing alternatives exist. The model attempts to predict how many customers will eventually adopt the new product and when they will adopt. The question of when is important because answers to that question guide the firm in its deployment of resources in marketing the innovation.
In addition to modeling, there are several techniques to directly influence the rate of diffusion. One tool is known as Rogers Framework for the Diffusion of Innovation or the ACCORD model, provides a market assessment and strategy development tool for high tech products.
From the ACCORD model perspective, the speed of diffusion of new products is driven by:
• Relative Advantage: Whether innovation is perceived as better than what it is replacing.
• Compatibility: Whether the innovation is perceived as compatible with existing consumer behavior
• Complexity: Whether the innovation is perceived as difficult to understand and use
• Trial ability: Whether the innovation can be experimented with on a limited basis
• Observability: Whether the innovation is visible to other people (social effects)
• Risk: The degree to which adopting the innovation is perceived as leading to a bad experience for the user that the user cannot protect himself from
• Divisibility: Whether the innovation can be tried on a limited basis.
The ACCORD model variables impact the diffusion rate as noted in the figure below.
Based on the ACCORD assessment, marketing tools are used to frame the innovation to improve the rate of diffusion. When introducing breakthrough innovation, use the marketing mix to increase perceptions of advantage, compatibility, observability and divisibility while decreasing the perceptions of complexity and risk.
Business development strategy may also be used to improve the diffusion rate through affecting aspects of the ACCORD model. First, an appropriate early adopter, “beachhead” customer should be selected that will lead to opportunities and efficient market entry into other verticals in a “bowling pin” like strategy. Working with government entities and regulatory bodies should be a major aspect of that approach for several reasons.
Due to security requirements, government entities tend to be early adopters or, worst case, early majority customers. Some example, applications like airports with the FAA, installation security, refineries, nuclear power, borders and ports – all market opportunities for a security product - are subject to compliance with government generated operational rules and regulations defining safety and standard operational procedures. Government regulation compliance improves the relative advantages of a product through reduced costs for violations and a competitive advantage in bidding for contracts. Regulatory compliance reduces perceived risk and improves the value proposition. Observability and divisibility are improved as demonstration results are shared across agencies
In addition to oversight, many government entities outsource security work to commercial security providers. This represents a direct pathway for entering the commercial market at a quick adoption rate. Commercial security firms will have to incorporate robotic security systems in their product offerings to fulfill government contracts enabling easy translation into other business models and multiple vertical markets.