If It Sells Soap It Can Help Sell Innovations: A Useful Lesson from Marketing

Getting small businesses to adopt new ideas is largely a task in marketing. The "customer" will "buy" the new idea if it meets a need at the right "price." The greater the perceived need and the lower the perceived price, the more rapidly the customer will adopt the new idea. This is the challenge in promoting new ideas to small businesses. In this paper we present a practical tool to sort out your customers and target your marketing approach. We use several concepts from Diffusion of Innovation theory, as well as a number of other practices from commercial marketing. Waste minimization technology is used as an example "product" that a Cooperative Extension Service program may be marketing to small businesses.

The profession of commercial marketing has developed a number of highly successful tools and ideas for understanding the customer's needs and developing a product to meet those needs. One of the greatest developments in marketing was the recognition that not all customers are the same. Potential customers can be grouped in several ways which improve our understanding of them, and our ability to market to them.

"Market segmentation" is the ability to segment your market into various groups, each of which can be provided with a unique product or communication to directly address their needs. Take automobiles, for example. Manufacturers recognize that one segment of the market is looking for safety, one for fuel economy and dependability, and one for performance. They may address this need through producing different products or through communications which emphasize these different aspects of one product.

There are many potentially useful ways to segment a market. "Innovativeness" and "Stage in the buying process" are two segmentation strategies which can provide some valuable insights into marketing to small businesses.

Not all individuals adopt a new product at the same time; some will adopt very quickly; others will adopt much later. This personal characteristic is "innovativeness," that is the degree to which an individual adopts a new product (innovation) early relative to other potential customers. Innovativeness is a key concept in understanding the diffusion of innovations through a population (Rogers, 1995).

Marketing typically recognizes five categories, from "Innovators" who adopt new innovations rapidly even though they are risky, to "Laggards" who resist adoption until there is no choice. Table 1 briefly explains each of the five categories in the order in which they adopt. Adoption begins slowly with "innovators" and then "early adopters" leading the market. Adoption then accelerates, but finally slows as "laggards" gradually move to adopt the innovation. Each group typically looks to the preceding group for signals that the innovation is successful and worth the cost. Each group looks at the world quite differently and responds to different marketing messages.

"Stage in the buying process" reflects the typical sequence of steps most customers follow in buying a new product or idea. Table 2 explains a common sequence of stages. The marketing profession recognizes that potential customers need different information at each stage in the process. Providing the right information at a given stage allows the customer to move rapidly from stage-to-stage and ultimately to adoption. Providing the wrong information at a given stage can stall or abort the adoption process. Our work suggests that small businesses adopt waste minimization innovations in similar stages and that the type of information needed at each stage is similar to that for other innovations (Bierma and Waterstraat 1995a, Spring; Bierma and Waterstraat, 1995b).

These two market segmentation tools, "Innovativeness" and "Stages in the buying process" can be combined in a matrix and used to assess the best approach to a particular market. Table 3 is an example of an innovation with relatively extensive diffusion through the market. Innovators and Early Adopters are already using it. The Early Majority recognize the need for the innovation and have begun to search for information about alternatives. In this case, widespread dissemination of technical information about the technology is warranted, as a large segment of the market needs such information to move on to the adoption stage.

Completing an Innovativeness-Stages Matrix might appear to be an overwhelming task, and, in fact, a thorough Matrix would require extensive market research. But a rough, and usually quite adequate, Matrix can be completed without a large research effort. The secret is finding good Key Informants.

To construct a matrix, begin by selecting an industrial sector and a specific innovation (or class of innovations - such as aqueous cleaning technologies), since different innovations may diffuse differently. Then find a few Key Informants. Key Informants know the market and can help estimate the extent to which an innovation has diffused through a population. Begin with managers of the businesses you are interested in. Extension programs often already have contacts in a few of these businesses. These managers usually have an extensive network of contacts with other businesses in the industry. They can be full of useful information about how new technologies are diffusing.

However, some of the best Key Informants are high profile trusted suppliers to the industrial sector you have targeted. These suppliers make their living by understanding their market and can be excellent informants. In our work on small, metal product fabricators we found the best Key Informant to be a regional sales representative with a major Midwest metal supplier. Many small business managers we interviewed had named this supplier as the most trusted, high quality supplier in the business. The sales representative knew many of the shop owners. He knew what technologies they were using and their interest in new innovations.

Most industrial sectors have similar suppliers. Initial interviews with the business managers will usually reveal these potential sources of Key Informants. For example, we found that most auto repair shops named a single tool supplier as their most trusted source of information on tools and new repair technologies. Among metal fabricators, nearly all mentioned the same waste management/recycling company that they trusted with their waste problems. All such companies can make good Key Informants

Key Informants may not understand the language of the Innovativeness-Stages Matrix. It is best to translate the Matrix into common industry language. For example, assume that High Volume/Low Pressure (HVLP) paint guns were being promoted to autobody repair shops to improve efficiency and reduce waste. A good tool supplier, even if they don't sell paint guns, can often provide a good estimate of the percentage of shops that have adopted the technology, and how many other shops are talking about it.

Through this kind of questioning, Key Informants can usually give you the information you need to understand the diffusion of an innovation through a population, and construct a rough Innovativeness-Stages Matrix. Using the matrix you can now begin to construct more effective marketing messages targeting specific segments of your market.

Once the Innovativeness-Stages Matrix is completed, you can use it to help build a more effective marketing approach. First, determine the "marketing fronts" - segments of the market where your marketing resources are going to be most effective. Returning to Table 3, where an innovation has been relatively well diffused though a population, there are two primary "fronts": moving "Early Majority" businesses to Adoption, and moving "Late Majority" businesses to become "Aware of Their Own Need."

Next, you can use your understanding of the typical needs of individuals at different "Stages" and of different "Innovativeness" to craft a marketing message which addresses those needs. Tables 1 and 2 summarize some of these needs, but we recommend Rogers' seminal text on diffusion of innovations (Rogers, 1995) as well as any number of good marketing texts for more detail.

As an example, consider the case of the poorly diffused innovation in Table 4. Marketing along two "fronts" is probably warranted. The first "front" must move "Early Adopters" to recognize their own need for the innovation. Ideally, marketing communications should help "Early Adopters" see their businesses as similar to "others" who need the innovation, or provide simple tools to help "Early Adopters" document their own needs. "Early Adopters" are motivated by opportunity for competitive advantage, so communications to this group should stress the need to stay ahead. "Early adopters" can often be reached through trade shows or other events presenting the latest in industry innovation.

The second "front" in Table 4 broadly covers basic awareness for the "Early Majority", "Late Majority", and "Laggards". Most businesses in these groups are unaware of the innovation or the need for the innovation. One-to-many communication channels, such as trade media and professional meetings, can be useful. Communications should use real cases and industry "hot buttons", such as cost, efficiency, or quality. The purpose is to create general awareness and an openness to considering one's own need for the innovation. Technical details of an innovation would likely be of little value on this "front".

Promoting innovations is an act of marketing. Carefully conceived marketing plans can greatly enhance success. The understanding that different market segments have different product and information needs is a basic concept in commercial marketing. "Innovativeness" and "Stage in the adoption process" are two useful ways of segmenting a market. The Innovativeness- Stages Matrix, combined with an understanding of the different needs of the market segments, provides a powerful tool for focusing our marketing efforts without extensive marketing research or resources.

Rogers, E.M. (1995). Diffusion of Innovations. New York: Free Press.

Bierma, T.J. and Waterstraat, F.L. (1995a) Marketing pollution prevention. Pollution Prevention Review, 5(2), 63-72.

Bierma, T.J. and Waterstraat, F.L. (1995b). Promoting P2 among small metal products fabricators. Pollution Prevention Review, 5(4), 27-40.

Kotler, P. and Armstrong, G. (1991). Principles of Marketing, 5th Edition, Englewood Cliffs, NJ: Prentice Hall.

Weinstein, N. (1988). The Precaution Adoption Process. Health Psychology, 7(4), 355-386.