Use pages 1-9 (attached) in "Four Products: Predicting Diffusion (2011)" to answer the following questions

Questions for Analysis

1. Which of the four innovations discussed in the case had/could have the fastest diffusion in the market?
2. Identify 3-5 factors that led/might have led to the rapid diffusion of at least one of the four products in a target market.
3. Which of the four innovations appealed/or would appeal most to people in the market?
4. How quickly did customers adopt/would adopt innovations described in the case and why?
5. What are the product characteristics detailed in the case that supported/could support fast adoption?

Four Products: Predicting Diffusion (2011) One job of product managers, marketers, strategic planners, and other corporate executives is to predict what the demand will be for a new product. This task is easier for certain classes of new products than for others. For new consumer package goods, for instance, one can look at past product rollouts, one can look at similar products currently in the marketplace, or one can do test markets- selling the product in a small section of the country to assess consumer acceptance. Quite often, for new products that represent incremental variations or improvements over existing products, marketers do a pretty good job of understanding how that product will be adopted in the marketplace. This is not to say that managers always get it right, as has been made evidently clear in the case of New Coke,1 dry beers,2 and the Edsel.3 However, more often than not, managers of incremental new products predict demand within the right order of magnitude. Contrast this with "new-to-the-world" products - products that represent great improvements over products currently in the marketplace or those that represent completely new classes of goods and services. For these types of products, consumers have either (1) no benchmark or (2) an inappropriate benchmark for understanding the product. Consider the telephone. When first introduced to the world, it was dismissed as a curiosity item, unlikely to replace the seemingly adequate telegraph. And with the personal computer, it took consumers years to understand what it was and how it might impact their lives, and even then, it still only penetrated 30% of homes 15 years after it was first developed. For these new-to-the-world products, it is much more difficult to predict consumer acceptance (at least in the short run). This is not to say that firms do not try. Many firms develop predictions either in-house or by hiring a top- notch consulting or market research firm to do a demand assessment. The approach taken in these efforts often is one of adding up the pieces-for example, "We predict 10% adoption within Segment A, 25% adoption within Segment B, and so on." Unfortunately, these Four Products: Predicting Diffusion (2011) systematic approaches often rely upon predictions and assumptions that are shaky at best. The result is that sales estimates miss by many orders of magnitude. They are not off by 10% or 20%, they are off by factors of 10, 20, oreven 100. As one colleague notes, "We're not talking the difference between a single and a home run, we are talking about whether we are even in the right ballpark." Where do these predictions go astray? One answer is that these methods grossly underestimate how long it will take for that demand to materialize. We refer to this as "product diffusion" - the rate and scope of product adoption among the target market. The first step in predicting demand for new- to-the- world products is understanding what factors inherent in those products will either encourage adoption or hinder adoption among target customers. What product characteristics will accelerate product purchase and usage, and what product characteristics will act as roadblocks? Over the next set of pages, you will see four innovative products - some more innovative than others, perhaps. Ten years from now, some of these products may be well entrenched in our (or some customer segment's) daily lives. Others may be still struggling to gain customer acceptance. Still others may have long since disappeared, never having gained sufficient traction in the marketplace. Of course, it would be nice to predict demand for each of these products with some degree of reliability. As a first step, however, a marketer might settle for understanding what consumer adoption and product diffusion might look like. The goal of this exercise is to compare and contrast these four products to determine why one might diffuse rapidly and another not at all. What are the product characteristics that make Product X a likely star and Product Y a likely dog? Exhibits 1, 2, 3, and 4 provide brief newspaper accounts of innovations that have been introduced to the marketplace. Your job is to (1) rank the four innovations in terms of how rapidly and broadly they will diffuse in the marketplace, and (2) identify those high-level characteristics that account for those predictions. Note that it is insufficient to say "this product will never fly" or "this is a silly product." Rather, you need to dig down and determine why it will never fly or why it is a silly product. You should also ask what changes could be made to the product to increase the likelihood of acceptance. Finally, you should think about target-market selection. Perhaps a product makes absolutely no sense for the masses but will be particularly attractive to a segment of the population. What might such a segment be and how rapidly and broadly will the product diffuse within that segment? In the end, one should be able to identify that handful of factors that generalize across a broad class of products. You might even develop a template or framework that allows you to assess products beyond those identified in this case.Four Products: Predicting Diffusion (2011) Exhibit 1 Article Appearing in Fortune, October 29, 2001 The Best Thing Since Sliced Bread by David Stires A bright idea is one thing, but stick-to-itiveness can be far more important when developing a new product. It took 432 tries and nearly three years, but Oklahoma entrepreneur Stewart Kennedy, 29, says he and a team of food researchers at Oklahoma State University have finally perfected their formula for individually wrapped peanut butter slices. (Think Kraft Singles.) Now in test markets with Wal-Mart, Albertson's and other retailers, PB Slices could be coming to a store near you very soon. Fortune caught up with Kennedy to talk about how he developed the idea, how he's protecting it, and what makes a good PB&J sandwich. Q: Why does the world need sliced peanut butter? A: Well, people are too lazy to take out a knife and cut off a piece of cheese, aren't they? Q: Guess so. Any other reasons? A: It's just more convenient. No knives. No spoons. Makes our lives less stressful. And it's easy for little kids to take it with them or to roll around a piece of fruit. Q: How'd you come up with it? A: I was playing cards at a friend's house, and we were talking about crazy food ideas. One person said her mother wanted sliced peanut butter because regular peanut butter tears the bread when making a sandwich. Q: Why was it so hard to develop? A: It was sticking to the plastic. Or if it didn't stick to the plastic, it tasted like crap. It's easy to make a rubbery slab of peanut butter stuff. But to make a true peanut butter slice - that's hard. Q: Sounds frustrating A: We got so tired of eating peanut butter, it drove us crazy. We'd have 40 different prototypes, and none of them was right. Q: Did you ever feel like giving up? A: A few times. We thought we had the perfect product. Then we found out that the ingredient we used to release it from the plastic wasn't approved to be in the food chain. Q: What was it? A: A food-grade wax. At home, you can use as much of it as you want. But commercially you can only use like 0.01% or 0.001%. We had an ungodly amount. We'd spent three months thinking this was the one. I just wanted to puke. Q: I hear you've rigged it so none of your producers can steal your formula.A: We have three different stages in the production process, and at each stage there are different ingredients added, so no one company knows the full ingredients. That's just safety. Plus we have patents pending. And if you steal the idea, the university is going to call you a bad person because you'd be taking money away from their children. Q: Have you always been a peanut butter nut? A: Not really. My biggest thing was peanut butter mixed up with waffle syrup. I'd put it on biscuits, pancakes, and waffles. I grew up on that. Q: Oh. A: They don't have that in New York? Must be an Oklahoma specialty-food item. Q: What's next for you? A: We're coming out with a crunchy and a thick. Crunchy is harder to make because the peanut pieces poke through the plastic. Q: What about sliced jelly? A: It's already out there. It's called a Fruit Roll- Up. But the problem is that it doesn't have any moisture, so it doesn't work in a peanut butter and jelly sandwich. Q: Why not? A: A PB&J has to have "squoosh." The squoosh factor is very important. If you have sliced jelly you don't have the squoosh. Four Products: Predicting Diffusion (2011) Exhibit 2 Excerpt from an Article appearing in The New York Times, February 8, 2006 New Synthetic Surface for Thoroughbreds Hits Pay Dirt by Bill Finley Twenty years ago, Martin Collins concluded that the riding surfaces available to him as a professional horse show rider in his native England were less than satisfactory. He thought that if he added a little of this and a little of that to the sand that made up the typical surface in a show ring, he might come up with something better. So he went to a friend's junkyard and took the discarded plastic casings from some telephone cable and blended it with the sand. Collins did not know it at the time but he had just reinvented the wheel for thoroughbred racetracks. What started out as sand and cable casings has been perfected into something called Polytrack. Collins will not divulge the specific ingredients or their relative significance in the blend, but Polytrack is known to include wax-coated sand, rubber and synthetic fibers. The result is a racing surface that many believe is more forgiving for thoroughbred horses and that could go a long way toward easing the injury problem in the sport. ..."Polytrack is going to make a huge difference when it comes to injuries and keeping stars around," said Craig Fravel, the executive vice president of the Del Mar racetrack in California. "If you manage a racetrack, the most difficult thing you deal with is the issue of keeping the sport's pre-eminent horses safe and making sure they remain in the game for a long period of time. .. Fravel has been a Polytrack believer for a while, but others in similar positions were skeptical. Horse racing has rarely embraced change, and many did not see the need to alter the type of sand-based tracks that have been around since the game's earliest days. "I tried to get into American markets as early as the late '80's, and nobody in America would even take a look at what I had," Collins said. But Collins found a more receptive audience in England. Racing there had been conducted only on turf courses, but there were a couple of tracks that were looking to convert to dirt racing for the winter and they wanted a surface that would hold up in the harsher weather. In 2001, Lingfield Race Course in England became the first track to install Polytrack. Trainers and owners there gave it good reviews. Few horses broke down, the track held up to the English winter, and because Polytrack particles are coated in wax and there was a good drainage system, the track always dried out so quickly that there was never a muddy or sloppy surface. "I think of it as the surface wearing a rain coat," said Jim Pendergest, who represents Collins's company in the United States. "Water hits the stuff and it's just gone." Noticing Polytrack's impact in England, the management at Keeneland Race Course in Lexington, Ky., became convinced that there would be benefits to making the switch. Keeneland converted its training-track surface to Polytrack in the fall of 2004 and became partners with Collins in an effort to market the new track in the United States. The next step came when Turfway Park in northern Kentucky, which is owned by Keeneland in partnership with Harrah's Entertainment, was converted to Polytrack. The first American race on a Polytrack surface took place Sept. 7 when Turfway opened its fall meet. So far, Polytrack appears to have performed to expectations. "It's like walking on a pillow," the Turfway-based jockey Willie Martinez said. "I've been riding 16 years and I honestly have to say that this is the safest I ever felt riding in my entire career." Pendergest said: "It is very different from a regular surface, which can be very hard. Think of the concussion involved with a 1,200-pound animal Four Products: Predicting Diffusion (2011) going 40 miles per hour and landing on one foot. The impact is very severe and it is terribly hard on the legs.' With Polytrack, Pendergest said, "there is a cushion effect on impact." Since Polytrack's installation at Turfway, three horses have had to be euthanized after sustaining injuries in a race. Fourteen were euthanized during a comparable period ayear earlier. Trainers have also told management that their horses are generally coming out of races in good condition and are bouncing back faster. Over the course of a 30-day meet, instead of getting two starts from a horse, you might get three," said Robert Elliston, the Turfway president and chief executive. "You can see how this builds up when it comes to field size.' Because horses are running more often and because trainers are more likely to race grass horses on Polytrack than on conventional surfaces, Turfway has had some of the largest racing fields in the country . And large fields are a powerful attraction to bettors. At the recently concluded 24-day holiday meet at Turfway, the overall handle was up 37.7 percent. "I know that I bet a lot more on Turfway in 2005 than I did in 2004," said Dave Gutfreund, a professional handicapper. "The fields are fuller and more competitive ... and it certainly helps that you know what the track will be like every night when you do your handicapping. .. [Interestingly] the races at Turfway are being run in slower times on Polytrack, presumably because Polytrack is softer. If Polytrack becomes the surface of choice around the country, the records that have been set for various distances are likely to remain records. It cost about $5 million to convert Turfway to Polytrack, which has a grayer tint than the normal surface but would not look noticeably different to someone watching a race on television. Because Polytrack can handle an abundance of rain and snow and also the thaw-and-freeze cycles that can plague a track, Turfway will not be forced to shut nearly as much in the winter. Fewer lost days mean a larger betting handle and more profits. The same racing executives who could not be bothered to listen to Collins some 15 years ago are going to Turfway to check out Polytrack. ... So maybe Polytrack is the wave of the future. And maybe one of the sport's biggest challenges - keeping its stars healthy and in training - will begin to be addressed, thanks to a once-frustrated English show rider who decided there had to be a better way . Source: Bill Finley, The New York Times, February 8, 2006, p. C15. Copyright @ 2006 by The New York Times Co. Reprinted with permission. Four Products: Predicting Diffusion (2011) Exhibit 3 Excerpt from an Article posted to denverpost.com, August 15, 2011 Grave Tags Offer Digital Life After Death by Susan Gilmore Wave a smartphone over the bench-style headstone of James Wilson at Shoreline Cemetery in Seattle, Wash., and you'll learn he was a collision- repair specialist and successful businessman who loved to barbecue, fly his airplane and travel. You'll see pictures of Wilson and the life he shared with his wife, Faye, and of him with his airplane and riding on an elephant."They'll learn he was a genuinely nice guy and what he did with his life, what made him successful," said Faye Wilson. "It's for the family, for generations to come." This is all thanks to a quick-response code, or QR code, affixed to Wilson's grave. It's a tiny square code about the size of a postage stamp that gives you a link to a password- protected website with volumes of information about Wilson's life. These QR codes are similar to the bar codes found on most products. The digital patterns, when scanned by a smartphone or an iPad with the proper application, connect the user to a website with the person's written history, photos and videos. The information on the site is provided by the family, and the service is part of the headstone purchase. The code on Wilson's headstone was added by Seattle's Quiring Monuments, which began offering what it calls "living headstones" several months ago and has sold about three dozen so far. Last month, it put QR codes on the headstones of six Medal of Honor recipients and two Silver Star recipients at Seattle's Evergreen Washelli Cemetery. "It opens up the world to virtually anyone who is in our cemetery," said Washelli general manager Scott Sheehan. "Before, you might stand on a gravesite and read (the tombstone) and wonder what that person was about. Now you can read their life story. Every life has a story. That's our tagline." Dave Quiring, 68, president of the third- generation company, has affixed QR codes to the gravestones of his parents. When his father died, he said, the family found a scrap of paper in his wallet - the often-quoted lines by poet Robert Frost: "The woods are lovely, dark and deep, But I have promises to keep, And miles to go before I sleep, And miles to go before I sleep." That is now on his father's QR code and it gives Quiring peace when he reads it. "For many funerals, there are few young people," Quiring said. "This technology brings them back into the fold. This marriage of technology with history seems a way to make preserving memories more important to people." At first, Quiring considered not just affixing the QR code but carving it into the headstone, but he didn't want it so permanent. Not only can the codes be placed on tombstones, but they can be added to mausoleums, a bench in the garden, a sundial and even a cremation urn. Those who have passwords can go to the website for the person who has died and add even more information, including pictures and videos It costs $65 to put a QR code on an existing headstone, Quiring said. Four Products: Predicting Diffusion (2011)Exhibit 4 Excerpt from an Article appearing in Monocle, September 2007 Running Costs - Colorado by Ann Marie Gardner Newton Running is a relatively unknown running shoe brand that might just be one of the most exciting and inspirational launches in years. Over 5,000 pairs of shoes (at $175 a pair) were sold in the first four months - this from a company that makes its product available only through trade and athletic shows, on the internet and at one shop (owned by one of the founders) in Boulder, Colorado. In the billion-dollar sports footwear business, Newton Running is a David and Goliath story. Based in Boulder, co-founders and elite runners Jerry Lee and Danny Abshire spent 13 years finessing their patented technology for a running shoe that mimics running barefoot - typically a 30 per cent more efficient way to run. Newton's technology relies on simple physics. Remember Newton's third law? "For every action, there is an equal and opposite reaction." That's the gist of it. Newton's shoe (which can take two weeks to get used to) allows you to strike first with your forefoot, not your heel, and uses that energy to propel you forward. The shoe appears to give athletes a competitive advantage and Abshire, who has been making racing orthotics for athletes for 20 years and coaching runners for 18, says, "Newtons have up to 58 per cent more energy return than other shoes." At first, several large footwear companies (including one on the West Coast) were given the opportunity to buy the technology. Not one of them bit. "They concluded that the shoe was too difficult to mass produce," says Abshire. "After our third rejection we said, 'we know this'll work, let's produce it ourselves"." Lee believes that they have little competition because Newton's shoe targets forefoot runners, whereas all the giant footwear brands focus on heel strikers. Forefoot striking is the running style Source: Ann Marie Gardner, Monocle, September 2007, p. 103. of most professional runners and the one that both Abshire and Lee believe is the proper way to run. "We're guessing," says Lee, "that 20 per cent of the tens of millions of runners are forefoot runners. So our potential market is millions." Abshire says, "We spent so much time and research on the technology, but we're up against bigger companies with bigger budgets. If you check out the latest issues of running magazines, you'll see they are trying to copy us and talk about the 'third law principle' . But we are the first shoe company to build shoes for proper running. We think that most people have not been taught to run properly and the big companies have missed this market." Lee, who spent the first six months of this year launching the company ... says, "It's been quite a year. We had instant credibility because eight-time world Ironman triathlon champion Paula Newby- Fraser was winning races in our shoes. We targeted triathletes - a group of three million technology-driven athletes who know each other through events and blogging. And the internet allowed us to launch the company in a way we could afford. It's been a perfect storm of events for us that allowed us to launch our company." ... "With $13m of investment," says Lee, "we had to rely on friends but Danny and I didn't do this to make money." Abshire and Lee like the idea of being a little company with a good product. "If we're a success," says Lee, "we want to be able to share our success with people less fortunate." Abshire's goal is to continue to focus on the technology. Next off the blocks is a trail runningshoe to be launched in the spring, an even more specialized racing shoe and a walking shoe produced at the request of many athletes who don't want to wear anything but Newtons 7