“Chasm crossing is not the end, but rather the beginning, of mainstream market development.”
Geoffrey A. Moore
The phases of consumer adoption of any product/ service targeted towards mass adoption follows Availability, Accessibility and Contextualisation. The phases are overlapping and a single product might be experiencing different cycles simultaneously or wish to operate all three phases in different markets at the same time. It looks similar Moore’s stages of tech/production adoption but in today’s market even before the product reaches laggards, new competing products are being launched. The pace of innovation is fastest than ever!
Stages
- Availability: You make the product accessible to a select few customers (early adopters). Monetisation is limited.
- Affordability: You make the product affordable (early majority/ late majority) thus automatically expanding the market. Market is commoditised and mantra is to play on scale.
- Contextualisation: You add contextualisation features and make users pay more for the product as they know the product and always expect more. This is where maximum innovation also happens and the market becomes fragmented provided discretionary spending of the masses increases. You end up making new products/ features for your early adopters. It is the ultimate holy grail.
Take an example of ice cream. When it was launched, it was only meant to be served during special occasions and was available in very few flavours. The prices were then brought down by investing in supply chain and distribution to make it affordable for everyone but I remember always ended up eating two-in-one or orange sticks. Then came Cornetto and Feast, relatively higher priced products but consumers were willing to pay for it. Profit margins were definitely higher for such products but I bet volume of vanilla and chocolate ice would have made more absolute profit. Slowly and slowly, now we see nobody eats plain vanilla ice cream unless it is with a gulab jamun! People are paying 10x-25x for gelatos and the ice cream industry is flourishing more than ever. There are myriad flavours among thousands of brands and everyone has their own favourite.
I would say two very popular and heavily funded industries right now are/ will follow the same trend.
Ecommerce - Rather than the ecommerce industry, the product categories are undergoing significant changes. From Nescafe and Bru to 20-30 D2C brands on Cred itself. Now the share of wallet spend is shifting from FK/ Amazon/ BB/ Grofers to D2C brands very rapidly for commoditized products. It is not that consumers will stop using marketplaces but their spending will decrease, you will still go to Amazon to buy the new Oneplus or iPhone. Remember going to neighbourhood stores when you were a child to buy branded/ non-branded clothes, then once malls came up you always ended up visiting brand stores. Now equate your neighbourhood store to marketplaces and individual stores in the mall to D2C brands!
Payments - Players like Paytm, Google Pay, Phonepe have made payments super easy and accessible but now a band of players are coming up in BNPL, neo-banks which are trying to make payments contextual for relevant demographics (neobanks for teens, freelancers, white collared workers, etc) and offering personalised services and thus looking to move beyond monetisation made just via MDR or issuing.
Fun facts - The country that consumes the most ice cream is USA, followed by Australia and then Norway. The most popular flavour remains vanilla, then chocolate. Vanilla was rare and exotic in the late 1700’s. Ice cream in America in the 1700’s was rare and enjoyed by the elite. Industrial ice cream production in the US began in 1851. The majority of Americans – around 90% have ice cream in their freezers.
#startups #innovations #ecommerce #payments #d2c #monetisation #adoption #products