The high-tech buying process and the technology adoption lifecycle
The technology adoption lifecycle (TALC) describes buying behaviour for technology products in various market segments. The buying process is similar for the different segments along the TALC.
Visionaries and technology enthusiasts in the Early Market (see the TALC) follow the same stages of the buying process as pragmatists in the Chasm and Bowling Alley, although they have different motivators. Startups must understand this process and develop a sales and marketing process that fits with the buying process.
The high-tech buying process is distinguished by the speed of change of technologies in the marketplace and the information asymmetry between buyer and seller. Buyers cannot possibly understand all the complexity of a high-tech product.
This lack of knowledge makes them anxious about buying a product that is about to become obsolete or irrelevant to their business. The buyer’s information search is an attempt at managing the risks associated with the purchase. As a result, the seller needs to think about how best to deal with the buyer’s information needs. At this stage, the seller is more of an educator than a traditional salesperson trying to persuade a buyer.
Understanding high-tech customers
To develop effective marketing strategies, companies must understand how and why customers make purchasing decisions for high-technology products. There are three key issues in assessing their motivations:
- What factors affect customers’ purchasing decisions?
- What factors determine who the desirable customers are?
- What factors affect the timing of purchasing decisions?
Stages in the high-tech buying process
The buying process is related to buyer motivation. Once the buyer recognizes a need, the buying process begins. The buying process typically has five distinct stages:
- Recognize a problem: The buyer recognizes a need, which is prompted by either internal or external stimuli.
- Search for information: The buyer searches for information about how to solve the problem by identifying alternatives.
- Evaluate the alternatives: The buyer evaluates the alternatives according to six key factors:
- Relative advantage: The benefits of adopting the new technology compared to the costs
- Compatibility: The extent to which adopting and using the new technology is based on current methods of doing things and standard cultural norms
- Complexity: How difficult the new technology is to use
- Trialability: The extent to which the new technology can be tried on a limited basis
- Ability to communicate product benefits: The ease and clarity with which the benefits of owning and using the new technology can be communicated to potential customers
- Observability: How observable the benefits are to the customer using the new technology, and how easily other customers can observe the benefits received by customers who have adopted the new technology
- Make a purchasing decision: The buyer decides to purchase a specific technology and forms a purchasing agreement with the seller.
- Evaluate the purchase afterward: The buyer assesses how well the purchase has lived up to its potential. (that is, was the buyer able to learn to use the new technology? Did the technology deliver the promised benefits? Were there hidden costs to using the new technology?)
The buyer’s evaluation after the purchase is critical to the development of potential brand loyalty. Most technology products present a number of challenges (that is, technical, organizational) for the buyer.
Any of these challenges provide an opportunity for a startup to evaluate its whole product offering with respect to any missing pieces. Ask yourself:
- Is there a need for better product documentation and training?
- Does customer service need to be strengthened?
- Should the product be altered to provide a better customer experience?
Mohr, J., Sengupta, S., and Slater, S. (2005). Marketing of High-Technology Products and Innovations. Upper Saddle River, New Jersey: Pearson Education.