Key Points
- Between 40-90% of new products fail on the market.
- A new study from Florida Atlantic University created a mathematical innovation model grounded in psychology to predict the adoption of new products.
- The model divided adopters into four categories: innovator, early adopter, majority, and laggard.
Researchers from Florida Atlantic University have developed a new model that could improve the success rate of new product introductions. The study was published in the journal Physica A, and the results showed that this new model outperformed the most commonly used marketing model today.
The researchers used a combination of maths and psychology to predict sales data of 200 products sold in a supermarket chain over four years. They divided adopters into four categories based on their adoption behaviours: innovator, early adopter, majority, and laggard. They applied their innovation model to make predictions about which products would sell the most based on these different behaviours.
The results showed that innovators will try out a new product regardless of what others are doing. Early adopters are interested in future successful products and try to get them early. They react to the value of the second derivative of cumulative sales when making their decision. The majority are interested in products that quickly gain popularity, and are more likely to buy when the first derivative of cumulative sales is high. Finally, laggards see only the total number of adopters as a convincing reason to buy.
The researchers found that companies that want to survive and flourish in today’s fast-changing market need to constantly innovate and adapt to changing conditions, customer sentiment, and emerging trends. Accurate models of product adoption can help companies reduce waste from unsold products, which can also have a positive impact on the environment and decrease storage costs.
“We assumed that individuals’ decisions regarding the purchase of a new product are driven by the perceived type of adoption trend,” said Andrzej Nowak, co-author and a professor of psychology in FAU’s Charles E. Schmidt College of Science. “Innovators look for new products and try them out first, regardless of what anyone else is doing. Early adopters, who look for new future successful products, try to get them early. They react to the value of the second derivative of cumulative sales when making decisions. The majority are interested in products quickly gaining popularity and are more likely to buy when the first derivative of cumulative sales is high. The laggards see only the total number of adopters, which is cumulative sales, as a convincing reason to buy.”
The authors are excited about the potential of their innovation model, which could help companies better predict the success of their products and reduce waste from unsold goods. They are looking forward to further research in this area of retail product sales forecasting.