9-520-012
JULY 18, 2019
Professor John Gourville prepared this case. This case was developed from published sources. Funding for the development of this case was
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JOHN GOURVILLE
Four Products: Predicting Diffusion (2019)
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.4
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
1 New Coke was a reformulation of Coca-Cola’s flagship product. It was introduced to the world on April 23, 1985, after blind
taste tests showed it to be preferred to traditional Coke. Consumer backlash was almost immediate, forcing Coca-Cola to
reintroduce its traditional product as Coca-Cola Classic and to eventually drop New Coke in most markets.
2 Dry beers were a 1980s attempt by the beer manufacturers to expand the market for beers. They were lower in alcoholic content,
crisper, less sweet, and had less aftertaste. After several years of activity, they almost completely disappeared from the
marketplace.
3 The Edsel was introduced in 1957 by the Ford Motor Company to great fanfare. Ford anticipated sales of over 1 million vehicles
in its first several years. In the end, however, consumers found it to be ugly and uninspired. It sold only about 100,000 units
before it was discontinued in 1960, its name synonymous with the greatest flop in automotive history.
4 Tom Coughlin, “Personal Computer And Mobile Phone Growth To Drive Storage Trends,” February 7, 2016.
https://www.forbes.com/sites/tomcoughlin/2016/02/07/personal-computer-and-mobile-phone-growth-to-drive-storagetrends/#2b2582a3518d, accessed July 2019.
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520-012 Four Products: Predicting Diffusion (2019)
2
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
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, or even 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 stadium.”
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-tothe-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 media 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.
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Four Products: Predicting Diffusion (2019) 520-012
3
Exhibit 1 Excerpt from an Article in Forbes, May 29, 2018
This Beijing Startup Designed an Autonomous
Robot Suitcase with Facial Recognition
By Ben Sin
The annual trade show CES (Consumer
Electronics Show) is a deluge of smart
appliances, many of which do things totally
unnecessary–case in point, the talking A.I.-
powered toilet–but there are some products that
legitimately excite the masses and prove to be of
real-world use.
A Beijing startup named ForwardX is hoping
its self-driving robot suitcase belongs in the latter
camp. Having made its debut at the Las Vegas
trade show to positive coverage, the Ovis is
ready to hit the global market with a
crowdfunding campaign that starts today.
The company foresees most of its initial
customers to be Americans, which explains
why the marketing effort is mostly centered
around its [Northern California] office. But a
week ago, I got the chance to meet company
founder Nicholas Chee for a demonstration in
Hong Kong.
At first glance, the Ovis looked like any other
suitcase: it’s rectangular, black, has four wheels.
But upon closer examination, I could see it has
two USB ports for charging gadgets and a 170-
degree wide-angle camera lens that is essentially
the Ovis’ eye. That, combined with the facial
recognizing, body movement-tracking algorithm
developed by Chee, allows the Ovis to follow its
owner around without additional assistance.
At CES, the suitcase could only follow a
person from behind. Since then, the company has
improved functionality so the suitcase can now
follow its owner side-by-side, and according to
Chee, avoid obstacles (aka moving humans) that
may get in the way. …
I conducted my own test during our meeting,
and I found that the Ovis mostly lived up to the
marketing claims–it followed one of Chee’s
colleagues from hotel entrance to check-in desk
and successfully stopped when someone got in
its way–but there were also slight bugs here and
there, including a 10 second stretch when the
Ovis began spinning in circles.
Chee claimed these software kinks will be
worked out long before the product hits the
market. Considering the funding ForwardX has
already secured … and Chee’s pedigree (he
studied electrical engineering at
Beijing’s University of Science and Technology
and won China’s prestigious Robocon
competition in 2003), the company should be
able to work things out.
There’s one more reason to be confident: the
Ovis isn’t ForwardX’s first self-driving product.
Ovis actually has an older brother of sorts–a selfdriving factory flatbed truck that is being used in
some of the warehouses of JD.com, one of
China’s e-commerce giants.
Chee, 37, said he started ForwardX two years
ago after a decade of working as hardware and
software engineer for various companies in
China because he “wanted a companion during
his travels.”
As mentioned, ForwardX is aiming this at the
U.S. market so Ovis has been built to cater to the
[stricter] U.S flying regulations. For example, the
suitcase has a built-in weight sensor to detect its
own weight; its 50wH battery (that can
supposedly push the Ovis for 12 miles) can be
easily removed to get through security; and the
suitcases’ lock is TSA-approved. … [The] final
retail price will be around $700.
Personally, I’m happy just lugging my own
bag at airports. But then again, I’m no jet-setting
CEO.
Source: From Forbes.com. © 2018 Forbes. All rights reserved. Used under license.
For the exclusive use of C. Medina, 2022.
This document is authorized for use only by Carlos Medina in UF MKT 5806 Fall 2022 Mod 1 taught by TIM HALLORAN, Georgia Institute of Technology from Aug 2022 to Oct 2022.
520-012 Four Products: Predicting Diffusion (2019)
4
Exhibit 2 Excerpt from an Article in the Santa Fe Reporter, October 2, 2018
Death Becomes Him
Entrepreneur Tackles Cremation Industry through Science and Design
By Julie Goldberg
Disclosure: For many years, I have served in
some capacity as a judge for MIX Santa Fe’s
BizMIX competition5, an accelerator program for
local entrepreneurs. I always enjoy reading the
various pitches and proposals and, as an
inherently lazy person, admire all the folks in
Santa Fe toiling to create new restaurants,
services and products for the rest of us.
This year, one of the initial pitches last spring
stuck out to me as it proposed a business to
revolutionize cremation via new technology with
help from Los Alamos National Laboratory.
Always on the look-out for science-meets-world
stories, as well as a sucker for anything that
sounds like the premise for a zombie flick,
I contacted Parting Stone founder Justin Crowe
and invited myself over to his Second Street
studio to learn more.
Crowe, 30, received a BFA in ceramics from
Alfred University but, even as an art student, was
just as drawn to the commerce side of the
endeavor. When he analyzed all the things
he loved about pottery—an obsession from the
age of 10—he soon realized he loved creating
things and he also loved selling them: an
entrepreneur was born.
“Building businesses feels like building art,”
he says. “You start with nothing, you have an
idea in your head … you have to figure out the
tools that you need and the people you need and
the funding you need and … slowly you take the
world that’s in your head and get the rest of the
world to see it like that. That was my process with
art and that’s also my process with business.”
5 Mix Santa Fe is a Santa Fe, New Mexico-based community
effort to encourage business, artistic, and social development.
BizMix is a business plan competition they run every year.
Crowe began creating products and selling
them on the internet. One is named Paul, a giant
torso whose crotch serves as a phone charger.
Another iterates on the selfie-stick by allowing
users to take photos in which they appear to be
holding hands with someone else. Both were
intentionally funny and designed as objects of
both aesthetics and discourse.
But after Crowe’s grandfather died in 2015,
the entrepreneur began thinking less
humorously about society’s relationship to
technology and more intently about the culture’s
relationship to mortality. “I started to research
death and mortality because I was facing my
mortality for the first time watching him die,” he
says.
He was thinking about how people inherently
strive to remain connected to their loved ones
after they die, and also began mulling the average
experience for those whose loved ones are
cremated: the trauma of seeing a loved one
reduced to ash and bone, followed by the
challenge of deciding how to live with those
remains. Crowe describes the entirety of the
cremation industry as “an unfortunate user
experience,” and set about improving it.
Knowing a bit about glaze chemistry, he
began experimenting with adding ashes to glazes
and from there launched Lifeware, a business
that incorporated remains into jewelry and other
objects. Crowe then began further
investigating the funeral industry, a point of
interest that became an obsession. …
“We were making cremated remains beautiful
and touchable and displayable,” he says, but
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Four Products: Predicting Diffusion (2019) 520-012
5
nonetheless, people were still left with 12 cups of
ashes. Crowe pushed forward. His current
business, Parting Stone and its technology,
Purified Remains, takes cremated ashes, removes
impurities, superheats them into molten remains
and then creates “purified remains,” a solid object
(or possibly many solid objects) that can be
touched and displayed.
Crowe applied for and received help from the
New Mexico Small Business Assistance Program,
which connects small businesses with technical
challenges like his to either [Los Alamos National
Laboratory] or Sandia National Laboratory.
Crowe was paired with [Los Alamos] scientist
Chris Chen, who described to me the technical
problem of firing the ashes at a high temperature
with a small amount of glass to create a solid
object as a “very easy” problem to solve.
The science may not be complex (if you have
a PhD in material science and engineering at any
rate), but the disruptive nature of Crowe’s idea
touches on a variety of complex issues regarding
attitudes toward death and memorialization.
Moreover, the rise of cremation versus burial
created an opening for someone with an
entrepreneurial spirit. “The death industry is so
starved of innovation,” Crowe says, and “that’s
created a situation where there’s a lot of
opportunity.”
On Sept. 20, judges picked Purified Remains
as the top BizMIX recipient and awarded it
$5,000. Crowe also picked up a CEO through the
… process (BizMIX mentor Kimberly Corbitt)
and is on his way to launching what appears to
be a very successful endeavor.
“The dream is that we’re creating a new form
of human remains,” he says. “The results will be
beautiful and touchable and clean, and they’re
going to have a really good and beautiful user
experience.”
Source: Julie Goldberg, Santa Fe Reporter, October 2, 2018, accessed online at
www.sfreporter.com/news/theinterface/2018/10/03/death-becomes-him, on July 2, 2019.
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This document is authorized for use only by Carlos Medina in UF MKT 5806 Fall 2022 Mod 1 taught by TIM HALLORAN, Georgia Institute of Technology from Aug 2022 to Oct 2022.
520-012 Four Products: Predicting Diffusion (2019)
6
Exhibit 3 Excerpt from an Article appearing in The Boston Globe, April 21, 2018
Climate Control: On Your Wrist
The Embr Wave Functions Like a Personal Thermostat, to Cool You Off or
Warm You Up
By Hiawatha Bray
The Embr Wave is the sort of gadget you
might see on a TV infomercial at 3 a.m. — a
chunky little box that straps around your wrist
like a watch. Except it doesn’t tell time, but rather
functions like a personal thermostat, cooling you
off when you’re hot or warming you up when it’s
chilly.
It sounds crazy, and even a little scammy. But
before you grab for the remote, check out the cast
of characters.
The Embr Wave was designed by three guys
from the Massachusetts Institute of Technology,
two with doctorates in materials science. Their
Somerville-based company, Embr Labs, has
attracted venture investment from a pair of
technology titans, Intel Corp. and Bose Corp., as
well as a $225,000 research grant from the
National Science Foundation. Researchers at the
University of California at Berkeley who tested
Embr Wave on their students say it works.
And even at a hefty $300 a pop, Embr Labs has
sold more than 4,500 bracelets in just six months.
If this is just a gimmick, it’s a mighty effective
one.
Co-founder Matt Smith acknowledged that
the whole thing seems quixotic. When he and
MIT colleagues David Cohen-Tanugi and Sam
Shames came up with the idea several years ago,
none of them were convinced it would work.
“This is a really weird project,” said Smith. “It
goes against intuition.”
In 2013, the three men entered an MIT contest
to devise practical uses for advanced materials.
Their inspiration came from sitting in a school lab
where the air conditioning was way too cold.
Instead of donning sweaters, they decided to
invent a way to warm up one person without
affecting the surrounding environment.
The Embr Wave bracelet contains a Peltier
device, a heat exchanger made of multiple layers
of different materials that get hot or cold when
electricity is passed through them. By reversing
the flow of current, the Peltier device can either
cool or warm a person’s skin.
The Wave doesn’t generate nearly enough
heat or cold to change a person’s core
temperature. But Sam Shames told me that’s not
the goal. Instead, the Wave is supposed to work
like downing an icy beer in July or holding a
steaming cup of coffee in January. It’s the sudden
surge of heat or cold that makes us feel better,
even though our core temperature has hardly
changed.
The Wave bracelet contains software that
varies the effect, producing pulses of heat or cold
that you feel on your wrist through the bottom of
the device. It’s this constant variation that helps
make it effective, Shames said. You adjust the
setting by pressing one end of a temperature bar
for warm, the other for cool.
Still, the effect isn’t dramatic, like walking into
a sauna or a stand-up icebox. In fact, it’s largely
psychological. The Wave makes people feel
cooler or warmer even though their body
temperature hasn’t changed. It sounds a bit like
voodoo, especially since Smith said the Wave has
no effect on people who are already comfortable.
Hui Zhang was a skeptic. But then she tried it
out on students at the University of California at
Berkeley, where she is a researcher in “human
thermal comfort.” The experiment put 49
students in rooms that were either too hot, or too
cold. After wearing the Wave bracelet for 30
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Four Products: Predicting Diffusion (2019) 520-012
7
minutes, she said the students reported a distinct
improvement, roughly equivalent to a fivedegree increase or decrease in room temperature.
“I was surprised when I looked at the results,”
Zhang said. …
Shames calls [his target market], the
“thermally underserved.” He told me that the
now-familiar room temperature standard of 72
degrees Fahrenheit was established in the 1960s
by testing men of average build, dressed in suits.
No thoughts of female metabolism, nor
adjustments for the rise of business casual.
As a result, many of us are always
complaining it’s either too warm or too cold at
the office, and these people are Embr’s core
market. Smith thinks that if enough buy a Wave
bracelet, office buildings can turn down their
heaters and air conditioners, saving companies
millions in energy bills and easing demand for
fossil fuels.
So the Wave is more than an odd-looking
wristband. It just might be a secret weapon in the
fight against climate change. …
Source: From The Boston Globe. © 2018 Boston Globe Media Partners. All rights reserved. Used under license.
For the exclusive use of C. Medina, 2022.
This document is authorized for use only by Carlos Medina in UF MKT 5806 Fall 2022 Mod 1 taught by TIM HALLORAN, Georgia Institute of Technology from Aug 2022 to Oct 2022.
520-012 Four Products: Predicting Diffusion (2019)
8
Exhibit 4 Excerpt from an Article appearing on Bustle.com on March 22, 2018
Sliced Ketchup Exists, and It Will Either Be Your Godsend, or Make You Super,
Duper Uncomfortable
By Rebecca Fishbein
Ketchup is a universally satisfying
condiment, adding a necessary oomph to
everything from french fries to hot dogs to, um,
salad, DON’T JUDGE ME. Of course, ketchup is
also a pain in the butt. It takes forever to come out
of bottles and tends to end up being too much or
too little. (Don’t even get me started on ketchup
packets, which are useless, messy, and frequently
manage to land on the nearest garment.) Some
innovative souls have seen our ketchup woes and
come up with a solution: slices of ketchup, which
won’t squirt or get your bread soggy. Genius.
[T]hese inventive ketchup slices come
courtesy of Bo’s Fine Foods, and they’re dubbed
“Slice of Sauce.” According to Bo’s Fine Foods’s
website, the slice creator, Emily, was inspired to
transform ketchup into a more manageable
condiment while trying out some of her family’s
recipes, as handed down to her by her father,
who was a restauranteur in Michigan’s Upper
Peninsula. Somehow, that experimentation led to
Slice of Sauce, a “no-mess, portable condiment
that adds a layer to flavor to anything from
burgers and sandwiches to wraps and burritos,”
per the site. …
[T]he Slice of Sauce creator was actually
trying to make a BBQ sauce when this dried
ketchup was birthed; after braising a bunch of
veggies for that sauce, she ended up mixing,
grounding, baking and drying them, hence the
strip of condiment. And earlier this month, she
launched a Kickstarter for Slice of Sauce in hopes
of getting the product in stores nationwide.
“We set out to share our passion for healthy
living and our love of food,” the Kickstarter’s
mission statement reads. “We want to spread
awareness that products with clean labels and
ingredients with integrity can also be fun. Slice of
Sauce™ began in our homes but we’re excited to
bring it to the shelves of grocery stores
everywhere. In addition, we hope Slice of
Sauce™ will address a need for healthier
alternatives in schools, hospitals, and the
military.” Emily and her business partner, Thac,
plan to use the Kickstarter funds to help finance
a manufacturing spot in Brooklyn and the
necessary labor to produce the product; they’ll
also go toward packaging, branding, and
shipping, in addition to Kickstarter fees and
processing.
“We’ve been working with a manufacturer in
Brooklyn, NY to produce our hand-made slices
and we’re ready to fulfill orders,” the site reads.
“We’re confident that we can satisfy our backers,
however, we encourage your early support in
order to ensure timely deliveries.”
Slice of Sauce isn’t the first dried ketchup
initiative of its kind, though it appears to be the
first with a crowdfunding campaign. A Los
Angeles-based restaurant, Plan Check Kitchen +
Bar, started cooking up something called
“ketchup leather” back in 2012, and it’s pretty
much the same thing as Slice of Sauce. Per LAist,
chef Ernesto Uchimura invented the ketchup
leather, dehydrating ketchup in an oven until the
condiment has the consistency of a Fruit Roll-Up.
Like Slice of Sauce, this innovation keeps bread
from getting soggy.
Then again, as the Atlantic pointed out in 2015,
we really don’t need to improve burgers by
jazzing them up with chewy ketchup. The piece
notes that it is cool to add something new to a
classic dish, which the ketchup leather succeeds
in doing, but to claim that soggy buns are a
problem is taking the whole thing a step too far.
… Just some food for thought.
Source: Copyrighted 2018. Bustle Digital Group. 2151638:0520AT.
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This document is authorized for use only by Carlos Medina in UF MKT 5806 Fall 2022 Mod 1 taught by TIM HALLORAN, Georgia Institute of Technology from Aug 2022 to Oct 2022.
Four Products: Predicting Diffusion
Read the power point attached to see images of the four products that you will analyze in this discussion board post.
- For this discussion, you are to advocate for one product that you feel will “diffuse” fastest. What are its strengths? Why will it succeed? Which products are likely to succeed? Why?
- Feel free to argue against products that you DON’T think will succeed and explain why.
