Product diffusion is the acceptance of a product or service by a target market. It is a process of communication whereby consumers first hear about a product, try it and share their impressions with others. The following are illustrative examples.
MediaA shoe design debuts at a fashion week and is widely covered by fashion magazines and blogs. By the time it hits the shelves, it is already in high demand. The shoe receives positive customer reviews and sells out without a need to discount.
Person to PersonA new lighter material for aircraft components is launched by an industrial materials firm at a trade fair. Engineers and media representatives are invited to visit company's lab for product demonstrations that showcase the mechanical properties of the material. Word spreads through the industry and the material gets incorporated into new designs.
Product GiveawaysA small musical instrument company releases a set of desktop speakers designed to appeal to musicians working at home. The company gifts the speakers to up and coming indie musicians to generate publicity. They find this to be an effective way to spark word of mouth about a product that they are confident musicians will find attractive.
Trial VersionsA market data service is stable, fast and reliable with an intuitive user interface. The firm competes with free services that are slow, buggy and unreliable. However, customers are resistant to paying for a service that is commonly available for free. The service fails to take off in its first year. In the second year, the company launches a free version that allows financial bloggers to export images of custom graphs and charts based on vast stores of data. This is instantly popular and generates much publicity. The service exceeds its own revenue targets in the second year.
Penetration PricingAn organic cosmetics company adopts a strategy of releasing new products with ecommerce partners at a penetration price in order to generate initial reviews. For example, they release a hand cream on a high volume ecommerce site for $1 that normally costs $6. They continue this pricing until the product has 100 reviews. The company finds that products with many reviews tend to sell. They have confidence in the quality of products and know that customers tend to write more positive reviews when they get a surprisingly good price.
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