A Theory of Relevancy

Do you wonder why certain people aren't excited about wireless home networks? Do you question why some people are reluctant to buy a new PC with the latest processor? Have you noticed how some people purchase personal digital assistants (PDAs), then let them sit in their cradles untouched?

If you've answered “yes” to any of these questions, you may want to look deeper into an issue I call relevancy .

The Role of Relevancy
In my first Consumer Advocate Voice column, I described my take on the Technology Gap — the gap that exists between the increase in technology innovation and the rate at which consumers are adopting technology products. I also discussed some of the potential causes of the Technology Gap, as defined by the AMD Global Consumer Advisory Board (GCAB), including: issues with trust, problems with systemic alignment, socio-economic factors, complexities associated with technology — and, lack of relevance.

In this issue, I will focus on technology relevancy and its effect on adoption. The holiday season is always peak technology buying time. The good news is that online consumer holiday retail spending alone was expected to reach $17 billion in 2003, a 21 percent increase over online consumer spending in 2002 (Jupiter Research).

How big a share of that spending was on technology products? According to the Consumer Electronics Association's (CEA) “10th Annual Holiday Purchase Patterns” survey (October 2003), nearly three-quarters of all U.S. households said they were likely to purchase at least one consumer electronics product as a gift this holiday season.

But, which products won? While I may not yet have an exact answer, I believe — even before all the results have been tabulated — that products perceived as relevant by consumers were at the top.

Essentially, the industry's success this holiday season depended in part on its ability to communicate the relevance of its products to people's lives. Surely, the industry is proficient in communicating new features, higher speeds and better quality. But features and speeds alone do not make a technology product owner — relevance does. So, what exactly is relevance? Defining Relevancy
To answer that question, the GCAB commissioned a first-ever study, entitled A Theory of Relevancy for Technology Product Adoption. The project defines attributes of relevancy and explores how those attributes come together to trigger product adoption.

Building on previous research in this field, the study examines six attributes of relevance, including:

• Familiarity — How familiar a person is with a product;
• Importance of benefit to me — How much personal value a person assigns to a product;
• Affordability — A person’s perception of the affordability of a product;
• Knowledge of where to buy — Knowing where and how to obtain a product;
• Perception of ease of install — A perceived understanding of how to install a product; and
• Perception of ease of use — A person’s perception of his/her ability to use a product.

To determine how these attributes come together to trigger adoption, the GCAB – with the help of Parks Associates, a research and consulting firm – surveyed more than 1,000 U.S. nationally representative households by phone to test the intensities of those attributes for six different technology products at different states of diffusion, from the microwave to the wireless home network (WHN).

For example, one of our survey questions is, “On a scale of one to seven, with one meaning ‘Not familiar at all’ and seven meaning ‘Extremely familiar,’ how familiar are you with a microwave oven?”

What We Found
One of our main findings is that the “importance of a product’s benefit” and a consumer’s “familiarity” with it affect how a consumer judges its “affordability.” This intrigued us, as a large segment of the consumer electronics industry focuses intensely on lowering prices to jumpstart adoption. Our data shows that the industry should be communicating the benefits of products to people’s lives first and foremost – because only once a product is deemed personally beneficial will judgments about its affordability even matter.

We also found that while it’s important, familiarity alone does not make an owner. For example, people who are familiar with and know where to buy a WHN still do not necessarily have plans to purchase one, whereas people who are highly familiar with, know where to buy, and see high levels of personal benefit in a WHN do have plans to purchase. The implication is that marketers of WHNs need to demonstrate a direct, positive connection to a consumer’s life to transform mere awareness into a purchase.

The study also found that owners of personal digital assistants (PDAs) ranked “importance of benefit to me” at about four (on a scale of one to seven, with seven the highest ranking) — the lowest of all the products. From a marketing perspective, the low score of “importance” by PDA owners is troubling. It may explain why, according to analysts such as Parks Associates and Forrester, PDA sales with their current utility have hit a plateau.

I was compelled to investigate this a bit further and found the following description of a high-end PDA on the Web:

“Breakthrough Stretch Display Processor 64MB RAM

Powerful and compact, the…handheld boasts…breakthrough Stretch Display with 50% more viewing area than other…handhelds. Instantly rotate the display from portrait to landscape. Features also include an ultra-fast 400MHz…processor, 64MB of memory, built-in Bluetooth, and more.”

Certainly this is troubling from a jargon standpoint. But it's also troubling because I suspect a consumer would have a hard time connecting to this description of a device most people use for schedule and contact management. This might mean more to me, a handheld user, if it told me, for example, that with a large landscape display and other new features, I could more easily view my spreadsheets, documents, photos and e-mails.

The Beginnings of a Theory
The GCAB's Theory of Relevancy for Technology Product Adoption study truly defines the multi-faceted concept of relevance. The study is moving from understanding past adoption patterns to predicting future patterns, and like all good research, raises several questions worth further consideration:

• How strongly must the various attributes of relevancy exist in a consumer's mind to trigger product adoption?
• Can these findings be placed into a predictive context or formula that would allow providers to assess weaknesses in product relevance, and then prescribe marketing solutions to address those weaknesses and accelerate adoption?

While we don't have all of the answers right now, AMD has already begun sharing this research with its consumer electronics partners to more clearly communicate technology product relevance, thereby speeding adoption and helping to increase overall sales.

If you would like to see a full copy of the report, please visit www.amdgcab.org at the “What’s New” section.