Numerous past studies and development efforts have promoted a “product path” to PV market expansion. PV products are subsidized or supported with the primary goal of achieving economies of mass production and eliminating barriers to use. Lowering “cost per watt” is seen as the key to unlocking a vast potential market for photovoltaics.Examples of product support typically include: federal and state buy-down programs; coordinated government procurement of PV; elimination of barriers to capital formation; legislative packages supporting distributed energy; legislative and regulatory assistance to states and prohibition of restrictive covenants and ordinances. As stated in a recent research report by the Renewable Energy Policy Project (REPP): “The product path requires government involvement to increase the diffusion rate of consumer [PV] products through setting market rules, making strategic purchases, and other innovative support. ” This product-centric approach emphasizes pushing photovoltaics into various applications or markets under the assumption that lower prices, attractive financing options and the absence of barriers to implementation, will automatically lead to consumer demand. In contrast, the underlying belief in a unsupported industry is that people do things for their own reasons. So low price and ease of implementation do not exclusively drive market transformation. People must want to buy what is being offered. And motivating people to want something—especially if it contains an element of risk—requires the influence or involvement of preceding groups of people in the marketplace. Most “for profit” organizations working to accelerate market transformation focus on winning over groups of buyers in sequence according to their psychographic profiles. This involves identifying a group of early buyers who initially value a product offering, and then communicating or promoting a combination of tangible and intangible benefits in ways that lead to the sale of product. After capturing the first group, the organization refocuses its collective attention on the unique needs of the next group, and so on. In this way a succession of customers act to pull the market forward as the product is adapted or “positioned” to address their varying needs. From the standpoint of pure capitalism, it is important to realize that there is no guarantee solar power will automatically become widely adopted when it costs approximately the same, or even somewhat less than conventional sources of electricity. Many other factors influence market adoption. Overview of Commercial/Market Adoption Models There are a number of widely accepted models of market development or “market transformation” that offer guidelines for accelerating the adoption of new products in an emerging marketplace. Two of them provide useful background information for those involved in Renewable Energy. The first model is the Technology Adoption Lifecycle which was originally developed in 1957 based on social research about how communities respond to discontinuous innovations-new products or services that require the end user to change their past behavior. Everett Rogers broadened this model six years later in his book, Diffusion of Innovations . The Technology Adoption Lifecycle is a model that describes a market’s acceptance of a new technology in terms of the types of consumers it attracts throughout its useful life. It is probably the most well established model in “new product marketing” because it provides useful insight at all stages of market development. The underlying thesis of the Technology Adoption Lifecycle is that innovations are absorbed into any given user base in stages corresponding to psychological and social profiles of segments within that user community. The process can be represented by a bell curve with definable stages; each associated with a definable group, and each group making up a predictable portion of the whole community. The prescription for success in introducing a new product or innovation into any community is to focus first on the innovators, growing that market, then moving on to the early adopters, growing that market, and so on. To do this effectively, it is necessary to know and understand the psychological characteristics of each group of buyers. The psychographics of each group in the adoption process influences the development and dynamics of the market. For example, each group places a different value on product intangibles, and on endorsements or references from other groups. As products move through the adoption process, intangibles and user references assume more importance. Often, pioneering new products lose their initial prominence because a new entrant is more successful in product positioning based on a more effective mix of intangibles. This can be the case even if the second product is not technically superior. Another useful, albeit less developed model of market adoption is the Principle of Disruptive Innovation. This model provides a framework for commercializing new products whose performance is not as well developed as established products along some dimension that mainstream customers have historically valued. Developed by Clayton Christensen, an associate professor at the Harvard Business School, the fundamental principle is that new products usually fail when offered in direct competition (or in direct comparison) to established offerings because they are not initially able to deliver the value provided by mainstream products. Although disruptive technologies often become competitive over time, the task of an organization is to discover alternative applications or uses that have the greatest value to early customers, and focus on those first. Historically, the attributes that make disruptive technologies unattractive in established markets often are the very ones that constitute their greatest value in emerging markets. The Technology Adoption Lifecycle and the Principle of Disruptive Innovation share at least two fundamental attributes. First, both models describe market development in terms of the changing nature of the user rather than the product. Using similar terminology, both suggest that products are initially used by early customers who base their purchase decisions primarily on the product’s functionality. Then, once the demand for functionality has been met, vendors must begin to address the need for reliability that is demanded by an initial wave of mainstream buyers. A third phase of growth occurs when market followers and conservatives require that vendors meet their needs for convenience. The final group is mostly concerned with price. Another shared attribute is, despite a track record of proven success, both models are counterintuitive to most business managers. When struggling for survival, an organization will find it incongruous to focus on the peculiar or specialized needs of a small group of potential buyers, before addressing the more common needs of larger groups. Too often managers attempt to serve an entire market all at once, and unintentionally delay the market transformation process. The inescapable task of winning over a sequence of buyer types, combined with the necessity of promoting intangible benefits tailored to the user’s point-of-view, form the cornerstones of market transformation. These principles have repeatedly guided new products and companies to the achievement of mainstream market acceptance and commercial success. Much of the history and experience behind these models can be translated into helpful guidance for those involved in Renewable Energy. The Technology Adoption Lifecycle would lead us to expect that initially, customers would show interest in PV strictly due to their love of technology. But survey results indicate that many early users of PV are conservative by nature and therefore we know the expansion of many PV programs is not following the standard technology adoption sequence (innovators, early adopters, early majority, and so on). Without the support and inertia that is passed from group to the next, the PV industry has little chance of surviving without ongoing government subsidies. The relationship between product tangibles and intangibles shifts dramatically as different stages of the adoption process are achieved. Part 2 of this article will appear next week. About the Author Warren Schirtzinger is the owner of High Tech Strategies, Inc., a consulting firm specializing in strategy and marketing for technology-based companies. Schirtzinger has over 18 years experience helping organizations accelerate the adoption of emerging products or technologies, and is especially skilled in understanding the dynamics of market transformation. Schirtzinger has provided strategy and marketing council for dozens of high tech companies, as well as renewable energy organizations such as: Sacramento Municipal Utility District (SMUD), Solar Design Associates, and the Northwest Energy Education Institute.