How Many People Will Adopt Your Product?

August 4, 2020
Kelly Harrigan

What is the ATAR forecast model?

The ATAR forecast model estimates the percent of sales based on a given market size. We use this technique to assess potential success of a new product or service, which helps clients make smarter choices during uncertainty.

The ATAR acronym (Awareness, Trial, Availability, Repeat), is based on the concept of ‘Diffusion of Innovation.’ For someone to be considered a reliable customer of a new product or service, they must first know it exists (Awareness). Once someone is aware of the existence of the new product, they need to opt to try it out (Trial). After someone has opted to try it out, they need to be able to actually purchase the product (Availability). If they are happy with the experience, they may adopt the product and become repeat buyers (Repeat).

Building a sales forecast is one of the most important steps in new product development, but historical product performance may not be relevant when assessing new and innovative solutions.  The advantage of ATAR is that its assumption-based.  We can use the target market size to suggest the magnitude of awareness, then proportion down to those aware and willing to try, and then further proportion down to those with access to the sales channel.  That estimate is multiplied by the number of purchases expected in a given time period to calculate the total number of repeat purchases.  Combine the initial trial market and repeat market to generate a total volume estimate (e.g. annual volume).

Why use the ATAR calculator?

The ATAR forecasting exercise breaks down the behavior of the market so you can understand whether you're solving a big enough problem.  We’ve used it with clients from large corporations to small start-ups in preparation for major product development milestones.  

It can be used to establish credibility when getting ready for an investor pitch. The ATAR framework can provide a forecast that makes explicit assumptions, inform the amount of funding needed to raise from investors, and help investors understand their ROI.

It's also a helpful tool for the Stage-Gate process. Innovation teams could apply the framework in a series for a portfolio management look at the market.  When looking at a collection of investments, managers can weigh the IRR (Internal Rate of Return) of a new product development program versus alternate investments in operational efficiency.

How do I figure out my inputs for the ATAR calculator?

For Awareness, a common market size to start with is the US population.  Out of the US population, can we narrow it down further to demographics that are likely to buy the product?  Consider your current advertising budget; what is the expected awareness % given the budget available?  Is there a more cost-effective way to build awareness with the target market?  This input is guided by smart market research work.

To find the Trial rate of an innovative product, we need to understand the needs and behaviors of our target customers on a deeper level.  Trig’s Insights + Ideation team designs, conducts, and analyzes customer research, uncovering proprietary knowledge of your customer’s response to a new solution. Disruptive products are tricky because people lack comparisons to know how much it should cost, so price becomes a significant driver.  We’ve developed a concept testing methodology that layers in price sensitivity (using Van Westendorp model) to understand adoption rate and optimal price range.  Design research plays a pivotal role in the precision of your Trial input.

Availability speaks to your channel strategy. Being available online is great, so long as your customer base has Internet access. While online retailers have become a dominant force, the convenience of distribution in Brick-and-Mortar stores may be a major factor for your product's purchase profile. Service delivery for durable goods can be a major factor across different regions.

Repeat purchase is similar to Trial in that you are trying to understand your target customer’s needs and behaviors.  Mapping out and testing the product journey with customers will tip you off to their use and reuse habits.  As you move from low-fidelity mockups to high-fidelity prototypes, usability testing can help you evaluate your product’s actual experience with real customers. This important ‘moment of truth’ is when your customer experiences the reasons for repurchase, leading to a more reliable input for repurchase rate input.

Typically, the ATAR model applies to products purchased multiple times in a year, such as consumer packaged goods.  It can be tweaked to apply to more durable goods, where an initial purchase lasts for multiple years. ATAR provides a forecast of annual sales, so a product that is estimated to be purchased on an annual basis would be a neutral multiple of 1 or 100%. A product that is replaced every 5 years would have a multiple of 0.2. A product replaced every 3 months would have a multiple of 4.

What if I find out that I’m not solving a big enough problem?

Sounds like a great opportunity to consider inclusive thinking tools.  Inclusive thinking starts with a curiosity to learn without assumptions so you can gather a broad range of perspectives.  When you’re seeing with fresh eyes, you’re more likely to discover ideas to expand your solution’s reach.  Cross-pollination is one method to look beyond your industry for similar customer problems to solve.  Macrotrends help you identify pervasive, global shifts so you can get ahead of your competitors for awareness, trial, accessibility, and repurchase. 

It’s worth noting that consumer attitudes are evolving on ‘fast fashion’ and other products positioned for high turnover, and consequently, high waste.  Your target customer may aspire to reduce waste, but the current market solutions make it too difficult.  What services, subscriptions, or upgrades can address the full product lifecycle as a business?  Rather than rely on a traditional use and disposal model for profit, can you provide tools to reconnect with customers so they continue to flourish?  

Trig uses multiple forecast approaches, but the ATAR model has proven to be a reliable tool to break down the behavior of the market into four drivers.  If you're still not sure about your inputs or how to solve a bigger problem, please feel free to contact us for guidance.

Kelly Harrigan
Senior Design Strategist

Kelly Harrigan is an explorer in both her professional and personal life. Natural curiosity about the world fuels her to uncover the physical, cultural, and environmental forces that shape people’s lives. Connecting the seemingly unrelated dots to inspire new product opportunities is Kelly's sweet spot. While she's comfortable living in the fuzzy front-end, she strives to help others push their creativity threshold as well. At Trig, Kelly is responsible for leading customer research studies, organizing and facilitating ideation sessions, as well as pioneering brand new services with trend research and trend field trips.


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