In this article, we will explore the latter and explain how entrepreneurs can use the S-curve model to optimize costs and maximize return on investment in their promotional campaigns.
The Birth of the S-Curve
The S-curve was originally developed to describe the diffusion of innovations over time and has its roots in sociology and psychology. In the 1960s, in fact, scholar Everett M. Rogers introduced the concept of “diffusion of innovation” to explain how new ideas and technologies spread within a population. In that context, the S-curve was used to represent the diffusion of innovation, highlighting how the adoption process is characterized by three phases: slow growth, acceleration and saturation , which follow a sigmoidal trend (this is the technical name of the S-curve) over time.
Subsequently, the S-curve has been applied in various contexts , including, in marketing, as an essential model to show the relationship between the costs of promotional campaigns and their performance.
The S-Curve in Marketing
The S-curve applied to marketing describes the relationship between promotional costs and the performance of advertising campaigns.
The curve highlights how the marginal increase in promotional cost influences performance in at least three distinct characteristic responses:
Low-Budget Static Response : When the promotional budget is limited, marginal increases in costs lead to modest increases in performance. At this stage, poor consumer knowledge of the product or service and limited market penetration make it difficult to achieve a significant impact on performance.
High Response to Mid-Budget : As the promotional budget increases, a stage is reached where the investment generates an increasing and more significant return. In this stage, promotional campaigns gain momentum, leading to a rapid increase in sales and market share.
High-budget saturation : Beyond a certain point, further increases in promotional budget produce only a marginal increase in performance. At this stage, the market reaches saturation and consumer sensitivity to promotional messages declines.
The Importance of the S-Curve for Entrepreneurs
If you are an entrepreneur, a marketing manager or a marketing consultant, understanding the meaning of the S-curve model is essential. Through it, in fact, you can obtain valuable information on how to optimize promotional spending and maximize ROI. The S-curve helps identify the optimal point of promotional investment , that is, the point at which further increases in the budget begin to produce diminishing marginal returns. Investing beyond this point can lead to an inefficient use of resources and a reduction in ROI, up to the point at which the campaigns become uneconomical. Using the model can therefore lead to a strategic use of the promotional budget : up to a certain quota, we know that the investment will produce important results; going beyond this point will instead mean proposing aggressive campaigns to maximize market penetration, but with the consequence of reducing or canceling the immediate return on the promotional investment.
WE MAXIMIZE YOUR INVESTMENT BY TAKING CARE NOT TO NEVER EXCEED THE POINT BEYOND WHICH IT BECOMES UNECONOMIC. CONTACT US
S-Curve Based Strategies
In general, in fact, understanding the S-curve model can guide entrepreneurs in defining more effective marketing strategies. Some strategic considerations based on the S-curve include:
