Early Majority

What it is:

The early majority is a group of people who purchase or try new products -- typically technology -- after a much smaller population of innovators and early adopters have done so.

How it works/Example:

The early majority is one of five types of consumers (the others are innovators, early adopters, late majority, and laggards) along the "Diffusion of Innovations Curve" pioneered by Everett Rogers. Rogers stated that 2.5% of those who embrace a new technology do so very early (the innovators); the early adopters represent the next 13.5% of consumers; the early majority (34% of the adopters) comes next; the late majority (another 34% of the adopters) comes next; and the laggards (16% of the adopters) are the last to try the technology.

For example, the first iPhone, launched in 2007, came with a $600 price tag. Two months later, Apple lowered the price to $400; in June 2009, the price fell again to $200 and the phone offered twice the storage. Nonetheless, early adopters camped out in front of Apple stores and other retailers in 2007 to get their hands on the first version. The early majority, however, is much more likely to wait for the $200 version and might only purchase it after personally hearing stories from innovators and early adopters who have used the product.

Why it Matters:

Rogers characterizes the early majority as a group of thoughtful people who are careful about accepting change. They aren't quite skeptics (that's the late majority), but they aren't quick to try out new technology. Often, they rely on recommendations from those who have used the product already.

Because 34% of consumers are in the early majority, the early majority often represents a first major "wave" of traffic for vendors and producers; that is, the innovators and early adopters can spread the word about a product, and the early majority can bring the profits.

Best execution refers to the imperative that a broker, market maker, or other agent acting on behalf of an investor is obligated to execute the investor's order in a way that is most advantageous to the investor rather than the agent.