Aiming at the problems of product design in functional innovation and product adoption under the background of existing new technology and industry, based on the innovation diffusion theory, this paper explores and optimizes the cervical spine pillow product design method from the aspects of product function, concept and iterative strategy. Taking the intelligent cervical pillow product design as the experimental sample, this paper summarizes the core problems in the process of product innovation from the perspective of innovation diffusion theory, integrates the product design and optimization direction into different optimization paths such as core function, user experience and application scenario innovation, divides the user groups with strong diffusion tendency, and formulates different iterative strategies according to their needs, Thus, the subdivided iterative products with different optimization strategies are obtained to put on the market for diffusion test. The iterative products from two different product lines are cross compared and verified, and the total adoption is improved by 15.8% compared with the original products. At the same time, the targeted diffusion experiment results of potential user groups show a significant expression of diffusion potential boundary breakthrough. The design idea of innovation diffusion in the optimal design of cervical pillow products was explored. The product design mode of the "demand- innovation-adoption" is put forward. It is proved that the product iteration based on the information feedback of the diffusion process improves the user's new adoption probability and imitation adoption probability. At the same time, the feasibility of product design strategy research guided by innovation diffusion demand is verified.