adoption diffusion 16june08 n32

8/3/2019 Adoption Diffusion 16June08 n32

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The ADOPTIONand DIFFUSION of

Innovations


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The Adoption Process

KNOWLEDGE PERSUASION DECISION

IMPLEMENTATIONSCONFIRMATION

TIME

The decision stages that focus on internal

consumer influences (psychological/social)that lead to innovation acceptance/rejection

A micro process


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Steps in the

AdoptionProcess


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Variations from the NormalAdoption Curve

Case in Point: Airbus versus Boeings 747R&D = years


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The DIFFUSION PROCESS is the spread of aninnovation from its source to the ultimate

consumer that focuses on external forces.

The key elements of Diffusion are:(1) an innovation is

(2)Communicated through certain channels(types of change agents & information)

(3) Over time

(4)Among the members ofa social system(types of audiences, community).

A macro process


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2.5% Innovators

13.5% Early Adopters

34% Early Majority34% Late Majority

The Diffusion Process hasidentified adopter typologies that are

linked to marketing strategies.


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Diffusion Process, Adopter Categories

INNOVATORS - are first to buy andtypically described as venturesome,

younger, well educated, financiallystable, and willing to take risks.

EARLY ADOPTERS - are local opinionleaders who read magazines and whoare integrate into the social systemmore than the average consumer.


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EARLY MAJORITY - solid, middle-classconsumers who are more deliberate

and cautious

LATE MAJORITY - described as older,

more conservative, traditional, andskeptical of new products

Diffusion Process,Adopter Categories


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Laggards Resist change

Conservative

Like tradition Often older & lower in

socioeconomic status

Nonadopters

Refuse to change

OK, we will

buy X.

If I have

to buy itI will.

No way!

Diffusion Process,Adopter Categories


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Diffusion of innovation research traces the spreadof product acceptance across its product life cycle

Total Industry

Profit

+

$ 0

MarketIntroduction

MarketGrowth

MarketMaturity

SalesDecline

Time

Total IndustrySales

Stage customers:

Early Adopters Early Majority Majority Laggards


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THE DIFFUSION PROCESSHow different segments of the market act

P

ERCENTO

FTOTALM

ARKET

TIME

EARLYAD

OPTERS-13.5%

L

ATEMAJORITY-34%

LAGGARDS(INCLUDINGNONADOPTERS)-16%

These phases of adoption are important because they are linkedto different marketing strategies during the product life cycle.


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Life-Style Characteristics ofInnovators and Non innovators

Characteristics Innovators Non innovators

Product Interest MORE LESS

Opinion Leadership MORE LESS Personality:

Dogmatism OPEN-MINDED CLOSE-MINDED

Social Character INNER-DIRECT OTHER-DIRECT

Category Width BROAD NARROW

Venturesome ness MORE LESS

Perceived Risk LESS MORE

Theory


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Life-Style Characteristics ofInnovators and Noninnovators

Characteristics Innovators Noninnovators

Purchase and Consumption Traits:

Brand Loyalty LESS MOREDeal Proneness MORE LESS

Usage MORE LESS

Media Habits:Magazine Exposure MORE LESS

Television LESS MORE

Specialized Magazine MORE LESS


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Life-Style Characteristics ofInnovators and Noninnovators

Characteristics Innovators Noninnovators

Demographic Characteristics:Age YOUNGER OLDER

Income MORE LESS

Education MORE LESS

Occupational Status MORE LESS Social Characteristics:

Social Integration MORE LESS

Group Members MORE LESS


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is influenced by* Competition Intensity (+)

* Channel Coordination (suppliers &

distributor reputations) (+)* Standardization of Technology (+)

($) Resource Commitments (+)

Communicationin groups outside an individualspersonal network (heterophilous groups) andcommunications among peers and family (homophilousgroups)

Speed of Diffusion


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Communication in the DiffusionProcess

1.

Trickle Up and Trickle DownThe transmission of influence between socioeconomic groups can

be described as a trickle-downprocess from higher to lower

groups (the traditional view) or a trickle-upprocess.

Occasionally, a trickle-up direction occurs. For example,

innovators and early adopters of jeans and of bluegrass and rock

music were those in lower socioeconomic classes.

2. Trickle Across

Since the post World War II period, a leveling effect in

socioeconomic status has occurred which makes trickle-down or upeffects less relevant. Mass media now communicate information on

innovations to all classes. A more likely process of diffusion is one

that occurs across groups, regardless of socioeconomic status,

known as a trickle-acrosseffect.


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Communication Flows

Two-Step Flow of Communication

COMPANY

MESSAGE

OPINION

LEADERS

TARGET AUDIENCES


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Two-Step Flow of Communicationand Adopter Categories

Early

adopters

Innovators Early

majority

Company Message

from mass media

Product Category

Opinion

leader(s)

Potential target

audiences

Opinion recipient 1

Opinion recipient 2

Opinion recipient 3


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Positions of Status

OPINION LEADER - one who occupies a position ofinformalinfluences over the attitudes and overt behavior

of others. Opinion leadership isearned

not assumed.

CHANGE AGENT - one who occupies a professionalposition offormalinfluence associated with a given roleof status. Change agent status is assumed, notnecessarily earned

FOLLOWER - not a passive patsy. Actively seeksinfluence.


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Characteristics of Opinion Leadersin contrast with their followers

More like, than unlike, their followers

More technically competent

More socially accessible

More cosmopolitan

More innovative (receptive to change) Higher media exposure (more informed)

Higher social status

More conformist with social norms and values


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Industrial Firms,Diffusion of Innovation

Factors related to innovativeness among industrial firms

1. Favorable attitude toward scienceas witnessed bystatus given scientists in firm.

2. Cosmopolitanismsas indicated by worldwide travel ofexecutives and lack of secretiveness.

3. Adequate information sources

(a) high subscription levels to scientific journals

(b) high degree of contact with universities4. High growth rate (sales)

5. Lack of shop-floor resistance to innovationSource: Journal of Industrial Economics (1959)


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The Winds of Change

0

1000

2000

3000

4000

5000

6000

7000

1999 2000 2001

GermanySpain

Denmark

U.S.A.

Total Power Capacity , in Megawatts

Johnson, Keith. In Energy Hunt, Is EU Tilting at Windmills? WSJ, A13.


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Characteristics That Encourage andDiscourage Diffusion

Encourage

1. Relative

advantage2. Compatibility with

past usage

3. Simplicity of use

4. Observability

5. Trialability

6. Divisibility

Discourage

1. Value barrier

2. Usage barrier3. Complexity

4. Risk barrier


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Marketing Value Added (2000)(Shareholder investment & Co.s current value)

WINNERS: Pharmaceutical Companies

- Innovation against diseasedisability, & death

- new tools to prolong life & wellness

RELATIVE ADVANTAGE - is an enhancedbundle of benefits or clear-cut advantages

over existing offerings (+)

Characteristics of New Products


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Marketing Value Added ???

LOSERS: Ford, G.M., Chrysler,

1950 - cars moved people from A to B

2000 - high in car mileage & quality ,cars still basically move people fromA to B (No fundamental change)


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Compatibility with existing habits, values andconsumption behavior, similar usage asexisting products

Characteristics of NewProduct Success

COMPLEXITY -is a disadvantage for newproducts which slows diffusion and may be offsetby simplifying usage or through extensive

education


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Trial abilityexperienceor see the newness

Easily tested Low risk

Inexpensive

No special equipment

Free samples or coupons

Demo days

Sample size

Characteristics of NewProduct Success


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(wsj 23 July 85)

Women Buying a New Food ProductWithin the Last Month, Their Reasons:

OBSERVABILITY is the opportunity for buyers


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(Field test ..

validity??)

OBSERVABILITY- is the opportunity for buyersto see the newness (+)


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Why Some New Products Fail andOthers Succeed

Unreal time pressure& vested interest groups

Absorption in process: lack of objectivity, courage (risk)

Product Deficiencies (Technical or Design Problems)

Inadequate research (Overestimation of Market Size)

Poor Execution of Plans (Promotion, Distribution,Price, poor timing, etcetera)

Result: No differential advantage &Failure to Meet Customer Needs

80 to 90% Fail. Why?

Absolute failure Relative failure


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#1. Performance & Price

New product failures generally offer the same or

worse performance than competing productswith the same or higher price

#2. Inadequate Market Analysis

Offer a unique benefit (a differential advantage)

Solve a consumers problem or providean

opportunity a reward

New Product Success

Why Some New Products Fail andOthers Succeed

80 to 90% Fail. Why?

adoption diffusion 16june08 n32

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