new product adoption and diffusion process

NEW PRODUCT ADOPTION AND DIFFUSION PROCESS

(Adoption Theory)

The Adoption Decision ProcessHow an individual consumer acts . . .

KNOWLEDGE PERSUASION DECISION

IMPLEMENTATIONSCONFIRMATION

TIME

New Product Adoption Theory

ADOPTION PROCESS - The consumer decision stages that lead to

innovation acceptance/rejection - A micro process process that focuses on

internal forces of the consumer* Intra Personal (Psych) Influences* Inter Personal (Social) Influences* Product Selection Criteria

Influences on the Rate of Adoption

Relative advantage How much better than existing alternatives?

Compatibility Fit current values and experiences?

Complexity Ease of understanding?

Divisibility Can it be tried on a limited basis?

Communicability Can the innovation be observed and communicated?

New Product Diffusion Theory

DIFFUSION PROCESS.

- the spread of an innovation from its.

source to the ultimate consumer.

- a macro process that focuses on external.

forces on the consumer (change agents,

channels of information, types of.

information).

- occurs in a social system (a target.

audience, community, etc.

THE DIFFUSION PROCESSHow different segments of the market act

PER CENT OF TOTAL MARKET

TIME

INN

OV

AT

IOR

S-2

.5%

EA

RL

Y A

DO

PT

ER

S-1

3.5%

EA

RL

Y M

AJO

RIT

Y-3

4%

LA

TE

MA

JOR

ITY

-34%

LA

GG

AR

DS

(IN

CL

UD

ING

NO

NA

DO

PT

ER

S)-

16%

is influenced by…

* Competitive Intensity (+)

* Good Supplier Reputation (+)

* Standardization of Technology (+)

* Vertical ( ) Channel Coordination (+)

* Resource Commitments (+)

Speed of Diffusion

2.5% Innovators

13.5% Early Adopters

34% Early Majority34% Late Majority

Diffusion Process• Product Adopter Categories

Diffusion Process,Adopter Categories

INNOVATORS - are first to buy and typically described as venturesome, younger, well educated, financially stable, and willing to take risks.

EARLY ADOPTERS - are local opinion

leaders who read magazines and who are integrate into the social system more than the average consumer.

EARLY MAJORITY - solid, middle-class consumers who are more deliberate and cautious

LATE MAJORITY - described as older, more conservative, traditional, and skeptical of new products


Laggards Resist change Conservative Like tradition Often older & lower in

socioeconomic status

Nonadopters Refuse to change


Life-Style Characteristics of Innovators 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

Life-Style Characteristics of Innovators and Noninnovators

Characteristics Innovators Noninnovators Purchase and Consumption Traits:

Brand Loyalty LESS MORE

Deal Proneness MORE LESS

Usage MORE LESS Media Habits:

Magazine Exposure MORE LESS

Television LESS MORE

Specialized Magazine MORE LESS

Life-Style Characteristics of Innovators and Noninnovators

Characteristics Innovators Non innovators 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

Characteristics of New Product Success

RELATIVE ADVANTAGE - is an enhanced bundle of benefits or clear-cut advantages over existing offerings (+)

Compatibility with existing habits, values and consumption behavior, similar usage as existing products


Trial ability…experience or see the newness Easily tested Low risk Inexpensive No special equipment Free samples or coupons


OBSERVABILITY - is the opportunity for buyers to see the newness (+)

COMPLEXITY - is a disadvantage for new products which slows diffusion and may be offset by simplifying usage or through extensive education (-)


Why Some New Products Fail and Others Succeed

Failure to Meet Customer Needs Poor Timing Market Conditions Ineffective or Inconsistent Branding Technical or Design Problems Overestimation of Market Size Poor Promotion Insufficient Distribution

80 to 90% Fail. Why?

Communication Flows

Two-Step Flow of Communication

COMPANYMESSAGE

OPINIONLEADERS

TARGET AUDIENCES

Positions of Status

OPINION LEADER - one who occupies a position of informal influences over the attitudes and overt behavior of others. Opinion leadership is earned not assumed.

CHANGE AGENT - one who occupies a professional position of formal influence associated with a given role of status. Change agent status is assumed, not necessarily earned

FOLLOWER - not a “passive patsy.” Actively seeks influence.

Two-Step Flow of Communication and Adopter Categories

Earlyadopters

Innovators Earlymajority

Company Messagefrom mass media

Product CategoryOpinionleader(s)

Potential targetaudiences

Opinion recipient 1Opinion recipient 2Opinion recipient 3

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

new product adoption and diffusion process

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