Diffusion of Innovations

Dr. Kelly Haws

Key Questions What is an innovation? What makes innovations/new ideas

spread? How do innovations diffuse in the

marketplace? What are different type of

innovations and innovation adopters?

Readings Gourville, John T. (2006), “Note on Innovation

Diffusion: Roger’s Five Factors,” Harvard Business Review,

Crossing the Chasm, Chapter 1, “High-Tech Marketing Illusion”

The Tipping Point, Chapter 1, “The Three Rules of Epidemics”

Made to Stick, Introduction, “What Sticks?” and Epilogue

What is an innovation? A product, service, attribute, or idea

that consumers within a market segment perceive as new and that has an effect on existing consumption patterns.

What is an Innovation? What is a “New” Product? Newness Compared with Existing Products

Functional difference Newness in Legal Terms (FTC)

Up to 6 months after it enters “regular distribution

Newness from the Company’s Perspective Product line extension Significant jump in innovation or technology

• Continuous Innovation – no new behaviors must be learned

Newness from the Consumer’s Perspective

• Dynamically Continuous Innovation – only minor changes in behavior are required for use

• Discontinuous Innovation – requires consumer to learn entirely new consumption patterns to use product

What is an Innovation?

What are MOST new products?

More ways to Classify Innovations: By Benefits Offered

Functional Innovations (e.g., Roomba) Aesthetic or Hedonic Innovations (e.g.,

new foods, types of music) Symbolic Innovations

Trucker Hat Word “gay” Appearance

(tanning, weight)

More ways to Classify Innovations: By Breadth

Breadth = Range of new and different uses for a particular product

Adoption of Innovations and Resistance to Adoption

Adoption A purchase of an innovation by an

individual consumer or household Are Consumers Willing to Adopt

Innovations? Resistance – a desire not to buy an

innovation, even in the face of pressure to do so

Why might consumers not want to adopt innovations?

How Consumers Adopt Innovations

Diffusion Diffusion

The percentage of the population that has adopted an innovation at a specific point in time

How Do Offerings Diffuse Through a Market? S-Shaped Curve

A diffusion curve characterized by slow initial growth followed by a rapid increase in diffusion

The S-Shaped Diffusion Curve

The Exponential Diffusion Curve

Exponential Curve A diffusion curve characterized by rapid initial

growth

Diffusion and Product Life Cycle Curves

Roger’s Five Factors Gourville, John T. (2006), “Note on

Innovation Diffusion: Roger’s Five Factors,” Harvard Business Review, http://www.harvardbusiness.org, pp. 1-6. (Library)

Roger’s Five Factors Describe the categorization of

innovation adopters model (in this reading and in the “Crossing the Chasm” reading next). ***

Innovation Adopter Groups

For any product to succeed, must be adopted by innovators and early adopters

Who are early adopters? 49% own an MP3 player 70% have broadband Internet at

home Roughly 60% are “sick of

advertising today” 1.5 times more likely than the

general population to own a laptop About 40% of Gen Xers (ages 28-

41) are early adoptersSource: “Who’s on First?”, Marketing News, 11.1.07

Roger’s Five Factors What are Rogers’ 5 factors and do

they contradict or support what we learned in “The Three Rules of Epidemics?” *** Why or why not?***

What Influences Diffusion? (Rogers’ Five Factors)

Relative advantage—the degree to which a product is better than the product it replaces

Compatibility—the degree to which a product is consistent with existing values and experiences

Complexity—the degree to which a product is difficult to understand and use

Trialability—the degree to which a product may be experimented with on a limited basis

Observability—the degree to which product usage and impact are visible to others

Roger’s 5 Factors WAE Using Rogers’ 5 factors, pick a

recent innovation to the marketplace (other than an Apple product) and discuss the innovation’s success or failure based upon these factors (like the telephone example).

Crossing the Chasm Crossing the

Chasm, Chapter 1, “High-Tech Marketing Illusion,” pp. 9 -25. (Course pack pp. 142-150)

Crossing the Chasm What are the differences between

discontinuous and continuous innovations?***

Differences in Adoption: The Chasm Model

Adoption of High Tech Products* Over Time*Applicable only to Discontinuous Innovations

Crossing the Chasm In your opinion, why do you think

the adoption life cycle has become so prominent in marketing courses today?***

How accurate is the Revised Technology Adoption Life Cycle? Can you think of specific products that have recently fallen victim to one of the gaps?***

Made to Stick Made to Stick, Introduction, “What

Sticks?” pp. 3-24 and Epilogue, “What Sticks,” pp. 238-252. (Book)

Made to Stick What is the “curse of knowledge”

and how does it hamper our ability to effectively communicate ideas?*** How has the internet affected the

Curse of Knowledge?

Made to Stick WAE Use Heath and Heath’s stickiness

principles to convey an idea (preferably one related to your field project). Discuss why your approach could be effective.

The Tipping Point The Tipping Point, Chapter 1, “The

Three Rules of Epidemics,” pp. 15-29. (Course pack pp. 151-158) TEAM

The Tipping Point What does the author suggest are

the ways to tip an epidemic? Explain each of his three “agents of change”***. Law of the Few The Stickiness Factor The Power of Context

The Tipping Point: Law of the Few What is the 80/20 rule and how

does it relate to the Law of the Few?*** Can The Law of the Few explain our

fascination with celebrity endorsements?

The Tipping Point: The Stickiness Factor Are there negative effects of

“Stickiness?” If so, what?***

The Tipping Point How are social epidemics like

epidemics of disease?*** What are some implications for

marketers?

Revisit Key Questions What is an innovation?

What makes innovations/new ideas spread?

How do innovations diffuse in the marketplace?

What are different type of innovations and innovation adopters?