Consumers and the Diffusion of Innovations

CHAPTERFourteen

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By the end of this lecture you should understand:1. The twofold process of the spread and acceptance of

innovative products and services within a social system.

2. How innovative products and services spread (or fail to spread) within a social system.

3. How individual consumers decide whether or not to try and adopt a particularly innovative product or service.

4. The personal characteristics of innovators.

Learning Outcomes

Dr Catherine Bachleda: MKT 3303

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• Diffusion Process: The process by which the acceptance of an innovation is spread by communication to members of a social system over a period of time.

• There four critical elements of the diffusion process are:

1. The innovation

2. The channels of communication

3. The social system

4. Time

The Diffusion Process

Dr Catherine Bachleda: MKT 3303

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1. The Innovation: There is no universally accepted definition of the terms product innovation or new product/service. However there are four definition approaches:

a. Firm-oriented definitions: Product is “new” to the company

b. Product-oriented definitions: Based on usage patterns: continuous; dynamically continuous; discontinuous

c. Market-oriented definitions: Based on consumer exposure

d. Consumer-oriented definitions: Consumer judges it as “new”

Diffusion Process: The Innovation

Dr Catherine Bachleda: MKT 3303

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Product Characteristics that Influence Diffusion

Dr Catherine Bachleda: MKT 3303

Relative Advantage

• Degree to which consumers consider it superior to existing substitutes

Compatibility

Observability

Complexity

Trialability

• Degree to which consumers feel it is consistent with their present needs, values and practices

• Degree to which it is difficult to understand or use

• Degree to which it can be tried on a limited basis

• Degree to which its benefits can be observed, imagined or described

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2. Communication Channels: How quickly an innovation spreads through a market depends on the degree of communication between marketers and consumers, as well as communication among consumers themselves.

3. Social System: The orientation of a social system, is likely to influence the acceptance or rejection of new products.

– If the social system is modern in orientation, the acceptance of innovations is likely to be high.

– If the social system is traditional in orientation, innovations that are perceived as radical or as infringements on established custom are likely to be avoided.

The Diffusion Process

Dr Catherine Bachleda: MKT 3303

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4. Time: Impacts on the diffusion process in three inter-related ways:

a) The amount of purchase time

b) The identification of adopter categories

c) The rate of adoption

The Diffusion Process

Dr Catherine Bachleda: MKT 3303

Product Number of years

Pager 41

Telephone 38

Cable television

25

Fax machine

22

VCR 9

Cell pone 9

PC 7

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• Adoption Process: the stages through which an individual consumer passes, in arriving at a decision, to try (or not to try), to continue using (or to discontinue using) a new product:

1. Awareness: The consumer becomes aware of the new product, but lacks information about it.

2. Interest: The consumer seeks information about the product.

3. Evaluation: The consumer considers whether trying the new product makes sense.

4. Trial: The consumer tries the new product on a small scale to improve his or her estimate of its value.

5. Adoption: The consumer decides to make full and regular use of the new product.

1. Later modifications to model include a need stage, evaluation and rejection after each stage, and a post-adoption evaluation stage.

The Adoption Process

Dr Catherine Bachleda: MKT 3303

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• Consumer Innovator: The earliest purchasers of a new product.

• Consumer innovators tend to:– Be much more interested in the product categories that

they are among the first to purchase and – seek information concerning their specific interests

from a variety of informal and mass media sources.– Be consumer opinion leaders and provide other

consumers with information and advice about new products and – influence the acceptance or rejection

of new products.

The Consumer Innovator

Dr Catherine Bachleda: MKT 3303

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• Consumer innovators also tend to:– Be less dogmatic– Have a need for uniqueness – Be inner-directed– Be low risk perceivers and more venturesome– Be less brand loyal and more deal prone– Have greater total exposure to magazines especially

those involved in the category where they innovate.– Be more socially involved– Have a higher level of education and income

and higher social status

The Consumer Innovator

Dr Catherine Bachleda: MKT 3303

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1. _____ is a macro process concerned with the spread of a new product from its source to the consuming public.a) Adoptionb) Assumptionc) Diffusiond) Innovatione) Introduction

• Answer: 2. According to the firm-oriented definition of innovation,

copies or modifications of a competitor's product qualify as new. True or False ?

• Answer:

Concept Check

Dr Catherine Bachleda: MKT 3303

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3. Which of the following is true of the personality traits of consumer innovators? a) they tend to be inner-directed b) they are highly dogmatic c) they have a high need for conformity d) they tend to be brand loyal e) they have low optimum stimulation levels

• Answer:

Concept Check

Dr Catherine Bachleda: MKT 3303