CONSUMER BEHAVIOUR

Unit 12

Diffusion of Innovation

IBS Gurgaon SL MM 602

Class of 2021 Dr. Mohammad Shariq
Section - E 213GGBF0

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 Syllabus Topics

• Types and degrees of innovation & behavioral demands.

• Factors affecting adoption/diffusion & the decision making process.
• Adopter categories.
• Factors affecting speed of diffusion.
• Marketing strategies for enhanced diffusion.

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 Classification of new products

(20%) (10%)
High New product lines
New to the world products
(new to firm) Create new markets
Company enters category new to it
Newness to Company

(26%) (26%)
Revisions/improvements to Addition to existing
existing products products
Improvements to current products Line extensions in current markets

(11%) (7%)
Cost reductions Repositioning
Replaces existing product at lower
Products targeted for new use
Low cost

Low High
Newness to market
Source: Booz, Allen & Hamilton, 1982
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 Diffusion of Innovations
• Diffusion of innovations is the macro process by which the acceptance of an innovation
(i.e., a new product, new service, new idea, or new practice) takes place among
members of a social system (or market segments), over time.
• The framework for exploring the evolution of consumers’ acceptance of new products
throughout the social system.

• The process includes four elements:

1. The innovation
2. The channels of communication
3. The social system
4. Time

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 Innovation Adoption Process

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 discontinue
using) a new product.

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

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 Adoption Process and Extended Decision Making

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 Defining Innovations

• Firm-oriented definitions
• Product-oriented definitions
• Market-oriented definitions
• Consumer-oriented definitions

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 Product-Oriented Definitions

Continuous Innovation

Dynamically
Continuous Innovation

Discontinuous
Innovation

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 Continuous innovation

• A continuous innovation has the least disruptive influence on

established patterns.

• It involves the introduction of a modified product rather than a

totally new product.

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 Dynamically continuous innovation

• A dynamically continuous innovation is somewhat more

disruptive than a continuous innovation but still does not alter
established behavior patterns.
• It may involve the creation of a new product or the modification
of an existing product.

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 Dynamically continuous innovation

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 Discontinuous innovation
• A discontinuous innovation requires consumers to adopt new
behavior patterns.

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 Factors That Affect the Diffusion of
Innovations

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 Factors That Affect the Diffusion of Innovations

• The Innovation
• The Channels of Communication
• The Social System
• Time

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 Product Characteristics That Influence Diffusion

• Relative Advantage
• Compatibility
• Complexity
• Trialability
• Observability
• Felt Need
• Risk

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 Social System and Diffusion

Does the target market have:

• A positive attitude towards change?
• Technological skill?
• A general respect for education and science?
• A focus on rational and ordered social relationship?
• An outreach perspective?
• The ability to accept different roles?

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 Time and Diffusion

• Purchase Time
• Adopter Categories
• Rate of Adoption

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 Diffusion Rates for Popular Consumer Electronics (Cumulative)

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 Product Features That Affect Adoption

• Not all products are equally likely to be adopted by consumers.

• Some products catch on very quickly e.g. affordable cell phones
• Whereas others take a very long time to gain acceptance or
never seem to achieve widespread consumer acceptance e.g.
electric car

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 Product Features That Affect Adoption

• Relative Advantage
• Compatibility
• Complexity
– Technical fear most widespread concern of innovators
– Rapid obsolescence, social rejection and physical harm are
other fears
• Trial-ability
• Observability (communicability)

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 Factors Affecting the Spread of Innovations

Type of Group

Type of
Perceived Risk
Decision

Marketing
Trialability
Effort

Rate of
Diffusion

Fulfillment of
Observability
Felt Need

Complexity Compatibility

Relative
Advantage

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 Encourages Trial

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 Novelty Factor and Diffusion of Brands

Why do some ads or brands succeed and others fail despite the
novelty factor?

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 The Adoption Process

1. Awareness
2. Interest
3. Evaluation
4. Trial
5. Adoption

• Discussion Question: What is missing from the model of

Consumer Adoption?

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 Adopter Categories

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 Adopter Categories
A sequence of
categories that
describes how early
(or late) a
consumer adopts a
new product in
relation to other
adopters.

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 Innovators: Description

• 2.5% of population
• Venturesome
• Very eager to try new ideas
• Acceptable if risk is daring
• More cosmopolite social relationships
• Communicates with other innovators

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 Early Adopters: Description

• 13.5% of population
• Respected
• More integrated into the local social system
• The persons to check with before adopting a new idea
• Category contains greatest number of opinion leaders
• Are role models

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 Early Majority: Description

• 34% of population
• Deliberate
• Adopt new ideas just prior to the average time
• Seldom hold leadership positions
• Deliberate for some time before adopting

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 Late Majority: Description

• 34% of population
• Skeptical
• Adopt new ideas just after the average time
• Adopting may be both an economic necessity and a reaction to peer pressures
• Innovations approached cautiously

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 Laggards: Description

• 16% of population
• Traditional
• The last people to adopt an innovation
• Most “localite” in outlook
• Oriented to the past
• Suspicious of the new

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 The Profile of a Consumer Innovator

• Personality Traits
• Purchase and consumption characteristics
• Media Habits
• Social Characteristics

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 Marketing strategies for enhanced
diffusion

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 Marketing Strategies and the Diffusion Process (1/2)
Market Segmentation
• Since earlier purchasers of an innovation differ from later purchasers, firms should consider a "moving
target market" approach.
• That is, after selecting a general target market, the firm should initially focus on those individuals within
the target market most likely to be innovators and early adopters.
• Messages to this group can often emphasize the newness and innovative characteristics of the product
as well as its functional features.
• Since this group is frequently very involved with, and knowledgeable about, the product category,
marketing communications may be able to focus on the new technical features of the product and rely
on the audience to understand the benefits these features will provide.
• As the innovation gains acceptance, the focus of attention should shift to the early and late majority.
• This will frequently require different media.
• In addition, message themes should generally move away from a focus on radical newness. Instead, they
should emphasize the acceptance the product has gained and its proven performance record.
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 Marketing Strategies and the Diffusion Process (2/2)
Diffusion Enhancement
Strategies
• The critical aspect of this
process is to analyse the
innovation from the target
market’s perspective.
• This analysis will indicate
potential obstacles – diffusion
inhibitors – to rapid market
acceptance.
– The manager’s task is to
overcome these inhibitors
with diffusion enhancement
strategies.

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 Thank You

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