Unit 6

Consumer Influence and

Diffusion of Innovations
 Contents
Consumer Influence and Diffusion of Innovations
Opinion Leadership:
• Dynamics of opinion leadership process
• Measurement of opinion leadership
• Market Mavens
• Opinion Leadership & Marketing Strategy
• Creation of Opinion Leaders
Diffusion of Innovations:
• Diffusion Process (Innovation, Communication channels, Social
System, Time)
• Adoption Process: Stages, categories of adopters
Post Purchase Processes: Post Purchase Processes, Customer
Satisfaction, and customer commitment
• Post purchase dissonance, Product use and non use, Disposition,
Product disposition.
 Opinion Leadership
• Is the process by which one person (the opinion
leader) informally influences the actions or attitudes
of others, who may be opinion seekers or merely
opinion recipients.
 Dynamics of Opinion Leadership Process

• Credible sources of product related information.

• They are the people with experience.
• Provide unbiased information.
• They act both as source of information and advice.
• Have got greater exposure to media, in their area of
leadership.
• Tend to be consumer innovators.
 Measurement of Opinion Leaders

Self Designating Method:

Description Advantages Limitations

1. A series of Measures the 1. Objective
question. individual’s own 2. Personal
2. The degree to perception of his / influence
which he / she her opinion
perceives himself / leadership.
herself to be an
opinion leader.
 Measurement of Opinion Leaders
Socio-Metric Method:
Description Advantages Limitations
1. All Members 1. Degree of 1. Very costly.
of social validity. 2. Analysis is
system. 2. Easy to very complex.
2. Identify whom administer. 3. Requires a
they give large no. of
advice & to respondents.
whom they go 4. Not suitable
for advice. for sample
design.
 Measurement of Opinion Leaders

Key Informant Method:

Description Advantages Limitations

1. Carefully selected 1. Relatively 1. Informants
key informants. inexpensive. may not be
2. They designate 2. Less time familiar.
opinion leaders. consuming 2. Invalid
than Socio information
metric .
method.
 Measurement of Opinion Leaders

Objective Method:
Description Advantages Limitations
1. Artificially Measures 1. Requires
places individual’s establishment of
individuals as ability to an experimental
opinion influence design.
leaders. others under 2. Tracking the
2. Results are controlled resulting impact
measured. circumstances. is difficult.
 Profile of Opinion Leaders

Generalized attributes
Category specific
across product
attributes
categories

• Innovativeness • Interest
• Willingness to talk • Knowledge
• Self confidence • Media exposure
• Cognitive • Social exposure
differentiation outside group
• Same age and same
social status
Market Mavens:

• Refers to an individual who is a market participant

with a great deal of knowledge and connections, thus
having a trusted opinion on market events or
speculation.

• In general, the term is used to describe consumers

who have up-to-date information about products,
places to shop and different markets.
 Opinion Leaders and Marketing Strategy

Programs Designed to Stimulate Opinion Leadership:

• Positive word of mouth communication

• Word-of-mouth to induce product trial.
• Word-of-mouth through direct selling.
• Word-of-mouth through ‘experience’ and
Advertising.
Diffusion of Innovations
Diffusion of Innovations:

Framework for exploring consumer acceptance of new

products is drawn from area of research known as
diffusion of innovations.

Two processes are studied closely:

• Diffusion process
• Adoption process
 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.
 Elements of Diffusion Process

• Innovation
• Channels of Communication
• Social system
• Time
 Defining Innovations

Firm oriented definitions

Treats newness of the product from the perspective of
the company producing or marketing it.

Product oriented definitions

• Continuous innovation
• Dynamically continuous innovation
• Discontinuous innovation
Cont…

Market-oriented definitions
• Judges the newness of the product in terms of how
much exposure consumers have to the new product.

Consumer-oriented definitions
– A product is considered to be new if the consumer
judges it to be new.
 Telephone Interviews
Discontinuous Dynamically Continuous Continuous
Innovations Innovations Innovations
Telephone answering machines Hold button
Call forwarding Line-in-use indicator
Call waiting Redial button
Telephone Caller ID Auto dialing feature
Banking by telephone Touch-tone service
Call-prompting systems 800 Numbers
900 Numbers

Ability to send/receive email Switch from analog to

Incorporate PDA functions digital
Cell Phone Calendar/Phonebook Include camera
Voice-activated dialing Ringer styles
Play games

Fax modem Plain paper fax

Mobile fax machines Speed dial buttons
Fax Machine Home office systems Delayed send
(combined fax, copier, Copy function
computer printer) Paper cutter
 Product Characteristics that influence
Diffusion

• Relative advantage
• Compatibility
• Complexity
• Trialability
• Observability
 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.
Adopter Categories
 Stages of Adoption Process
WHAT HAPPENS
NAME OF
DURING THIS STAGE
STAGE
Consumer is first exposed
Awareness to the product innovation.
Consumer is interested in
the product and searches
Interest for additional information.
Consumer decides whether
or not to believe that this
product or service will
Evaluation satisfy the need--a kind of
“mental trial.”
EXAMPLE
Janet sees an ad for a new MP3 player in the
magazine she is reading.
Janet reads about the MP3 player on the
manufacturer’s Web site and then goes to an
electronics store near her apartment and has a
salesperson show her a unit.
After talking to a knowledgeable friend, Janet
decides that this MP3 player will allow her to
easily download the MP3 files that she has on
her computer. She also feels that the unit’s
size is small enough to easily fit into her
beltpack.
 Stages of Adoption Process

WHAT HAPPENS
NAME OF DURING THIS STAGE EXAMPLE
STAGE
Consumer uses the Since an MP3 player cannot be “tried” like
product on a limited a small tube of toothpaste, Janet buys the
Trial basis MP3 player online from Amazon.com,
which offers a 30-day full refund policy.

If trial is favorable, Janet finds that the MP3 player is easy to

consumer decides to use use and that the sound quality is excellent.
the product on a full, She keeps the MP3 player.
rather than a limited
Adoption basis--if unfavorable, the
(Rejection) consumer decides to
reject it.
Post Purchase Processes
 Post Purchase Processes

• Many businesses have started focusing on customer

relationship and loyalty programmes to increase:
- Customer satisfaction
- Commitment, and
- Retention of important customers.
 Post Purchase Action
• Consumers engage in a constant process of evaluating
the things that they buy.
• In case of certain purchases, consumers experience
post-purchase dissonance.
• This occurs as a result of the consumer doubting her-
his wisdom of a purchase.
• After purchase, most products are put to use by
consumers, even when they experience dissonance.
• Other purchases may be followed by non-use because
the consumer returns or keeps the product without
using it.
 Post-Purchase Dissonance
• Cognitive dissonance occurs as a result of some
discrepancy between a consumer’s prior evaluation and
the purchase decision.

Dissonance theory was derived from 2 basic principles:

- Dissonance is unpleasant & will motivate the person to
reduce it.
- Individuals experiencing dissonance will avoid
situations that produce more dissonance.
• Post-purchase dissonance is most likely to occur when
more than one alternative was attractive and a relatively
permanent and difficult decision had to be made.
• The doubt or anxiety resulting from such a decision is
termed as post-purchase dissonance.
 Post-Purchase Dissonance

The probability that a consumer will experience

dissonance and the magnitude of such dissonance, is a
function of the following factors:
- The importance of decision to the consumer
- The difficulty of choosing among the alternatives
- The individual’s tendency to experience anxiety
 Approaches to minimize Post – Purchase
Dissonance
The consumers may use one or more of the following
approaches to minimize the dissonance:
- Increase the desirability of the brand purchased
- Decrease the desirability of alternatives not
selected
- Decrease the importance of the purchase decision
- Return the product before using it
 Relationship of Expectations, Performance
and Satisfaction
Level of expectation
Perceived Below Above
performance minimum minimum
relative to desired desired
expectation performance performance
More than Satisfaction Satisfaction /
expected Commitment
Same as expected Non-satisfaction Satisfaction
Worse than Dissatisfaction Dissatisfaction
expected
 The Disconfirmation Paradigm

Expectations
Positive Satisfaction

Disconfirmation

Dissatisfaction
Negative
Performance

Feelings
 Dissatisfaction Responses
Post-purchase Evaluation

Dissatisfaction

Take Action Take No Action

Negative Attitude

Stop Buying Complain to

Complain to Negative
The Brand Consumer Take Legal
Retail Outlet Word-of-
Or From the Protection Action
Or Company Mouth
Store Agencies
 Product Disposition
PRODUCT

Get rid of it Get rid of it

Keep it
permanently temporarily

Use it to
serve original Rent it Loan it
purpose

Convert it to
serve new Throw it Give it
Trade it Sell it
purpose away away

To be Direct to
Store it consumer
(re)sold
Through
To be used middleman

To
middleman
 Marketing Strategies
Marketers need to focus on –

• Creating reasonable expectations among consumers through

appropriate promotional efforts, and
• Ensure consistency in product quality so that whatever
expectations are created among consumers through
marketing communications are fulfilled.
• Should develop an efficient system to receive complaints and
encourage consumers to record their complaints as soon as
they occur.
• It is essential for the marketers to not only give consumers
an opportunity to complain but also to effectively resolve the
cause of their complaints.