Diffusion and Adoption of Innovation

Diffusion is a macro process by which acceptance of an innovation is spread by communication channels to members of a social system over a period of time

5 Definitions of Innovation

Firm-oriented: when the product is "new" to a company
ignores whether the product is new to the marketplace
not very useful when the goal is to understand consumer acceptance of a new product

Product-oriented: 1) continuous innovation- least disruptive influence on behavioural patterns, introduction of modified product
2) dynamically continuous innovation- more disruptive but still does not alter established patterns, involve the creation of a new product or modification of existing products
3) discontinuous innovation- adopt new behavioural patterns

Service-oriented- acceptance of services more reliant on repeat purchases and loss of first-time users and adopters is more crucial.

Market-oriented: how much exposure consumers have. 1) considered new if it has been purchased by a small percentage of potential market 2) if it has been on the market for a short specified period of time. both are subjective to researchers

Consumer-oriented: a new product is any product the consumer judges to be new.

Product characteristics that
affect acceptance of new products

Relative advantage- the degree to which potential customers perceive the product as superior to existing substitutes

Compatibility- consistent with present needs,values & practices

Complexity- easy or difficult to understand or use

Trialability- capable of being tried on a limited basis

Observability- imagined or described to potential consumers

Time

pace of innovation depends on extent of communication (marketer-consumer) (consumer to consumer WOM)
impersonal sources (advertising and editorial matter) for initial product awareness
interpersonal sources (salespeople and opinion leaders)

social system is a physical,social or cultural envt to which people belong and within which they function
larger no of innovators = adopt faster
greater no of followers = accept innovation more widely
modern orientation = acceptance is higher

Five stages to arrive at decision

The amount of purchase time- time that elapses between consumers' initial awareness and point at which they purchase/reject it

The identification of adopter categories- where the consumer stands in relation to others in terms of time to adopt a new product
1)innovators 2)early adopters 3)early majority 4)late majority 5)laggards

Rate of adoption- establish market leadership by introductory low prices to discourage comepetition and demonstrate to intermediaries that product is worth full and continued support
skimming policy- to recoup development costs- making products available at high price then gradually lowering price to attract additional market segments

Awareness- initial exposure to innovation

Interest- search for info

evaluation- conclude and determine whether further info required

trial - use the product on a limited basis

adoption/rejection

assumes that consumers engage in extensive information search, does not adequately reflect full complexity of process or acknowledge problem or need recognition stage and possibility for evaluation and rejection at any stage, does not include post purchase evaluation.

Describing Innovators

Great interest in product category seeking information and greater deliberation.Opinion leaders who when enthusiastic, increase acceptance of products. Low dogmatism,high need for uniqueness, inner-directed, high Optimum Stimulation Level, brand switchers (less brand loyal), low-risk perceivers

more exposed to specific-interest magazines, less likely to watch TV, socially more accepted and involved

younger, more formal education, higher income and occupation status- better able to make mistakes