Diffusion of InnovationConsumers acceptance of New products/and/Existing products

---how consumers accept new products and brands---how they accept a set of marketing mix elements formulated for a brand over a period of time.

New products can be divided intoContinuous innovationDynamic continuously innovation Discontinuous continuous innovation

1. The innovation:

Approaches to understand product innovation/new product.Firm orientedfocus on firm/co./industryProduct oriented-(product features) a) A continuous innovation: modified version of existing product b) A dynamically continuous innovation-creation of new product/complete modification of an existing product c) A discontinuous innovation: product may be a innovation, consumers will be required to adopt a new behavior Market oriented approach: consumers reaction to the new product at the market place

E.G:Electric vehicles, shaversdiscontinuous innovation.( the degree of change in behavior as well as innovation is high)Mobile, digital cameras, internet shopping dynamically continuous innovation.(change in behavior is moderate as is the degree of innovation)Remote switch of a TV is consideredcontinuous innovation( small change with regard to their behaviour )

The channels of communication

communication between marketers and consumers , consumers and consumers consumer information---personal source--commercial source--public source--experimental source 3. The social system serves as the boundary within which the diffusion of the new product must exist.

Time: a) purchase time, b) determining the various adopter categories c)the rate of adoption

Purchase time time gap between consumers initial awareness of a new product and the time when he or she make the purchase Rate of adoption: penetration strategy ( low introductory price ) skimming strategy ( high price)

c)Adopter categories:innovators-pioneers or innovators,easily acceptable to new ideas these people are gregarious, more educated and generally follow life style matching the high social class statusii) Easily adopters- these people do not immediately plunge into buying as soon as a new product is available

-after carefully verifying and gathering information-companies have identified them as opinion leaders in their social circles -educated, high social status iii) Early majority: these people are more thoughtful and shrewd and will not easily get swayed by new product or innovation

prefer to wait and watch and learn hearing experience iv) Late majority :-more conservative in their approach-do not respond favorable -wait for public opinion -limited education, average social status

V) Laggards

-last category of buyers to adopt a new product-conservative, traditions bound-suspicious of changesThey mingle with people who share similar traditional out look.

Diffusion and existing products-Market oriented definitions :-

Market oriented approach judges the newness of a product in terms of how much exposure consumers have to the new product. DefinitionsA product is considered new if it has been purchased by a relatively small potential market.A product is considered new if it has been on the market for a relatively short period of time.

Consumer oriented definitions---

New product is any product that a potential consumer judges to be new. In other words, newness is based on the consumers perception of the product rather than on physical features or market realities.Product characteristics that influence diffusion:All product that are new do not have equal potential for consumer acceptance. Some products seem to catch on almost overnight, whereas others take a very long time to gain acceptance or never seem to achieve widespread consumer acceptance.

Influence of product characteristics on the rate adoption diffusion:-

1. relative advantage 2. compatibility 3. complexity 4. divisibility or trainability 5. communicability

Diffusion researchers have identified five product characteristics

Competitivre/Relative advantage---the degree to which potential customers perceive a new product as superior to existing substitutes is its relative advantage.Compatibilitythe degree to which potential consumers feel a new product is consistent with their present needs, values, and practices is a measure of its compatibility.

3.Complexity:The degree to which a new product is difficult to understand or use. Easier it is to understand and use a product, the more likely it is to be accepted.( fear of technical complexity, fear of rapid obsolescence, fear of social rejection and fear of physical harm)4. Trialability: refers to the degree to which a new product is capable of being tried on a limited basis.

5. Observability is the ease with which a products benefits or attributes can be observed, imagined or described to potential consumers. Products that have a high degree of social visibility , such as a new fashion items, are more easily diffused than products that are used in private, such as a new type of deodorant . Tangible product is promoted more easily than an intangible product.

Resistance to innovation--- what makes some new products almost instant successes, while others must struggle to achieve consumer acceptance ? ------ Marketers look at the product characteristics of an innovation. Such characteristics offer clues to help determine the extent of consumer resistance, which increases when perceived relative advantage, perceived compatibility, trialability, and communicability are low and perceived complexity high.