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Prof. Aparna Kanchan
The Adoption Process
&
Diffusion of Innovation
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DiffusionDiffusion
ProcessProcess
The process by
which the
acceptance of
an innovation isspread by
communication
to members of
social system
over a period of
time.
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AdoptionAdoption
ProcessProcess
The stages
through which an
individual
consumer passesin arriving at a
decision to try (or
not to try), to
continue using (ordiscontinue using)
a new product.
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The meaning of New Products
Marketers need to differentiate between emerging markets
and developed markets on what consumers perceive asnew
A touch of reality is required when conventional definitionsof new products are applied to an emerging market like India
Value, Convenience and Cultural associations are factorsthat may in combination work in the Indian Context
Good Night Mosquito Coil
Vatica hair oil with a combination of lime and coconut oil
Chik Sachets Value of 1 time use packs (Introduced the jasmine variant in SouthIndia)
Frooti introduced the first time Tetra pack with manjo juice- mango is a fruit with astrong cultural association
Ujala, Robin Blue- Additng a tinge of blue to white clothes is a cultural practice inseveral parts of India
PepsiCos Kurkure and ITCs Bingo have strong cultural association with the tasteof India
Nokia introduced the mobile phone with a torch and FM radio
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New Categories and the Diffusion of
Innovation
Eg: Contact lenses have been in India for the last 4
decades but despite the presence of multinational brands,
the category does not have a high level of penetration
Several aspects of consumer perception and perceivedrisks need to be addressed to ensure that the category
diffused to higher levels of penetration
What is the target market? and What is the Benefit?
Benefits can be functional convenience or enhanced
appearance that provides a fillip to ones self concept 5
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New Categories and the Diffusion of
InnovationAspects with regards to the product which the marketer
needs to look into; Knowledge Aspects- Is there a lack of understanding
about the product itself among prospective Consumers?
Persuasion Aspects- What is the WOM from users ofthe product?
Decision Aspects What kind of value does thecustomer expect & how can these aspects becustomized to the consumer at the POS?
Implementation of the decision- What kind of assurance
needs to be provided by the brand an the retailer toensure that the customer implements his/her decision totry out the product?
Confirmation- What should be the firms strategy toretain the consumer and ensure that he does not leave
the brand 6
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The Diffusion Process
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Elements of the Diffusion Process
The Innovation
The Channels of CommunicationThe Social System
Time
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The Innovation
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Defining Innovations
Firm-oriented definitions
Product-oriented definitionsMarket-oriented definitions
Consumer-oriented definitions
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Firm-oriented definitions
Treats the newness of a product from the perspective ofthe company producing or marketing it
When the product is new to the company it is
considered new
This definition ignores whether or not the product isactually new to the marketplace i.e. to the competitor or
the consumer
Consistent with this definition, copying or modification of
the competition product would be considered newNot very useful when the goal is to understand
consumer acceptance of a new product
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Product Oriented definitions
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Continuous
Innovation
Dynamically
Continuous
Innovation
Discontinuous
Innovation
Least Disruptive
Influence- Modified
Product rather than a
completely new
product
More Disruptive than
continuous innovation may involve creation of
a new product or
modification of an
existing product
Requires consumers
to adopt new
behaviour patterns
airplanes, TV,
automobiles, fax
machines
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Telephone Innovations
Telephone
Cell Phone
Fax
Machine
Telephone answering
machines
Call forwarding
Call waiting
Caller ID
Banking by telephoneCall-prompting systems
Hold button
Line-in-use indicator
Redial button
Auto dialing feature
Touch-tone service
800 Numbers900 Numbers
Ability to send/receive email
Incorporate PDA functions
Calendar/Phonebook
Voice-activated dialing
Switch from analog to
digital
Include camera
Ringer stylesPlay games
Fax modem
Mobile fax machines
Home office systems
(combined fax, copier,
computer printer)
Plain paper fax
Speed dial buttons
Delayed send
Copy function
Paper cutter
Discontinuous
Innovations
Dynamically Continuous
Innovations
Continuous
Innovations
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Market-Oriented definitions
This approach judges the newness of a product in terms ofhow much exposure consumers have to the new product.
Two popular definitions
A Product is considered new if it has been purchased
y a relatively small ( fixed) % of the potential market
A Product is considered new if it has been on the
market for a relatively short ( specified) period of time
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Consumer-Oriented definitions
A new product is any product that a potential consumerjudges to be new
Newness is based on Consumers perception s of the
product rather than on physical features or market realities
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What Influences Diffusion?
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C f
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Product Characteristics That Influence
Diffusion
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All products that are new do not have equal potential for
consumer acceptance
Some products seem to catch on almost overnight (eg:
cordless telephones), whereas others take a very long time
to gain acceptance or never seem to achieve widespread
consumer acceptance (eg: trash contractors)
The uncertainties of product marketing would be reduced if
marketers could anticipate how consumers will react to their
products
P d t Ch t i ti Th t I fl
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Product Characteristics That Influence
Diffusion
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Relative Advantage-The degree to which potential customers
perceive a new product as superior to existing substitutes is its relativeadvantage
Compatibility-The degree to which potential consumers feel a product
is consistent with their present needs, values and practices is a measure
of its compatibility
Complexity-The degree to which a new product is difficult to
understand and use , affects product acceptance
Trialability Refers to the degree to which a new product tried on a
limited basis
Observability Is the ease with which a products benefits or attributes
can be observed , imagined or described to potential consumers
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Characteristics That Influence Diffusion
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CHARACTERISTICSCHARACTERISTICS EXAMPLESEXAMPLES
Relative
Advantage
Air travel over train travel,
cordless phones over corded
telephones
Compatibility
Gillette MACH3 over disposable
razors, digital telephone
answering machines over
machines using tape
ComplexityElectric shavers, instant
puddings
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Characteristics That Influence Diffusion
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CHARACTERISTICSCHARACTERISTICS EXAMPLESEXAMPLES
Trialability
Trial size jars and bottles of new
products, free trials of software,
free samples, cents-off coupons
Observability
Clothing, such as a new Tommy
Hilfiger jacket, a car,
wristwatches, eyeglasses
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The Channels of Communication
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The Channels of Communication
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How quickly an innovation spreads thru the market
depends to a great extent on communications between themarketer and consumers as well as communication among
consumers ( WOM)
Two key influencers Impersonal Sources ( advertising
and editorial matter) & Interpersonal Sources(Salespeople and informal opinion leaders)
Internet also a major source of consumer - related
information
Both impersonal and Interpersonal source
Newchannels of communication in recent years Interactive marketing DVDs/podcasts
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The Social System
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The Social System
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The diffusion of a new product usually takes place in a social
setting frequently referred to as the social system
A social system is a physical, social or cultural environment
to which people belong and within which they function
The orientation of a social system, with its own special
values or norms , is likely to influence the acceptance or
rejection of new products
When a social system is modern in orientation, the
acceptance of innovation is likely to be high
When a social system is traditional in orientation, the
innovations are perceived as radical or as infringement
on established customs and are likely to be avoided
Ch t i ti f M d S i l
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Characteristics of a Modern Social
System
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A positive attitude towards change
An advanced technology and skilled labour force
A general respect for science and education
An emphasis on rational and ordered social relationships
rather than emotional ones
An outreach perspective, in which members of the system
frequently interact with outsiders thus facilitating the
entrance of new ideas into the social system
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Time
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Time and Diffusion
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Time is the backbone of the diffusion process
It pervades the study of diffusion on 3 distinct but
interrelated ways:
The Amount of purchase Time
The identification of the adopter Categories
Rate of Adoption
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A sequence of
categories that
describes how
early (or late) a
consumer
adopts a new
product inrelation to other
adopters.
Adopter
Categories
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Innovators
2.5%
Early
Adopters
13.5%
Laggards
16%
Percentage of Adopters by Category Sequence
Early
Majority
34%
Late
Majority
34%
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Adopter Categories
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Innovators: Description
30
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
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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 opinionleaders
Are role models
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Early Majority: Description
32
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
33
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
34
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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Stages in the Adoption Process
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NAME OF
STAGE
WHAT HAPPENS
DURING THIS STAGEEXAMPLE
Awareness
Consumer is first
exposed to the product
innovation.
Janet sees an ad for a new MP3 player
in the magazine she is reading.
Interest
Consumer is interested
in the product and
searches for additional
information.
Janet reads about the MP3 player on the
manufacturers Web site and then goes
to an electronics store near her
apartment and has a salesperson show
her a unit.
Evaluation
Consumer decides
whether or not to
believe that this productor service will satisfy the
need--a kind of mental
trial.
After talking to a knowledgeable friend,
Janet decides that this MP3 player will
allow her to easily download the MP3files that she has on her computer. She
also feels that the units size is small
enough to easily fit into her beltpack.
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Trial
Consumer uses the
product on a limited
basis
Since an MP3 player cannot be tried
like a small tube of toothpaste, Janet
buys the MP3 player online fromAmazon.com, which offers a 30-day
full refund policy.
Adoption
(Rejection
)
If trial is favorable,
consumer decides to
use the product on a
full, rather than alimited basis--if
unfavorable, the
consumer decides to
reject it.
Janet finds that the MP3 player is easy
to use and that the sound quality is
excellent. She keeps the MP3 player.
NAME OF
STAGE
WHAT HAPPENS
DURING THIS STAGEEXAMPLE
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Pre-
existing
problem
or Need
Awareness Interest Evaluation Trial
Adoption
or
Rejection
Postadoption
or
Postpurchase
Evaluation
Evaluation
Adoption or Rejection
Discontinuation
Discontinuation or
RejectionRejection
An Enhanced Adoption Process Model
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Importance
High
Low
Awareness
Adoption
Trial
Evaluation
Interest
Personal
and
interpersona
l sources
Impersonal
mass-
media
sources
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An Enhanced Adoption Process Model
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Thank- You
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