Diffusion of Innovation

Consumers 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 into
i) Continuous innovation
ii)Dynamic continuously innovation
iii)Discontinuous continuous innovation

1. The innovation:
Approaches to understand product innovation/new product.
Firm orientedfocus on firm/co./industry
Product 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 considered
continuous 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
a)Purchase time time gap between
consumers initial awareness of a new
product and the time when he or she
make the purchase
b)Rate of adoption: penetration strategy
( low introductory price ) skimming
strategy ( high price)

c)Adopter categories:
i) 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 status
ii) 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 changes
They 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. Definitions
1.A product is considered new if it has
been purchased by a relatively small
potential market.
2.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
1.Competitivre/Relative advantage---the
degree to which potential customers
perceive a new product as superior to
existing substitutes is its relative
advantage.
2.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.