Diffusion of Innovations

New Product Adoption

Process
Dr. Poonam Madan

The Innovation

An idea, practice or object that is perceived

as new by an individual or other unit of
adoption.

The Innovation

An invention is an idea, a sketch or model for a

new or improved device, product, process or
system. Such inventions may often be patented
but they do not necessarily lead to technical
innovations. In fact the majority do not. An
innovation in the economic sense is
accomplished only with the first commercial
transaction involving the new product, process
system or device.
Freeman & Soete, p. 6.

What is diffusion?
The process by which an
innovation is communicated
through certain channels over time
among the members of a social
system.

Diffusion

Process by which a new idea or new product

is accepted

Rate of diffusion is the speed that the new

idea spreads from one person to the next

Adoption concerns the psychological

processes an individual goes through to
embrace a new idea

Diffusion

Is a process by which an

innovation is communicated
through certain channels over
time among the members of a
social system
Everett M. Rogers
Diffusion of Innovations (1962-95)

OriginalTheorists

Gabriel Tarde (1903)

S-shaped curve for diffusion processes

Ryan and Gross (1943): adopter

categories

Innovators
Early adopters
Early/Late Majorities
Laggards

Original Theorists
Katz (1957) :

media opinion leaders opinion followers

Everett M. Rogers

Diffusion of Innovations (1962-95)

the process by which an innovation is

communicated through certain channels over
time among the members of a social system

The S-Curve of Innovation Adoption Various Technolog

Look for the inflection point (tipping point) where the curve
start going up to reason if a new technology gets a market.
9

The Buyer Decision Process

For New Products

New Product: A good, service or idea that is perceived by some

potential customers as new.

Adoption process the mental process through which an individual

passes from first hearing about an innovation to final adoption.

Consumers go through five stages in the process of adopting a new

product:
Awareness
Interest
Evaluation
Trial
Adoption

The Buyer Decision Process for

Products

New

New product is a good, service, or idea that is perceived

by some potential customers as new
Adoption process is the mental process an individual
goes through from first learning about an innovation to
final regular use
Marketers should help consumers move through these
stages.

5-46

Buyer Decision Process:

For New Products

Adoption Process
Stages

Awareness
Interest
Evaluation
Trial
Adoption

Buyer Decision Process for

New Products
Stages in the Adoption
Process

Awareness
Evaluation

Adoption

Interest
Trial

The Buyer Decision Process

for New Products

Stages in the Adoption Process

Does the customer always follow the above

steps?

Stages
Stages in
in the
the Adoption
Adoption
Process
Process
Awareness
Awareness
Interest
Interest
Evaluation
Evaluation
Trial
Trial
Adoption
Adoption

The Buyer Decision Process for

Products
Stages in the Adoption Process
1.
2.
3.
4.
5.

Awareness
Interest
Evaluation
Trial
Adoption

New

Stages in the Adoption

Process

Awareness: Consumer becomes aware of the

new product, but lacks information about it.

Interest: Consumer seeks information about new
product.
Evaluation: Consumer considers whether trying
the new product makes sense.
Trial: Consumer tries new product on a small scale
to improve his or her estimate of its value.
Adoption: Consumer decides to make full and
regular use of the new product.

Stages in the Adoption

Process
1.

Awareness: Consumer becomes aware of the new product,

but lacks information about it.

2.
3.

Interest: Consumer seeks information about new product.

Evaluation: Consumer considers whether trying the new
product makes sense.

4.

Trial: Consumer tries new product on a small scale to improve

his or her estimate of its value.

5.

Adoption: Consumer decides to make full and regular use of

the new product.

The Buyer Decision Process for

New Products
Stages in the Adoption Process
Awareness is when the consumer becomes
aware of the new product but lacks
information
Interest is when the consumer seeks
information about the new product

5-48

The Buyer Decision Process for

New Products
Stages in the Adoption Process
Evaluation is when the consumer considers
whether trying the new product makes sense
Trial is when the consumer tries the new
product to improve his or her estimate of
value

5-49

The Buyer Decision Process for

New Products
Stages in the Adoption Process
Adoption is when the consumer decides to
make full and regular use of the product

5-50

Rogers (1995)
Diffusion of Innovation
Stages of adoption:
Awareness - the individual is exposed to the
innovation but lacks complete information about it
Interest - the individual becomes interested in the new
idea and seeks additional information about it
Evaluation - individual mentally applies the
innovation to his present and anticipated future
situation, and then decides whether or not to try it
Trial - the individual makes full use of the innovation
Adoption - the individual decides to continue the full
use of the innovation

Table 15.11 The Stages in the Adoption

Process
NAME
OF
STAGE
Awareness

Interest

Evaluation

WHAT HAPPENS
DURING THIS
STAGE
Consumer is first
exposed to the product
innovation.
Consumer is interested
in the product and
searches for additional
information.
Consumer decides
whether or not to believe
that this product or
service will satisfy the
need--a kind of mental
trial.

EXAMPLE
David sees an ad for a new digital camera
in the newspaper.
David reads about the camera on the
manufacturers Web site, ad then goes to a
camera store near his office and has a
salesman show him the camera.
After talking with a knowledgeable
friend, David decides that his camera
should be able to provide him with the
photos he needs to use in PowerPoint
presentations. He also likes the fact that it
uses standard floppy disks for storage.

The Stages in the Adoption Process

NAME
OF
STAGE
Trial

WHAT HAPPENS
DURING THIS
STAGE
Consumer uses the
product on a limited
basis

EXAMPLE
Since camera cannot be tried like a
small bottle of a new shampoo, David
buys the camera from a dealer offering a
14-day full refund policy.

If trial is favorable,
David finds that the camera is easy to use
consumer decides to use and the results are excellent;
the product on a full,
consequently, he keeps the digital camera.
Adoption
rather than a limited
(Rejection)
basis--if unfavorable, the
consumer decides o
reject it.

Buyer Decision Process for

New Products

Individual Differences in Innovativeness

Consumers can be classified into five adopter

categories, each of which behaves differently toward
new products.

Product Adopter Categories

Not everyone adopts at the same pace.

Innovators: venturesome, try new ideas at some

risk.
Early adopters: opinion leaders who adopt new
ideas early, but carefully.
Early majority: deliberate adopters, who adopt
before the average person.
Late majority: skeptical, adopt only after the majority
of people have tried a product.
Laggards: last to adopt, tradition bound, and
skeptical of change.

The Buyer Decision Process for

Products

New

Individual Differences in Innovation

Early adopters are opinion leaders and adopt new ideas
early but cautiously
Early majority are deliberate and adopt new ideas
before the average person
Late majority are skeptical and adopt new ideas only
after the majority of people have tried it
Laggards are suspicious of changes and adopt new
ideas only when they become tradition

5-51

Adopter Categorization Distribution

Adopter Categories Based

on Relative Time of
Adoption

Diffusion Process the way in which new products are

adopted and spread throughout a marketplace. There are
five categories and profiles of product adopters.
Early adopters
13.5%
Innovators
2.5%

Laggards
16%

Early majority
34%

Late majority
34%

Time
Innovators:
Innovators:

Venturesome,
Venturesome,higher
higher
educated,
use
multiple
educated, use multiple
information
informationsources
sources

Early
Earlymajority:
majority:

Early
Earlyadopters:
adopters:

Deliberate,
Deliberate,many
many
informal
social
informal socialcontacts
contacts

Leaders
Leadersininsocial
socialsetting,
setting,
slightly
above
average
slightly above average
education
education

Late
Latemajority:
majority:

Laggards:
Laggards:

Fear
Fearofofdebt,
debt,neighbors
neighbors
and
friends
are
and friends are
information
informationsources
sources

Skeptical,
Skeptical,below
belowaverage
average
social
status
social status

Adopter Categorization:
Relative Time of Adoption

2.5%
Innovators

13.5%
Early
adopters

34% 34%
Early Late
majority majority

16%
Laggards

Time of adoption of innovations

Early Majority
Innovators

Percentage of Adopters

Adoption
Adoption of
of
Innovations
Innovations

Early
Adopters

Late Majority

34%

16%

13.5%
2.5%

Early

Laggards

34%

Time of Adoption

Late

Stages in the Adoption

Process

2.5%
Innovators

34%
Early
Majority

13.5%
Early
Adopters
X - 2

34%
Late
Majority
16%
Laggards

X-

X+

Time of adoption of innovations

Try new ideas at some risk.

Before the average person

Opinion Leaders adopt new

ideas early but carefully

Suspicious of change

Only after majority has tried it

Categories of Adopters

Technology
Enthusiasts

Visionaries

34%
Early
Majority

34%
Late
Majority

Pragmatists

Conservatives

16%
Laggards

The
Chasm

Early
Adopters

{
{

Innovators

13.5%

The Chasm!

2.5%

-2

Skeptics

The Buyer Decision Process

for New Products

Individual Differences in
Innovativeness

INNOVATIVENESS AND ADOPTER

CATEGORIES.

The adopter categories

(1) innovators,
(2) early adopters,
(3) early majority,
(4) late majority, and
(5) laggards.

INNOVATIVENESS AND ADOPTER

CATEGORIES.

Innovators:

active information-seekers about new ideas.

have a high degree of mass media exposure
their interpersonal networks extend over a wide
area.
can cope with higher levels of uncertainty about
an innovation than are other adopter categories.

Innovators:
Technology Enthusiasts

Appreciate technology for its own sake

Motivated by idea of being a change agent
Will tolerate initial glitches
Will develop make-shift solutions
Willing to alpha/beta test and work with technical
personnel in compensation with lower pricing
Provide early revenue for marketersbut not a large
group
Importance: They are the gatekeeper to the next
group of adopters.

Early Adopters:
Visionaries

Want to revolutionize competitive rules in their industry

Attracted by high-risk/high-reward projects (in returns of psychological and
substantive benefits)

Not necessarily very price sensitive

Demand customized solutions and intensive tech support
Will supply missing elements of total solution
Product Form Competition: Between categories of solutions
(determinates of standard/dominant design)

Early adopters communicate horizontally (across industry boundaries)

Opinion leaders, change agents

Early Majority:
Pragmatists

Comfortable with only evolutionary changes in business

practices, in order to gain productivity enhancements
Risk aversion to disruptions in their operations
Want proven applications, reliable service
Seek the convenient whole product design

A total solution provided at once

Buy only with a reference from trusted colleague in

same industry

Pragmatists (Cont.)

This group is the bulwark of the mainstream

market:

They want to move together (herd mentality).

They want to pick the same technology solution
(avoid risk).
Once they make a decision, they want to implement
it quickly (high visibility of performance).

Requires industry standards

INNOVATIVENESS AND ADOPTER

CATEGORIES.

Late majority category - characterised by:

low social status,

making little use of mass media channels
learn about most new ideas from peers via
interpersonal channels.

Late Majority:
Conservatives

Risk averse, technology shy

Very price sensitive
Require completely pre-assembled, bulletproof (reliable performance) solutions
Motivated only by need to keep up with
competitors in their industry
Rely on single, trusted advisor

Laggards: Skeptics

Want to maintain status quo

Technology is a hindrance to operations

Luddites (the guys resist to the technological progress)

Buy only if all other alternatives worse

Target Innovators or the

Early Majority?

Target the majority when:

Word of mouth effects are low

Consumer products industries (vs. b-to-b i.e., business
users)

Low ratio of innovators to majority users

Profit margins decline slowly with time
Long time period for market acceptance (the danger of
chasm!)

RATE OF ADOPTION

Rate of adoption - the relative speed with

which an innovation is adopted by members
of a social system.

When the number of individuals adopting a

new idea is plotted on a cumulative frequency
basis over time, the resulting distribution is an
S-shaped curve.

Rate of diffusion

Influence of Product
Characteristics on Rate of
Relative advantage
Adoption

Compatibility
Complexity
Divisibility
Communicability

Influences on the Rate of

Adoption
of New
Products
Relative Advantage
Communicability
Is the innovation
superior to existing
products?

Can results be easily

observed or described
to others?

Divisibility

Product
Characteristics

Can the innovation

be used on a
trial basis?

Complexity

Is the innovation
difficult to
understand or use?

Compatibility

Does the innovation

fit the values and
experience of the
target market?

Influence of Product Characteristics

on Rate of Adoption

Five characteristics are especially important in influencing an

innovations rate of adoption.
For example, consider the characteristics of HDTV (High-definition
television) in relation to the rate of adoption.

Relative advantage (superior to existing products)

Compatibility
(fits the values and experiences of potential customers)
Complexity
(difficult to understand or use)
Divisibility
(tried on a limited basis but still very expensive)
Communicability (results of using can be observed or described to others)

Product Characteristics That Influence

the Rate of Adoption

Relative Advantage

Compatibility

Is the innovation difficult to understand or use or perceived as

such?

Utility & Cost-Benefit

Does the innovation fit the values, behavior and experience of the
target market?

Complexity

Is the innovation perceived as superior to existing products?

Can the innovation be used extensively or on a more limited basis?

Communicability

Can results be easily observed and described to others?

Product Characteristics That

Influence the Rate of Adoption

Relative Advantage: Is the innovation superior to

existing products?
Compatibility: Does the innovation fit the values and
experience of the target market?
Complexity: Is the innovation difficult to understand
or use?
Divisibility: Can the innovation be used on a limited
basis?
Communicability: Can results be easily observed or
described to others?