The Adoption Process

&
Diffusion of Innovation

Prof. Aparna Kanchan

1
 • The process by
which the
acceptance of
an innovation is
• Diffusion spread by
Process communication
to members of
social system
over a period of
time.
2
 The stages
through which an
individual
consumer passes
• Adoption in arriving at a
Process decision to try (or
not to try), to
continue using (or
discontinue using)
a new product.
3
The meaning of “ New Products”
•Marketers need to differentiate between emerging markets
and developed markets on what consumers perceive as
‘new’
•A touch of reality is required when conventional definitions
of new products are applied to an emerging market like India
•Value, Convenience and Cultural associations are factors
that 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 South
India)
• Frooti introduced the first time Tetra pack with manjo juice- mango is a fruit with a
strong cultural association
• Ujala, Robin Blue- Additng a tinge of blue to white clothes is a cultural practice in
several parts of India
• PepsiCo’s Kurkure and ITC’s Bingo have strong cultural association with the taste
of India
• Nokia introduced the mobile phone with a torch and FM radio
4
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 perceived
risks 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
 New Categories and the Diffusion of
Innovation
Aspects 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 of
the product?
• Decision Aspects – What kind of value does the
customer expect & how can these aspects be
customized to the consumer at the POS?
• Implementation of the decision- What kind of assurance
needs to be provided by the brand an the retailer to
ensure that the customer implements his/her decision to
try out the product?
• Confirmation- What should be the firms strategy to
retain the consumer and ensure that he does not leave
the brand 6
The Diffusion Process

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Elements of the Diffusion Process

•The Innovation

•The Channels of Communication

•The Social System

•Time

8
The Innovation

9
Defining Innovations

•Firm-oriented definitions

•Product-oriented definitions

•Market-oriented definitions

•Consumer-oriented definitions

10
Firm-oriented definitions

•Treats the newness of a product from the perspective of

the 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 is
actually 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 new
•Not very useful when the goal is to understand
consumer acceptance of a new product

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 Product Oriented definitions
Least Disruptive
Influence- Modified
Continuous Product rather than a
Innovation completely new
product

More Disruptive than

continuous innovation –
Dynamically
may involve creation of
a new product or
Continuous
modification of an Innovation
existing product

Requires consumers
Discontinuous to adopt new
Innovation behaviour patterns –
airplanes, TV,
automobiles, fax
machines 12
Telephone Innovations

Discontinuous Dynamically Continuous Continuous

Innovations Innovations Innovations
Telephone answering Hold button
machines Line-in-use indicator
Call forwarding Redial button
Telephone Call waiting Auto dialing feature
Caller ID Touch-tone service
Banking by telephone 800 Numbers
Call-prompting systems 900 Numbers

Ability to send/receive email Switch from analog to

Incorporate PDA functions digital
Cell Phone Calendar/Phonebook Include camera
Voice-activated dialing Ringer styles
Play games
Fax modem Plain paper fax
Mobile fax machines Speed dial buttons
Fax
Home office systems Delayed send
Machine
(combined fax, copier, Copy function
computer printer) Paper cutter 13
Market-Oriented definitions

•This approach judges the newness of a product in terms of

how 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 consumer

judges 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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Product Characteristics That Influence
Diffusion
•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
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Product Characteristics That Influence
Diffusion
•Relative Advantage- The degree to which potential customers
perceive a new product as superior to existing substitutes is its relative
advantage

•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 18
Characteristics That Influence Diffusion

CHARACTERISTICS EXAMPLES

Air travel over train travel,

Relative
cordless phones over corded
Advantage
telephones
Gillette MACH3 over disposable
Compatibility razors, digital telephone
answering machines over
machines using tape
Electric shavers, instant
Complexity puddings
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Characteristics That Influence Diffusion

CHARACTERISTICS EXAMPLES

Trial size jars and bottles of new

Trialability products, free trials of software,
free samples, cents-off coupons

Clothing, such as a new Tommy

Observability Hilfiger jacket, a car,
wristwatches, eyeglasses

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The Channels of Communication

21
The Channels of Communication

•How quickly an innovation spreads thru the market

depends to a great extent on communications between the
marketer 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
•New channels of communication in recent years –
Interactive marketing – DVD’s/podcasts
22
The Social System

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 The Social System

•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

24
 Characteristics of a Modern Social
System
•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

•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
Adopter consumer
Categories adopts a new
product in
relation to other
adopters.

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Adopter Categories

Early Laggards
Adopters
13.5% Early Late 16%
Majority Majority
Innovators 34%
34%
2.5%

Percentage of Adopters by Category Sequence

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Innovators: Description

• 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

• 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 opinion
leaders
• Are role models
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Early Majority: Description

• 34% of population
• Deliberate
• Adopt new ideas just prior to the average time
• Seldom hold leadership positions
• Deliberate for some time before adopting

32
Late Majority: Description

• 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

• 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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 WHAT HAPPENS
NAME OF EXAMPLE
DURING THIS STAGE
STAGE
Consumer is first Janet sees an ad for a new MP3 player
Awareness exposed to the product in the magazine she is reading.
innovation.
Consumer is interested Janet reads about the MP3 player on the
in the product and manufacturer’s Web site and then goes
Interest
searches for additional to an electronics store near her
information. apartment and has a salesperson show
her a unit.
Consumer decides After talking to a knowledgeable friend,
whether or not to Janet decides that this MP3 player will
believe that this product allow her to easily download the MP3
Evaluation or service will satisfy the files that she has on her computer. She
need--a kind of “mental also feels that the unit’s size is small
trial.” enough to easily fit into her beltpack.

36
 WHAT HAPPENS
NAME OF DURING THIS STAGE EXAMPLE
STAGE
Consumer uses the Since an MP3 player cannot be “tried”
product on a limited like a small tube of toothpaste, Janet
Trial basis buys the MP3 player online from
Amazon.com, which offers a 30-day
full refund policy.
If trial is favorable, Janet finds that the MP3 player is easy
consumer decides to to use and that the sound quality is
use the product on a excellent. She keeps the MP3 player.
Adoption
full, rather than a
(Rejection
limited basis--if
)
unfavorable, the
consumer decides to
reject it.
37
An Enhanced Adoption Process Model

Discontinuation or
Rejection
Rejection

Evaluation

Pre- Adoption
existing Awareness Interest Evaluation Trial or
problem Rejection
or Need

Adoption or Rejection Postadoption

or
Postpurchase
Discontinuation Evaluation

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An Enhanced Adoption Process Model

High
Personal
and
interpersona
Importance l sources
Impersonal
mass-
media
sources
Low
Awareness

Evaluation

Adoption
Interest

Trial
39
Thank- You