Chapter 15 Consumer Influence and the Diffusion of Innovations

Opinion Leadership

The process by which one person (the opinion leader) informally influences the consumption actions or attitudes of others who may be opinion seekers or opinion recipients.

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What is Opinion Leadership?

Opinion Leader Opinion Receiver

Opinion Seeker

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Opinion Leader

A person who informally gives product information and advice to others.

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Opinion Seeker

An individual who either actively seeks product information from others or receives unsolicited information.

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Opinion Receiver

The person who receives an opinion offered by another person.

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Reasons for the Effectiveness of Opinion Leadership

Credibility Positive and Negative Product Information Information and Advice Opinion Leadership Is Category-Specific Opinion Leadership Is a Two-way Street

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Motivations Behind Opinion Leadership

The Needs of Opinion Leaders
Self involvement Social involvement Product involvement Message involvement New-product or new usage information Reduction of perceived risk Reduction of search time Receiving the approval of the opinion leader

The Needs of Opinion Receivers

Purchase Pals Surrogate Buyers Versus Opinion Leaders

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Table 15.1 A Comparison of the Motivations of Opinion Leaders and Opinion Receivers
OPINION LEADERS SELF-IMPROVEMENT MOTIVATIONS Reduce postpurchase uncertainty or dissonance Gain attention or status Assert superiority and expertise Feel like an adventurer Experience the power of converting others PRODUCT-INVOLVEMENT MOTIVATIONS Express satisfaction or dissatisfaction with a product or service Learn what products are new in the marketplace OPINION RECEIVERS Reduce the risk of making a purchase commitment Reduce search time

Learn how to use or consume a product

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Table 15.1 continued

OPINION LEADERS

OPINION RECEIVERS Buy products that have the approval of others, thereby ensuring acceptance

SOCIAL-INVOLVEMENT MOTIVATIONS Express neighborliness and friendship by discussing products or services that may be useful to others
MESSAGE-INVOLVEMENT MOTIVATIONS Express ones reaction to a stimulating advertisement by telling others about it

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Table 15.2 Key Differences Between Opinion Leaders and Surrogate Buyers
OPINION LEADER 1. Informal relationship with end-users 2. Information exchange occurs in the context of a casual interaction 3. Homophilous (to a certain extent) to end-users 4. Does not get paid for advice 5. Usually socially more active than end-users 6. Accountability limited regarding the outcome of advice 7. As accountability limited, rigor in search ad screening o alternatives low 8. Likely to have used the product personally 9. More than one can be consulted before making a final decision 10. Same person can be an opinion leader for a variety of related product categories
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Table 15.2 Key Differences Between Opinion Leaders and Surrogate Buyers
SURROGATE BUYER 1. Formal relationship; occupation-related status 2. Information exchange in the form of formal instructions/advice 3. Heterophilus to end users (that is, is the source of power) 4. Usually hired, therefore gets paid 5. Not necessarily socially more active than end-users 6. High level of accountability 7. Search and screening of alternatives more rigorous 8. May not have used the product for personal consumption 9. Second opinion taken on rare occasions 10. Usually specializes for a specific product/service category

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Table 15.4 Profile of Opinion Leaders

GENERALIZED ATTRIBTES ACROSS PRODUCT CATEGORIES Innovativeness Willingness to talk Self-confidence Gregariousness Cognitive differentiation CATEGORY-SPECIFIC ATTRIUTES Interest Knowledge Special-interest media exposure Same age Same social status Social exposure outside group

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Market Maven

Individuals whose influence stems from a general knowledge or market expertise that leads to an early awareness of new products and services.

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The Interpersonal Flow of Communication

Two-Step Flow
Views opinion leader as a middleman between the impersonal mass media and the majority of society

Multistep Flow
Takes into account the fact that information and influence often are two-way processes

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Two-Step Flow of Communication Theory

A communication model that portrays opinion leaders as direct receivers of information from mass media sources who, in turn, interpret and transmit this information.

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Figure 15.2 Two-Step Flow of Communication Theory

Mass Media

Step 1

Opinion Leaders

Step 2

Opinion Receivers (the masses)

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Multistep Flow of Communication Theory

A revision of the traditional two-step theory that shows multiple communication flows: from the mass media simultaneously to opinion leaders, opinion receivers, and information receivers; from opinion leaders to opinion receivers; and from opinion receivers to opinion leaders.
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Figure 15.3 Multistep Flow of Communication Theory

Step 2

Mass Media

Step 1a

Opinion Leaders

Step 3

Opinion Receiver/ Seekers

Step 1b

Information Receivers

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Issues In Opinion Leadership and Marketing Strategy

Programs Designed to Stimulate Opinion Leadership Advertisements Simulating Opinion Leadership Word of Mouth May Be Uncontrollable Creation of Opinion Leaders

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Diffusion Process

The process by which the acceptance of an innovation is spread by communication to members of social system over a period of time.

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Adoption Process

The stages through which an individual consumer passes in arriving at a decision to try (or not to try), to continue using (or discontinue using) a new product. The five stags of the traditional adoption process are awareness, interest, evaluation, trial, and adoption.
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Elements of the Diffusion Process

The Innovation The Channels of Communication The Social System Time

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Defining Innovations
Firm-oriented definitions Product-oriented definitions Market-oriented definitions Consumer-oriented definitions

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Product-Oriented Definitions
Continuous Innovation

Dynamically Continuous Innovation

Discontinuous Innovation
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Continuous Innovation

A new product entry that is an improved or modified version of an existing product rather than a totally new product. A continuous innovation has the least disruptive influence on established consumption patterns.

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Dynamically Continuous Innovation

A new product entry that is sufficiently innovative to have some disruptive effects on established consumption practices.

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Discontinuous Innovation

A dramatically new product entry that requires the establishment of new consumption practices.

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Figure 15.5 The Telephone Has Led to Related Innovations

Discontinuous Innovations Dynamically Continuous Innovations
Telephone answering machines Call forwarding Call waiting Caller ID Banking by telephone Call-prompting systems

Continuous Innovations
Hold button Line-in-use indicator Redial button Auto dialing feature Touch-tone service 800 Numbers 900 Numbers Silent alert Message displays Build-in alarm clock Interchangeable fashion color cases Plain paper fax Speed dial buttons Delayed send Copy function Paper cutter
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Telephone

Pager

Nationwide paging service Stock market quotation devices Sports scores delivery Two-way paging Pager watch Fax modem Mobile fax machines Home office systems (combined fax, copier, computer printer)

Fax Machine

Product Characteristics That Influence Diffusion

Relative Advantage Compatibility Complexity Trialability Observability

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Table 15.6 Product Characteristics That Influence Diffusion

CHARACTERISTICS DEFINITION The degree to which potential consumers perceive a new product as superior to existing substitutes The degree to which potential consumers feel a new product is consistent with their present needs, values, and practices EXAMPLES Air travel over train travel, cordless phones over corded telephones

Relative Advantage

Compatibility

Gillette MACH3 over disposable razors, digital telephone answering machines over machines using tape to make recordings

Complexity

The degree to which a Products low in new product is difficult complexity include frozen to understand or use TV dinners, electric shavers, instant puddings
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Table 15.6 continued

CHARACTERISTICS Trialability DEFINITION The degree to which a new product is capable of being tried on a limited basis The degree to which a products benefits or attributes can be observed, imagined, or described to potential customers EXAMPLES Trial size jars and bottles of new products, free trials of software, free samples, cents-off coupons Clothing, such as a new Tommy Hilfiger jacket, a car, wristwatches, eyeglasses

Observability

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Table 15.7 Barriers to Diffusion of an Innovation--On-Line Banking

TYPES OF BARRIERS FUNCTIONAL BARRIERS Usage Initial use requires a great deal of consumer learning Continuing use requires total commitment of system Partial or inconsistent use results in incorrect account balances Requires purchase of software and supplies Generally has additional monthly fee DEFINTIONS AND EXAMPLES

Value barriers

Risk barriers

Performance risk is high Economic risk is moderate Social risk is low

Not the way the consumer is accustomed to paying bills, etc. Negative (hard to use) image of personal computers in general and on-line banking in particular
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PSYCHOLOGICAL BARRIERS Traditional barriers Image barriers

Time and Diffusion

Purchase Time Adopter Categories Rate of Adoption

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Adopter Categories

A sequence of categories that describes how early (or late) a consumer adopts a new product in relation to other adopters. The five typical adopter categories are innovators, early adopters, early majority, late majority, and laggards.

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Figure 15.10 Adopter Categories

Early Adopters 13.5% Innovators 2.5%

Laggards

Early Majority 34%

Late Majority 34%

16%

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

34.0% 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

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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Table 15.10 The Importance of Time in the Diffusion Process

TYPE OF TIME
Purchase time MEANING EXAMPLES I you look at your cars gas gauge and it reads empty, you stop at the next gas station you come to. If youre shopping or Time between awareness an additional VCR for your home, you and purchase may take quite a while to make a purchase, as long as your present VCR is working properly. A classification scheme that indicates where a consumer stands, in relation to others, when adopting a new product.

Adopter categories

Innovators are the first to adopt a new product, and laggards are the last.

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Table 15.10 continued

TYPE OF TIME Rate of adoption

MEANING How long it takes a new product or service to be adopted by members of a social system

EXAMPLES Black-and-white TVs were adopted by consumers much more quickly than their manufacturers had envisioned; in contrast, trash compactors have never been widely adopted

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Table 15.11 The Stages in the Adoption Process

NAME OF STAGE Awareness 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.
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Interest

Evaluation

Table 15.11 The Stages in the Adoption Process

NAME OF STAGE 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.

Trial

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.

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Figure 15.11 An Enhanced Adoption Process Model

Rejection Discontinuation or Rejection Evaluation

Pre-existing problem or Need

Awareness

Interest

Evaluation

Trial

Adoption or Rejection

Adoption or Rejection

Postadoption or Postpurchase Evaluation

Discontinuation
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Figure 15.12 The Relative Importance of Different Types of Information Sources in the Adoption Process
High Personal and interpersonal sources Importance Impersonal mass-media sources Low Evaluation Awareness Interest Adoption Trial

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Issues in Profiling Consumer Innovators

Defining the Consumer Innovator Interest in the Product Category The Innovator Is an Opinion Leader Personality Traits Media Habits Social Characteristics Demographic Characteristics Are There Generalized Consumer Innovators?
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Figure 15.13 The Innovator Buying Cycle

EMBRACING INNOVATIONS Chasing the Advances Innovation Fascination

INNOVATION SATIATION Product Accumulation in the Closet Cumulative Innovation Disappointment Pace of Innovation Slows Down

INNOVATOR NO MORE What Ive Got is Good Enough Now Innovator Becomes Extremely Cautious, Careful Buyer Moving On
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