Description
A consumer is a person or group of people who are the final users of products and or services generated within a social system. A consumer may be a person or group, such as a household. The concept of a consumer may vary significantly by context, although a common definition is an individual who buys products or services for personal use and not for manufacture or resale.
Diffusion and Adoption
Defining Diffusion
? Diffusion is defined as the process by which the
acceptance of an innovation (a new product / service / idea / practice) is spread by communication (mass media, salespeople or WoM) to members of a social system (target market) over a period of time
Diffusion process - Basic elements
(B) Channels of Commn
(A) Innovation
(C) Social System
(D)
Time
(A) Innovation - Definitions
1) Firm – oriented definitions 2) Product – oriented definitions 3) Market - oriented definitions
4) Consumer - oriented definitions
1) Firm – oriented definitions
? Treats the newness of the product from the
perspective of the company producing or marketing it
? When the product is new to the company it is
considered new in general
? This approach ignores whether or not the product is
new to the marketplace (to consumers or competitors)
2) Product – oriented definitions
? ?
Focus on the inherent features of the products Focus on the effects of these features on the consumer buying patterns
?
Sometimes considers the extent to which the innovation is likely to disrupt the established behavior patterns
Types:
? ? ?
?
Continuous innovation Dynamically continuous innovation Discontinuous innovation
Product – oriented definitions contd…
? Continuous Innovation
? Has the least disruptive influence on established
patterns
? Involves introduction of a modified product rather than
a totally new product
? E.g: Software upgrades vis-à-vis totally new software
Product – oriented definitions contd…
? Dynamically Continuous Innovation
? Has a slightly more disruptive influence on established
patterns but DOES NOT alter existing patterns
? Involves creation of a new or a modified product ? E.g. External Hard drives, disposable diapers etc
Product – oriented definitions contd…
? Discontinuous Innovation
? Requires consumers to adopt new behavior patterns ? E.g. Internet, Mobile phones, online payments
3) Market– oriented definitions
? A product is considered new if:
? It has been purchased by a relatively small (fixed ) % of
the potential market
? It has been on the market for a relatively short
(specified) amount of time
4) Consumer– oriented definitions
? A new product is any product that a potential
consumer judges to be new
? Thus, ‘newness’ is based on the consumers’ perception
of the product rather than product features or market realities
Product Characteristics influencing Diffusion
Characteristics
Relative Advantage
Compatibility Complexity* Trialability Observability
Definition
The degree to which potential customers perceive a new product as superior to existing substitutes The degree to which potential customers feel a new product is consistent with their present needs, values and practices The degree to which a new product is difficult to understand or use The degree to which a new product is capable of being tried on a limited basis The degree to which a product ‘s benefits or attributes can be observed, imagined or described to potential customers
*Complexity
? Barriers to new product acceptance (especially for
high-tech consumer products)
? Fear of technical complexity ? Fear of rapid obsolescence
? Fear of social rejection
? Fear of physical harm
Diffusion process - Basic elements
(B) Channels of Commn
(A) Innovation
(C) Social System
(D)
Time
(B)Channels of Communication
? Relative influence of:
? Word-of-mouth (between consumers) ? Impersonal sources (advertising and editorial matter) ? Interpersonal sources (salespeople and informal opinion
leaders)
Diffusion process - Basic elements
(B) Channels of Commn
(A) Innovation
(C) Social System
(D)
Time
(C)The Social System
? The social system is a physical, cultural or social
environment to which people belong and within which they function
? Market segment / Target market are more relevant in
our context
Characteristics of a Social System
? A positive attitude towards change ?An advanced technology and skilled labor force ? A general respect for education and science ? Emphasis on ordered social relationships rather than emotional ones ? An outreach perspective facilitating the entrance of new ideas into the system ? A system in which members can see themselves in different roles
Diffusion process - Basic elements
(B) Channels of Commn
(A) Innovation
(C) Social System
(D)
Time
(D) Time
1) The amount of purchase time
2) Identification of adopter categories 3) Rate of adoption
1) Purchase time
Initial Customer Awareness Purchase Decision / Rejection
purchase time
2) Adopter Categories
? Classification scheme that indicates where a consumer
stands in relation to others in terms of time or when the consumer adopts a new product
2) Adopter Categories
Category Description
Venturesome – very eager to try new ideas; acceptable if risk is daring; more cosmopolite social relationships; communicate with other innovators Respect – more integrated into the local social system; the persons to check with before adopting the new idea; contains greatest number of opinion leaders
Relative %
1) Innovators
2.5%
2) Early Adopters
13.5%
2) Adopter Categories
Category Description
Deliberate – adopt new ideas just prior to the average time; seldom hold leadership positions; deliberate for some time before adopting 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
Relative %
3)Early Majority
34%
4) Late Majority
34%
2) Adopter Categories
Category Description
Traditional – the last people to adopt an innovation; most “localite” in outlook; oriented to the past; suspicious of the new
Relative %
5)Laggards
16%
% of Adopters - Category Sequence
Early Adopters 34% Early Majority 34% Late Majority
13.5%
2.5%
16%
Innovators
Laggards
3) Rate of Adoption
? It is the time taken for a new product or service to be
adopted by members of a social system i.e. how quickly it takes a new product to be accepted by those who will ultimately adopt it
? Depends on marketing of policy of the firm: ? Penetration policy ? Skimming
3) Rate of Adoption
? Penetration Policy ? Low introductory price to penetrate the market ? Rapid product adoption demonstrates to intermediaries that the product is worthy of their full and continued support ? Skimming Policy ? High introductory price to skim the market ? Stepwise reduction in prices to attract newer markets ? This is done to control the adoption rate and recover developmental costs
Diffusion process - Basic elements
(B) Channels of Commn
(A) Innovation
(C) Social System
(D)
Time
[email protected]
Definition
? The stages through which an individual consumer
passes while arriving at a decision to try or not to try to continue using or discontinue using a new product
Stages in the Adoption Process
Stage Remarks
Consumer is first exposed to the product innovation Consumer is interested in the product and seeks additional information Consumer decides whether or not to believe that this product will satisfy a need – “mental trial” Consumer uses the product on a limited basis If trial is favorable – consumer decides to use the product on a full basis If trial is unfavorable – Consumer rejects it
1. Awareness
2. Interest 3. Evaluation 4. Trial 5. Adoption / Rejection
Enhanced Adoption Process Model
Adoption OR Rejection
Need
Awareness ?Interest ? Evaluation ?Trial
Adoption / Rejection
Postadoption or postpurchase evaluation
Evaluation
Dis continuation
Discontinuation OR Rejection
Rejection
Adoption and Info Sources
? The adoption process provides a framework for
determining which types of information sources consumers find most important at specific decision stages
Relative importance of Info Sources
High Personal and interpersonal sources
Importance Impersonal mass media sources
Low
Awareness
Evaluation
Adoption
Interest
Trial
doc_385451309.pptx
A consumer is a person or group of people who are the final users of products and or services generated within a social system. A consumer may be a person or group, such as a household. The concept of a consumer may vary significantly by context, although a common definition is an individual who buys products or services for personal use and not for manufacture or resale.
Diffusion and Adoption
Defining Diffusion
? Diffusion is defined as the process by which the
acceptance of an innovation (a new product / service / idea / practice) is spread by communication (mass media, salespeople or WoM) to members of a social system (target market) over a period of time
Diffusion process - Basic elements
(B) Channels of Commn
(A) Innovation
(C) Social System
(D)
Time
(A) Innovation - Definitions
1) Firm – oriented definitions 2) Product – oriented definitions 3) Market - oriented definitions
4) Consumer - oriented definitions
1) Firm – oriented definitions
? Treats the newness of the product from the
perspective of the company producing or marketing it
? When the product is new to the company it is
considered new in general
? This approach ignores whether or not the product is
new to the marketplace (to consumers or competitors)
2) Product – oriented definitions
? ?
Focus on the inherent features of the products Focus on the effects of these features on the consumer buying patterns
?
Sometimes considers the extent to which the innovation is likely to disrupt the established behavior patterns
Types:
? ? ?
?
Continuous innovation Dynamically continuous innovation Discontinuous innovation
Product – oriented definitions contd…
? Continuous Innovation
? Has the least disruptive influence on established
patterns
? Involves introduction of a modified product rather than
a totally new product
? E.g: Software upgrades vis-à-vis totally new software
Product – oriented definitions contd…
? Dynamically Continuous Innovation
? Has a slightly more disruptive influence on established
patterns but DOES NOT alter existing patterns
? Involves creation of a new or a modified product ? E.g. External Hard drives, disposable diapers etc
Product – oriented definitions contd…
? Discontinuous Innovation
? Requires consumers to adopt new behavior patterns ? E.g. Internet, Mobile phones, online payments
3) Market– oriented definitions
? A product is considered new if:
? It has been purchased by a relatively small (fixed ) % of
the potential market
? It has been on the market for a relatively short
(specified) amount of time
4) Consumer– oriented definitions
? A new product is any product that a potential
consumer judges to be new
? Thus, ‘newness’ is based on the consumers’ perception
of the product rather than product features or market realities
Product Characteristics influencing Diffusion
Characteristics
Relative Advantage
Compatibility Complexity* Trialability Observability
Definition
The degree to which potential customers perceive a new product as superior to existing substitutes The degree to which potential customers feel a new product is consistent with their present needs, values and practices The degree to which a new product is difficult to understand or use The degree to which a new product is capable of being tried on a limited basis The degree to which a product ‘s benefits or attributes can be observed, imagined or described to potential customers
*Complexity
? Barriers to new product acceptance (especially for
high-tech consumer products)
? Fear of technical complexity ? Fear of rapid obsolescence
? Fear of social rejection
? Fear of physical harm
Diffusion process - Basic elements
(B) Channels of Commn
(A) Innovation
(C) Social System
(D)
Time
(B)Channels of Communication
? Relative influence of:
? Word-of-mouth (between consumers) ? Impersonal sources (advertising and editorial matter) ? Interpersonal sources (salespeople and informal opinion
leaders)
Diffusion process - Basic elements
(B) Channels of Commn
(A) Innovation
(C) Social System
(D)
Time
(C)The Social System
? The social system is a physical, cultural or social
environment to which people belong and within which they function
? Market segment / Target market are more relevant in
our context
Characteristics of a Social System
? A positive attitude towards change ?An advanced technology and skilled labor force ? A general respect for education and science ? Emphasis on ordered social relationships rather than emotional ones ? An outreach perspective facilitating the entrance of new ideas into the system ? A system in which members can see themselves in different roles
Diffusion process - Basic elements
(B) Channels of Commn
(A) Innovation
(C) Social System
(D)
Time
(D) Time
1) The amount of purchase time
2) Identification of adopter categories 3) Rate of adoption
1) Purchase time
Initial Customer Awareness Purchase Decision / Rejection
purchase time
2) Adopter Categories
? Classification scheme that indicates where a consumer
stands in relation to others in terms of time or when the consumer adopts a new product
2) Adopter Categories
Category Description
Venturesome – very eager to try new ideas; acceptable if risk is daring; more cosmopolite social relationships; communicate with other innovators Respect – more integrated into the local social system; the persons to check with before adopting the new idea; contains greatest number of opinion leaders
Relative %
1) Innovators
2.5%
2) Early Adopters
13.5%
2) Adopter Categories
Category Description
Deliberate – adopt new ideas just prior to the average time; seldom hold leadership positions; deliberate for some time before adopting 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
Relative %
3)Early Majority
34%
4) Late Majority
34%
2) Adopter Categories
Category Description
Traditional – the last people to adopt an innovation; most “localite” in outlook; oriented to the past; suspicious of the new
Relative %
5)Laggards
16%
% of Adopters - Category Sequence
Early Adopters 34% Early Majority 34% Late Majority
13.5%
2.5%
16%
Innovators
Laggards
3) Rate of Adoption
? It is the time taken for a new product or service to be
adopted by members of a social system i.e. how quickly it takes a new product to be accepted by those who will ultimately adopt it
? Depends on marketing of policy of the firm: ? Penetration policy ? Skimming
3) Rate of Adoption
? Penetration Policy ? Low introductory price to penetrate the market ? Rapid product adoption demonstrates to intermediaries that the product is worthy of their full and continued support ? Skimming Policy ? High introductory price to skim the market ? Stepwise reduction in prices to attract newer markets ? This is done to control the adoption rate and recover developmental costs
Diffusion process - Basic elements
(B) Channels of Commn
(A) Innovation
(C) Social System
(D)
Time
[email protected]
Definition
? The stages through which an individual consumer
passes while arriving at a decision to try or not to try to continue using or discontinue using a new product
Stages in the Adoption Process
Stage Remarks
Consumer is first exposed to the product innovation Consumer is interested in the product and seeks additional information Consumer decides whether or not to believe that this product will satisfy a need – “mental trial” Consumer uses the product on a limited basis If trial is favorable – consumer decides to use the product on a full basis If trial is unfavorable – Consumer rejects it
1. Awareness
2. Interest 3. Evaluation 4. Trial 5. Adoption / Rejection
Enhanced Adoption Process Model
Adoption OR Rejection
Need
Awareness ?Interest ? Evaluation ?Trial
Adoption / Rejection
Postadoption or postpurchase evaluation
Evaluation
Dis continuation
Discontinuation OR Rejection
Rejection
Adoption and Info Sources
? The adoption process provides a framework for
determining which types of information sources consumers find most important at specific decision stages
Relative importance of Info Sources
High Personal and interpersonal sources
Importance Impersonal mass media sources
Low
Awareness
Evaluation
Adoption
Interest
Trial
doc_385451309.pptx