DIFFUSION OF INNOVATION

Present by:Animesh Amal (01)

Tushar Bhosale (07)Sagar Mujumdar (17)

Introduction

• What is new product and services?- Revolutionary new or- Minor product variation

• For Consumer,- Increased opportunity to satisfy personal social and environmental

needs and add to their quality of life.

Introduction

• For Marketers ,- Important mechanism for keeping the firm competitive,

profitable and growing.

Diffusion and Adoption of Innovation

• Diffusion is a macro process concerned with the spread of a new product from its source to the consuming public.

• Adoption is a micro process that focuses on the stages through which an individual consumer passes when deciding to accept or reject a new product.

NEW PRODUCT AND THE DIFFUSION OF INNOVATION

• Some aspects related to product purchase and brand loyalty:

• Knowledge aspect• Persuasion aspect• Decision aspect• Implementation of the decision• Confirmation

DIFFUSION PROCESS

Innovation Channels Of

communicationSocial system Time

INNOVATION

• Firm oriented innovation: Treats the newness of a product from the perspective of

company producing or marketing it. • Product oriented innovation: Focuses on the feature inherent in the product itself and on

the effects these features are likely to have on consumers established uses patterns

- Types:• Continuous innovation• Dynamically Continuous innovation• Discontinuous innovation

Example of Product oriented innovation

Discontinuous innovation

• Cell Phone

Dynamically Continuous innovation

• Send/receive email• FM• MP3• Camera

Continuous innovation

• Bluetooth headset• WiFi• Android system• Duos sim card• Software

INNOVATION

• Market oriented innovation: Judges the newness of the product in terms of how much

exposure consumer have to the new product.

• Consumer oriented innovation: Newness is based on consumer’s perception of the product

rather than on physical features or market realities

Channels of Communication• How quickly an innovation spreads through a

market depends to a great extent on communication between marketer and consumer as well as communication among consumers i.e. W.O.M.

• Correct communication channels used during the process of diffusion, oriented towards behaviour and preferences of the target category of adopters

• Internet, TV, radio, banners, Sms, News papers, e-Commerce.

Social System• Diffusion of new product usually take place in social setting• Social system = physical + social + cultural environment• May influence entire society to accept or reject new product• Characteristics of Modern Social System:• Positive attitude of members of the social system towards changes• Progressive technologies• Positive attitude towards science and education• Rational relationships rather than on emotional ones• high level of homogeneity of the social system• high level of compatibility of innovation

Time• Proper timing of introduction of innovation

into the market• Amount of purchase time: Refers to the amount of that elapses between

Consumers initial awareness of a new product or service and point at which they purchase or reject

Adoption

• Adoption is a major step in the diffusion of innovation

• Its is how consumer decides whether or not to try and adopt innovative product/services.

Adopter categories

• Innovators• Early adopters• Early majority• Late majority• Laggards

Rate of adoption

• How long it takes a new product/services to be adopted by members of social system

• Diffusion of new product/services has become more fast and short.

Time required for electronic products to penetrate 10 % of the mass market in UKPRODUCT NO. OF YEARS

TELEPHONE 38CABLE TELEVISION 25VCR 9WIRELESS DATA SERVICS 6

• Penetration policy low introductory price to penetrate the market and quickly establish market leadership

• Skimming policy product available at high price initially but gradually lowers the price to attract additional market segment

Product characteristics that influence diffusion

Characteristics Definition

Relative advantage Degree to which potential customers perceive a new product as superior to existing substitute.Eg. HDTV over standard TV

Compatibility Degree to which potential consumers feel a new product is consistent with their present needs value and practicesEg. Gillete Mach3 Turbo over disposable razor

Product characteristics that influence diffusion

Characteristics Definition

Complexity Degree to which a new product is difficult to understand or useE.g. Disposable razors

Trialability Degree to which a new product is capable of being tried on a limited basisE.g. Free trial software

Observability Degree to which a products attributes can be observed, imagined to potential customers.E.g. Laptop

STAGES OF ADOPTION PROCESS

AWARNE

SS

• First exposure

INTEREST

• Show interest and searches for more information

EVALUATI

ON

• Mental trial

TRIAL

• Uses the product on a limited basis

ADOPTION/

REJECTION

• Decides to use / reject

Adoption process and information sources

• Advertising and media stories may spread information about new innovations, but it’s conversations that spread adoption.

• Because the adoption of new products or services involves risk and uncertainty.

• It’s usually only people we personally know and trust and who we know have successfully adopted the innovation themselves

• Early adopters are the exception to this. • But now a days there is change in the relative importance of

information sources in the later stage of purchase decision process person seeking information from another sources e.g. discussion forum, chat rooms and blogs on web.

Profile of Consumer Innovator

Consumer Innovator

Relatively small group of consumers who are the earliest purchasers of a new product.

Who has high levels of the education, social interaction, opinion leadership, optimism, cosmopolitanism and social status compared to those in the population who adopt later.

Characteristic

• Interest in the product category• The innovator is an opinion leader

Personality

• Dogmatism• Need for uniqueness• Social character• Perceived risk• Venturesomeness

Purchase and Consumption traits

Brand loyalty

Usage

Media Habits

• Total magazine exposure• Special – Interest magazines• Television

Social Characteristics

• Social integration• Social striving (eg- Social, physical, and occupational

mobility)• Group memberships

Demographic Characteristics

AgeIncome

EducationOccupational status

Characteristic Innovator Noninnovator

Product Interest More Less

Opinion Leadership More Less

PersonalityDogmatism Open minded Closed minded

Need for uniqueness Higher Lower

Perceived risk Less More

Variety seeking Higher Lower

Purchase and Consumption TraitsBrand loyalty Less More

Usage More Less

Media HabitsTotal magazine exposure More Less

Special – Interest magazine More Less

Television Less More

Social CharacteristicsSocial integration More Less

Group memberships More Less

Demographic characteristicsAge Younger Older

Income Higher Lower

Education More Less

Occupational Status Higher Lower

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