Innovation
• Offering which
– Is perceived as new by one
or more segments
• Within cultures
• Between cultures
– Affects existing consumption
• Substitution
• Complementarity
• Variety seeking
• May or may not involve
new technology
MKT 450
DIFFUSION OF INNOVATION
Lars Perner, Instructor
2
Some Examples of Cross-Cultural
Diffusion and Reinnovation
• Food
• Virtual pets
MKT 450
DIFFUSION OF INNOVATION
Lars Perner, Instructor
3
Reinnovation Over Time
• Fashion
• Music
MKT 450
DIFFUSION OF INNOVATION
Lars Perner, Instructor
4
Some Examples of Innovations
and Reinnovations
•
•
•
•
•
•
GPS systems (*)
Cellular phones
Torn jeans
Hip hop music (*)
Nail polish
ATM cards and
machines (*)
• Credit cards (*)
MKT 450
•
•
•
•
•
High end coffee shops
Vitamin C
Cranberry juice
Refrigerators
E-mail
DIFFUSION OF INNOVATION
Lars Perner, Instructor
5
The Chicken-and-Egg
Problem
• Some programs require two
components, each of which must be
present before the other can be
attracted
– E.g., an online auction site needs both
buyers and sellers. Buyers are less
motivated to come when there are few
sellers, but buyers are needed to attract
sellers.
• A “jump start” may be needed—
e.g., period of free service in return
for early signup
MKT 450
DIFFUSION OF INNOVATION
Lars Perner, Instructor
6
Examples of “Chicken-andEgg” Vulnerable Ventures
•
•
•
•
•
•
•
•
MKT 450
Personals sites
Auction sites
Text messaging systems
“Wiki” projects
Carpool systems
Electric cars
Computers and software
Fashion
DIFFUSION OF INNOVATION
Lars Perner, Instructor
7
Types of Innovations—Degree
of Innovation
• Continuous--same product, just small
improvements over time--e.g., typical
automobile/stereo system model
changes
• Dynamically continuous--product form
changed, but function and usage are
roughly similar--e.g., jet aircraft, ball
point pen, word processor
• Discontinuous--entirely new product;
usage approach changes (e.g., fax)
MKT 450
DIFFUSION OF INNOVATION
Lars Perner, Instructor
8
Continuity and Discontinuity
of Innovations
MKT 450
DIFFUSION OF INNOVATION
Lars Perner, Instructor
9
Types of Innovations-Benefit
• Functional: Tangible
benefit
• Hedonic/aesthetic:
Contribution of
pleasure—e.g., new
foods, music
• Symbolic: Selfexpression—e.g.,
fashions; framing of
benefits
MKT 450
DIFFUSION OF INNOVATION
Lars Perner, Instructor
10
Innovation by Co-Creation
• Consumers participate in the
development of new products
– Design of custom products
– Contribution of new product ideas
• May better suit customer needs
• May be spread more readily
online
• Building relationship with the
brand
MKT 450
DIFFUSION OF INNOVATION
Lars Perner, Instructor
11
Resistance to Innovation
• Concerns over
innovations
• Difficulty in
migrating or
learning to use
the product
• Inertia
MKT 450
DIFFUSION OF INNOVATION
Lars Perner, Instructor
12
Adoption Decisions
MKT 450
DIFFUSION OF INNOVATION
Lars Perner, Instructor
13
N u m b e r o f n e w a d o p to r s
Innovators and Imitators:
The Lifecycle of A Product
Adoption of Innovations Over Time
40
30
20
10
0
Innovators
-2.50
2.5%
MKTG 370
MKT 450
Early
-1.50
adoptors
(13.5%)
Early
-0.50
m aj
ority
34%
DIFFUSION
DIFFUSION OF INNOVATION
Late
m aj ority
0.50
34%
Laggards
1.50
2.50
(13.5%)
Lars Perner, Instructor
14
Adopter Groups:
Implications
• Demographic groups
• Social influence
• Personality
characteristics
• Culture
• Usage levels
MKT 450
DIFFUSION OF INNOVATION
Lars Perner, Instructor
15
Diffusion and Product
Lifecycle Curves
MKT 450
DIFFUSION OF INNOVATION
Lars Perner, Instructor
16
P e r c e n t d iffu s io n
One Diffusion Pattern—
Nicely Balanced...
The S-Shaped Diffusion Curve
1
0.8
100% adoption
or saturation
point
0.6
0.4
0.2
0
0
5
10
15
20
25
Tim e
MKT 450
DIFFUSION OF INNOVATION
Lars Perner, Instructor
17
Longevity of Innovations
• Types
– Fads
– Fashion
– Classic
• Disadoption
MKT 450
DIFFUSION OF INNOVATION
Lars Perner, Instructor
18
Influences on Diffusion and
Resistance
• Perceived value
• Perceived benefits
– Relative advantage
• Perceived costs
• Uncertainty/risk
• Consumer learning
requirements
• Social relevance
• Legitimacy and
adaptability
• Social system
–
–
–
–
Modernity
Physical distance
Homiphily
Opinion leadership
– Compatibility
– Trialability
– Complexity
MKT 450
DIFFUSION OF INNOVATION
Lars Perner, Instructor
19