Marketing 547
Diffusion of Innovations
Diffusion of Innovations
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Definitions
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Diffusion -- Process by which something spreads
Innovations -- A product as perceived as new by
the consumer
Diffusion of Innovations -- Process by which
products perceived as being new by consumers
spread across a society
Diffusion of Innovations
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Definitions Cont.
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Why Study Diffusion?
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Useful for planning purposes
Help reduce number of new product failures (which is
now estimated to be about 90%-95%)
Given the current environment, there is a strong reliance
on the development and introduction of new products
Diffusion of Innovations
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More on Innovations
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The innovation continuum -- dependent on:
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effect on consumption (including usage) behavior
degree to which the innovation is a technological
breakthrough
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Continuous
Dynamically Continuous
Discontinuous
Diffusion of Innovation
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The Diffusion Process
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Process via which the adoption of an innovation is
spread by communication to members of a target
market over a period of time.
Diffusion of Innovation
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The Innovator
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Consumer Categories
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1) The innovator (the first 2.5%)
2) The early adopter ( the next 13.5%)
3) The early majority (the next 34%)
4) The late majority (the next 34%)
5) Laggards
1
2
3
4
5
Diffusion of Innovation
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The Innovator (continued)
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The nature of innovativeness
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Seems to be product related
Demographic correlates
Personality correlates
Communication patterns
Usage behavior
Who should managers target?
Diffusion of Innovation
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The Adoption Process
Awareness
Knowledge
Evaluation
Trial
Adoption
Symbolic Rejection
Trial Rejection
Diffusion of Innovation
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The Diffusion Curve
Percent of
Adopters
Time of Adoption
Diffusion of Innovation
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The Diffusion Curve (continued)
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Theories of Diffusion ( Why is the curve Sshaped?)
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Social Interaction
Marketing Program & Competitive Affects
Other Curves (diffusion processes)?
Diffusion of Innovation
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Factors Affecting the Rate of Diffusion
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Relative Advantage
Compatibility
Simplicity
Observability
Trialability
Perceived Risk
Diffusion of Innovation
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Marketing Management & Diffusion
Continuous Innovation
Diffusion
rate
Fast
Segments
Well-Defined
Price
Low (Penetration)
Channels
Ads
Promotion
Intensive
Symbolic, Image
Price-Based
Discontinuous Innovation
Slow
Few Identifiable
High (Skim)
Selective
Informational
Trial-Based
Communication & Word-of-Mouth
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Communication
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Process of exchanging information and conveying
meaning between two or more parties via a
chosen medium
Types of Communication
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Impersonal
Interpersonal
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Formal
Informal (WOMC)*
Communication & Word-of-Mouth
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Definition of Word-of-Mouth Communication
WOMC
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Process of exchanging information and conveying
meaning about market offerings between
consumers
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Negative WOMC can really harm a brand – managers
should protect against it!
The WOMC environment in the 21st Century
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Consumer trust of “mass media”
Consumer accessibility to WOMC
Communication & Word-of-Mouth
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WOMC Process
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Mass Media
Opinion Leaders (OLs) – those who influence
others (intentionally or unintentionally)
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E-fluentials
Other agents of change (e.g., someone who may have
an ax to grind; someone who is “delighted” with a
brand’s performance)
Gatekeepers
Followers
Communication & Word-of-Mouth
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Managing WOMC
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Identify & target OLs
Create OLs
Simulate WOMC (with advertising)
Stimulate WOMC (with advertising &
sponsorships)