Diffusion and adoption of innovation


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Diffusion and adoption of innovation

  1. 1. DIFFUSION OF INNOVATION Present by: Animesh Amal (01) Tushar Bhosale (07) Sagar Mujumdar (17)
  2. 2. 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.
  3. 3. Introduction • For Marketers , - Important mechanism for keeping the firm competitive, profitable and growing.
  4. 4. 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.
  5. 5. 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
  6. 6. DIFFUSION PROCESS Innovation Channels Of communication Social system Time
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. 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.
  11. 11. 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
  12. 12. 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
  13. 13. 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.
  14. 14. Adopter categories • Innovators • Early adopters • Early majority • Late majority • Laggards
  15. 15. 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 UK PRODUCT NO. OF YEARS TELEPHONE 38 CABLE TELEVISION 25 VCR 9 WIRELESS 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
  16. 16. 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 practices Eg. Gillete Mach3 Turbo over disposable razor
  17. 17. Product characteristics that influence diffusion Characteristics Definition Complexity Degree to which a new product is difficult to understand or use E.g. Disposable razors Trialability Degree to which a new product is capable of being tried on a limited basis E.g. Free trial software Observability Degree to which a products attributes can be observed, imagined to potential customers. E.g. Laptop
  18. 18. STAGES OF ADOPTION PROCESS AWARNESS • First exposure INTEREST • Show interest and searches for more information EVALUATION • Mental trial TRIAL • Uses the product on a limited basis ADOPTION/ REJECTION • Decides to use / reject
  19. 19. 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.
  20. 20. 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.
  21. 21. Characteristic • Interest in the product category • The innovator is an opinion leader
  22. 22. Personality • Dogmatism • Need for uniqueness • Social character • Perceived risk • Venturesomeness
  23. 23. Purchase and Consumption traits Brand loyalty Usage
  24. 24. Media Habits • Total magazine exposure • Special – Interest magazines • Television
  25. 25. Social Characteristics • Social integration • Social striving (eg- Social, physical, and occupational mobility) • Group memberships
  26. 26. Demographic Characteristics Age Income Education Occupational status
  27. 27. Characteristic Innovator Noninnovator Product Interest More Less Opinion Leadership More Less Personality Dogmatism Open minded Closed minded Need for uniqueness Higher Lower Perceived risk Less More Variety seeking Higher Lower Purchase and Consumption Traits Brand loyalty Less More Usage More Less
  28. 28. Media Habits Total magazine exposure More Less Special – Interest magazine More Less Television Less More Social Characteristics Social integration More Less Group memberships More Less Demographic characteristics Age Younger Older Income Higher Lower Education More Less Occupational Status Higher Lower
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