NEW PRODUCT ADOPTION AND DIFFUSION PROCESS

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NEW PRODUCT ADOPTION AND DIFFUSION PROCESS

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  • 8 10-25 Copyright © 2000 by Houghton Mifflin Company. All rights reserved.
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  • NEW PRODUCT ADOPTION AND DIFFUSION PROCESS

    1. 1. NEW PRODUCT ADOPTION AND DIFFUSION PROCESS (Adoption Theory)
    2. 2. The Adoption Decision Process How an individual consumer acts . . . KNOWLEDGE PERSUASION DECISION IMPLEMENTATIONS CONFIRMATION TIME
    3. 3. New Product Adoption Theory <ul><li>ADOPTION PROCESS </li></ul><ul><li>- The consumer decision stages that lead to innovation acceptance/rejection </li></ul><ul><li>- A micro process process that focuses on </li></ul><ul><li> internal forces of the consumer </li></ul><ul><li>* Intra Personal (Psych) Influences </li></ul><ul><li>* Inter Personal (Social) Influences </li></ul><ul><li>* Product Selection Criteria </li></ul>
    4. 4. Influences on the Rate of Adoption <ul><li>Relative advantage </li></ul><ul><ul><li>How much better than existing alternatives? </li></ul></ul><ul><li>Compatibility </li></ul><ul><ul><li>Fit current values and experiences? </li></ul></ul><ul><li>Complexity </li></ul><ul><ul><li>Ease of understanding? </li></ul></ul><ul><li>Divisibility </li></ul><ul><ul><li>Can it be tried on a limited basis? </li></ul></ul><ul><li>Communicability </li></ul><ul><ul><li>Can the innovation be observed and communicated? </li></ul></ul>
    5. 5. New Product Diffusion Theory <ul><li>DIFFUSION PROCESS. </li></ul><ul><li>- the spread of an innovation from its. </li></ul><ul><li> source to the ultimate consumer. </li></ul><ul><li> - a macro process that focuses on external. </li></ul><ul><li> forces on the consumer (change agents, </li></ul><ul><li> channels of information, types of. </li></ul><ul><li> information). </li></ul><ul><li> - occurs in a social system (a target. </li></ul><ul><li> audience, community, etc. </li></ul>
    6. 6. THE DIFFUSION PROCESS How different segments of the market act PER CENT OF TOTAL MARKET TIME INNOVATIORS-2.5% EARLY ADOPTERS-13.5% EARLY MAJORITY-34% LATE MAJORITY-34% LAGGARDS (INCLUDING NONADOPTERS)-16%
    7. 7. <ul><li>is influenced by… </li></ul><ul><li>* Competitive Intensity (+) </li></ul><ul><li>* Good Supplier Reputation (+) </li></ul><ul><li>* Standardization of Technology (+) </li></ul><ul><li>* Vertical ( ) Channel Coordination (+) </li></ul><ul><li>* Resource Commitments (+) </li></ul>Speed of Diffusion
    8. 8. 2.5% Innovators 13.5% Early Adopters 34% Early Majority 34% Late Majority Diffusion Process <ul><li>Product Adopter Categories </li></ul>
    9. 9. Diffusion Process, Adopter Categories <ul><li>INNOVATORS - are first to buy and typically described as venturesome, younger, well educated, financially stable, and willing to take risks. </li></ul><ul><li>EARLY ADOPTERS - are local opinion leaders who read magazines and who are integrate into the social system more than the average consumer. </li></ul>
    10. 10. <ul><li>EARLY MAJORITY - solid, middle-class consumers who are more deliberate and cautious </li></ul><ul><li>LATE MAJORITY - described as older, more conservative, traditional, and skeptical of new products </li></ul>Diffusion Process, Adopter Categories
    11. 11. <ul><li>Laggards </li></ul><ul><ul><li>Resist change </li></ul></ul><ul><ul><li>Conservative </li></ul></ul><ul><ul><li>Like tradition </li></ul></ul><ul><ul><li>Often older & lower in socioeconomic status </li></ul></ul><ul><li>Nonadopters </li></ul><ul><ul><li>Refuse to change </li></ul></ul>Diffusion Process, Adopter Categories
    12. 12. Life-Style Characteristics of Innovators and Non innovators <ul><li>Characteristics Innovators Non innovators </li></ul><ul><li>Product Interest MORE LESS </li></ul><ul><li>Opinion Leadership MORE LESS </li></ul><ul><li>Personality : </li></ul><ul><li>Dogmatism OPEN-MINDED CLOSE-MINDED </li></ul><ul><li>Social Character INNER-DIRECT OTHER-DIRECT </li></ul><ul><li>Category Width BROAD NARROW </li></ul><ul><li>Venturesome ness MORE LESS </li></ul><ul><li>Perceived Risk LESS MORE </li></ul>
    13. 13. Life-Style Characteristics of Innovators and Noninnovators <ul><li>Characteristics Innovators Noninnovators </li></ul><ul><li>Purchase and Consumption Traits : </li></ul><ul><li>Brand Loyalty LESS MORE </li></ul><ul><li>Deal Proneness MORE LESS </li></ul><ul><li>Usage MORE LESS </li></ul><ul><li>Media Habits : </li></ul><ul><li>Magazine Exposure MORE LESS </li></ul><ul><li>Television LESS MORE </li></ul><ul><li>Specialized Magazine MORE LESS </li></ul>
    14. 14. Life-Style Characteristics of Innovators and Noninnovators <ul><li>Characteristics Innovators Non innovators </li></ul><ul><li>Demographic Characteristics : </li></ul><ul><li>Age YOUNGER OLDER </li></ul><ul><li> Income MORE LESS </li></ul><ul><li> Education MORE LESS </li></ul><ul><li> Occupational Status MORE LESS </li></ul><ul><li>Social Characteristics : </li></ul><ul><li>Social Integration MORE LESS </li></ul><ul><li>Group Members MORE LESS </li></ul>
    15. 15. Characteristics of New Product Success <ul><li>RELATIVE ADVANTAGE - is an enhanced bundle of benefits or clear-cut advantages over existing offerings (+) </li></ul>
    16. 16. <ul><li>Compatibility with existing habits, values and consumption behavior, similar usage as existing products </li></ul>Characteristics of New Product Success
    17. 17. <ul><li>Trial ability… experience or see the newness </li></ul><ul><ul><li>Easily tested </li></ul></ul><ul><ul><li>Low risk </li></ul></ul><ul><ul><li>Inexpensive </li></ul></ul><ul><ul><li>No special equipment </li></ul></ul><ul><ul><li>Free samples or coupons </li></ul></ul>Characteristics of New Product Success
    18. 18. <ul><li>OBSERVABILITY - is the opportunity for buyers to see the newness (+) </li></ul><ul><li>COMPLEXITY - is a disadvantage for new products which slows diffusion and may be offset by simplifying usage or through extensive education (-) </li></ul>Characteristics of New Product Success
    19. 19. Why Some New Products Fail and Others Succeed <ul><li>Failure to Meet Customer Needs </li></ul><ul><li>Poor Timing </li></ul><ul><li>Market Conditions </li></ul><ul><li>Ineffective or Inconsistent Branding </li></ul><ul><li>Technical or Design Problems </li></ul><ul><li>Overestimation of Market Size </li></ul><ul><li>Poor Promotion </li></ul><ul><li>Insufficient Distribution </li></ul>80 to 90% Fail. Why?
    20. 20. Communication Flows <ul><li>Two-Step Flow of Communication </li></ul>COMPANY MESSAGE OPINION LEADERS TARGET AUDIENCES
    21. 21. Positions of Status <ul><li>OPINION LEADER - one who occupies a position of informal influences over the attitudes and overt behavior of others. Opinion leadership is earned not assumed. </li></ul><ul><li>CHANGE AGENT - one who occupies a professional position of formal influence associated with a given role of status. Change agent status is assumed, not necessarily earned </li></ul><ul><li>FOLLOWER - not a “passive patsy.” Actively seeks influence. </li></ul>
    22. 22. Two-Step Flow of Communication and Adopter Categories Early adopters Innovators Early majority Company Message from mass media Product Category Opinion leader(s) Potential target audiences Opinion recipient 1 Opinion recipient 2 Opinion recipient 3
    23. 23. Characteristics of Opinion Leaders in contrast with their followers <ul><li>More like, than unlike, their followers </li></ul><ul><li>More technically competent </li></ul><ul><li>More socially accessible </li></ul><ul><li>More cosmopolitan </li></ul><ul><li>More innovative (receptive to change) </li></ul><ul><li>Higher media exposure (more informed) </li></ul><ul><li>Higher social status </li></ul><ul><li>More conformist with social norms and values </li></ul>

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