Diffusion

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  • Derived from the Latin for “spread out”
  • Examples? Laser eye surgery
  • Start by citing stats and examples in book (p. 353-4) of how businesses must continue to innovate or fail What is innovation? Examples of forms? In the computer industry, we have: Completely new technology (pc); changes to existing products (laptop); symbolic changes (shape of the iMac)
  • What is it? Examples? Redesigned automobile (new Beetle) Latest version of software program low-fat version of food product What are “symbolic innovations”? Symbolic innovations convey new social or psychological meanings Examples? designer jeans, skin care products for men, specialty coffees
  • What is it? Examples? What about cell phones?
  • What is it? Examples? Airplanes; cars; home computer; fax machines; VCRs; internet Cell phone?
  • Examples of those? Apple’s Newton Electric cars (book); trash compactors; composting toilets Examples of those that have succeeded? nutrasweet; disposable diapers (book); cordless phones
  • What is it? Examples? Cell phone over pager; fax machine over delivery services; Vinyl records to cassette to CD Floppy disks to CD’s
  • What does it mean? Examples? Gillette’s Mach 3 razor has become very popular… But unlikely men will accept a depilatory cream designed to remove facial hair (because incompatible with daily shaving practices) It is possible to make a very tiny phone, and they are popular in Japan, but Americans don’t like talking into space
  • Obviously, the harder to understand, assemble or operate, the less its likelihood of being selected Examples? Cameras--drop-in film auto focus, built-in flash, etc. all added to make cameras easier to use VCR is an exception to this! Apple had a great ad a couple of years ago, comparing the size of the pile of documentation that came along with a new Windows-based computer and an Apple
  • What does this mean? Examples? Free trial (samples) money-back guarantees--Total Gym (Chuck and Christie); America Online; Ron Popiel’s various products
  • What is it? Examples? Fashions and jewelry (worn in public) vs. soap or deodorant Use of celebrities and athletes to wear/use products can enhance speed of adoption
  • The second element in the diffusion process is the… Examples? Company web sites ask consumers if they want to receive e-mails, etc. about new products Companies use floppy disks or CD-ROMS to promote products
  • The third element in diffusion is… What is it? Why does this matter? Examples? Religion will affect acceptance of a new birth control method Older generation’s acceptance of computers, cell phones, etc.
  • Examples? Diet pills and sugar-free food appeal to American desire to eat as much as they want, not exercise Hair care product for African-Americans in New York City vs. whites in upstate New York Similar? US and UK. Dissimilar? Christian vs. Muslim; but halal v. kosher?
  • Time is the final element in the diffusion process
  • What does it mean? See Kanuk Table 15-8 p. 421 for time line for typical purchase In other words, when individual purchase time is short, a marketer can expect the overall rate of diffusion will be faster
  • These are all explained well in reading, so won’t go into detail. However, worth mentioning that…
  • We’ll see this again later under the heading of “word of mouth”
  • Graphically, adopter categories looks something like this “ Average consumer” is right in the middle
  • Graphically, diffusion looks something like this—an “S” shape Why does the curve ultimately flatten out? Because after a while most people who were going to purchase the innovation have already done so.
  • The third time-related factor is… What is it? E.g., it took 12 years longer for black and white tvs to reach the same level of “penetration” in Europe and Japan as in US; for color TVs, 5 years in Japan and slightly longer in Europe; for VCR’s, 3-4 years (with the US lagging); for CD players, about 3 years.
  • Skimming is a practice related to rate of adoption What is it and when might it be used? Examples? VCR’s originally sold for $700; now $100 for a better product (sometimes also the result of better technology, e.g., computers)
  • Nicely covered in book, so won’t go into detail A simplistic model that doesn’t account for full complexity of consumer decision process, but is still useful Consumer is first exposed to the product innovation (e.g., an ad on television) Consumer is interested and seeks and obtains information about the product; develops a favorable or unfavorable attitude toward the product Consumer decides whether the product will meet his/her needs Consumer uses the product on a limited basis (e.g., a 14-day money-back guarantee) If trial is favorable, consumer decides to use the product on a full, rather than limited basis/or rejects it
  • Again, these are explained well in text and will not cover in detail Focus on #4: Tradition barriers Language and cultural norms sometimes get in the way of adoption outside the U.S. Examples in book p. 378 Some famous instances of language barriers have turned out to be “urban legends” Chevy Nova Other examples (see web articles in file) Sometimes cultural differences can raise serious problems: Nestle/infant formula--not considering quality of water and mothers’ dilution of product due to low incomes
  • Diffusion

    1. 1. DiffusionDiffusionof Innovationsof InnovationsDiffusion of Innovations1
    2. 2.  In consumer behavior terms, refers to research onthe consumer acceptance of new products andservices Involves understanding two closely relatedprocesses: Diffusion: a macro process concerned with thespread of a new product--an innovation--from itssource to the consuming public Adoption: the micro process concerned with thestages the consumer goes through in deciding toaccept or reject a new product2
    3. 3.  Diffusion is the process by which the acceptance of an innovation--a new product,service, idea or practiceis spread by communication--mass media, salespeople,or word-of-mouth to members of a social system--target market over a period of time3
    4. 4.  Four basic elements of the diffusion process:1. The innovation2. The channel of communication3. The social system4. Time4
    5. 5.  Innovation takes many forms There is no universally accepted definition of the termsproduct innovation or new product Instead, approaches to define the term have taken placewithin certain contexts: Firm-oriented definitions Market-oriented definitions Consumer-oriented definitions Product-oriented definitions5
    6. 6.  This approach focuses on the features inherentin the product itself and the effects of thesefeatures are likely to have on consumers’established usage patterns Robertson identified three types of productinnovations: Continuous innovation Dynamically continuous innovation Discontinuous innovation6
    7. 7.  Introduction of a modified product rather than atotally new product Little or no change in technology Has the least disruptive(Interrupt )influence onestablished usage patterns Symbolic innovations tend to be continuous7
    8. 8.  May involve a new product or modification of anexisting product Some technical advances Still does not disrupt or alter consumer buying andusage patterns8
    9. 9.  Introduction of a pioneering product Involves a major technological advance Consumers must learn new behavior patterns May be difficult to market initially Is rare9
    10. 10.  Not all new products meet with immediate success No precise formula marketers can use to predict howconsumers will react to their products10
    11. 11. 1. Relative advantage2. Compatibility3. Complexity4. Trialability5. Observability11
    12. 12.  The degree to which potential consumers perceivea new product is superior to existing substitutes12
    13. 13.  The degree to which potential consumers feel anew product is consistent with their present needs,values and practices13
    14. 14.  The degree to which a new product is difficult tounderstand or use14
    15. 15.  The degree to which a new product is capable ofbeing tried on a limited basis15
    16. 16.  The ease with which a product’s benefits orattributes can be observed, imagined or describedto potential consumers16
    17. 17.  Speed with which an innovation spreads throughthe market depends in great part oncommunications Between the marketer and consumer Between consumers (word-of-mouth) In recent years a number of new channels ofcommunication have been developed17
    18. 18.  The physical, social, or cultural environment to whichpeople belong and within which they function Members of a social system have at least onecharacteristic in common that makes them potentialbuyers of a particular product The values and norms of a social system will influence theacceptance or rejection of new products18
    19. 19.  Three characteristics of a social systeminfluence spread of new products1. The degree of compatibility between innovation andvalues of members2. Homogeneity of members3. Across cultures, depends on social similarity of thecultures19
    20. 20.  Time relates to diffusion in three ways:1. Amount of purchase time2. Adopter categories3. Rate of adoption20
    21. 21.  Refers to the amount of time that elapses(passes)between a consumer’s initial awareness of a newproduct or service and the point at which he or shepurchases or rejects it Important because is a predictor of the overalllength of time it will take for the product toachieve widespread adoption21
    22. 22.  Involve a classification scheme that indicateswhere a consumer stands relative to otherconsumers in terms of when they adopt a newproduct (i.e., time) Five categories identified in research:1. Innovators2. Early adopters3. Early majority4. Late majority5. Laggards22
    23. 23.  Opinion leaders are most likely to be found among theearly adopters category Opinion leadership is the process by which one person--the opinion leader--informally influences the actions orattitudes of others The key characteristic is that it takes place between twoindividuals, neither of whom represents a commercialselling source and is thus considered more reliable23
    24. 24. Time and the Adopter Categories24Adopter Categories Based on InnovativenessInnovators
    25. 25. A pattern of marketacceptance for aninnovation that beginsslow, then accelerates, andfinally slows-down.25The S-Shaped Diffusion Curvefor Beanie Babies05101520253019931994199519961997199819992000
    26. 26.  How long it takes a new product or service to beadopted by members of a social system Rate of adoption generally is becoming faster Diffusion of products worldwide is becoming morerapid as well Marketers generally desire as fast a rate ofadoption as possible in order to dominate a marketbefore competitors enter26
    27. 27.  Sometimes marketers don’t seek a rapid rate ofadoption Making the product available at a very high priceto consumers who are willing to pay top dollar,then gradually lowering the price over time foradditional segments of the market Permits manufacturers to recover developmentcosts more quickly27
    28. 28.  Series of stages the consumer moves through inarriving at a decision to purchase or reject a newproduct Five stages include1. Knowledge/awareness2. Persuasion/interest3. Decision/evaluation4. Implementation/trial5. Confirmation/adoption (rejection)28
    29. 29.  Researchers have identified five factors that mayresult in consumers’ failure to adopt a newproduct1. Value barriers2. Usage barriers3. Risk barriers4. Tradition barriers5. Image barriers29
    30. 30. Table 15.11 The Stages in the AdoptionProcessNAMEOFSTAGEWHAT HAPPENSDURING THISSTAGEEXAMPLEAwarenessConsumer is firstexposed to the productinnovation.David sees an ad for a new digital camerain the newspaper.InterestConsumer is interestedin the product andsearches for additionalinformation.David reads about the camera on themanufacturer’s Web site, ad then goes toa camera store near his office and has asalesman show him the camera.EvaluationConsumer decideswhether or not to believethat this product orservice will satisfy theneed--a kind of “mentaltrial.”After talking with a knowledgeablefriend, David decides that his camerashould be able to provide him with thephotos he needs to use in PowerPointpresentations. He also likes the fact that ituses “standard” floppy disks for storage.30
    31. 31. Table 15.11 The Stages in the AdoptionProcessTrialConsumer uses theproduct on a limitedbasisSince camera cannot be “tried” like asmall bottle of a new shampoo, Davidbuys the camera from a dealer offering a14-day full refund policy.Adoption(Rejection)If trial is favorable,consumer decides to usethe product on a full,rather than a limitedbasis--if unfavorable, theconsumer decides oreject it.David finds that the camera is easy to useand the results are excellent;consequently, he keeps the digital camera.NAMEOFSTAGEWHAT HAPPENSDURING THISSTAGEEXAMPLE31

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