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Consumer behavior for MBA
- 1. DIFFUSION IN INNOVATION “ DIFFUSION PROCESS ” Submitted By : MAHIN KARIEM S3-MBA
- 2. What is Innovation??? Transformation of an idea into something useful. There are two different kinds of innovations 1.New things 2.Development of new things.
- 3. Diffusion of Innovation The diffusion of innovations theory seeks to explain how and why new ideas and practices are adopted, with timelines potentially spread out over long periods. It is designed in two process: 1. Diffusion 2. Adoption
- 4. New Product Adoption Theory ADOPTION PROCESS - The consumer decision stages that lead to innovation acceptance/rejection - A micro process process that focuses on internal forces of the consumer * Intra Personal (Psych) Influences * Inter Personal (Social) Influences * Product Selection Criteria
- 5. New Product Diffusion Theory DIFFUSION PROCESS. - the spread of an innovation from its. source to the ultimate consumer. - a macro process that focuses on external. forces on the consumer (change agents, channels of information, types of. information). - occurs in a social system (a target. audience, community, etc.
- 6. •PROESS B WHICH NEW IDEA OR PRODUCT IS ACCEPTED BY MARKET •RATE OF DIFFUSION IS THE SPEED IN WHICH THE NEW IDEA SPREADS OVER FROM ONE CONSUMER TO ANOTHER
- 7. Stages in Diffusion Innovators Early adopters Early majority Late majority Laggards.
- 8. 2.5% Innovators 13.5% Early Adopters 34% Early Majority34% Late Majority Diffusion Stages • Product Adopter Categories
- 10. Adopter Categories INNOVATORS - are first to buy and typically described as venturesome, younger, well educated, financially stable, and willing to take risks. EARLY ADOPTERS - are local opinion leaders who read magazines and who are integrate into the social system more than the average consumer.
- 11. EARLY MAJORITY - solid, middle-class consumers who are more deliberate and cautious LATE MAJORITY - described as older, more conservative, traditional, and skeptical of new products Adopter Categories
- 12. Laggards Resist change Conservative Like tradition Often older & lower in socioeconomic status No adopters Refuse to change Adopter Categories
- 13. INNOVATION CHANNELS OF COMMUNICATION SOCIAL SYSTEM TIME
- 14. The diffusion process The innovation Various approaches have been taken to define new product: 1.Firm oriented 2.Product oriented 3.Market oriented 4.Consumer oriented The channels of communication The social system Time
- 18. is influenced by… * Competitive Intensity (+) * Good Supplier Reputation (+) * Standardization of Technology (+) * Vertical ( ) Channel Coordination (+) * Resource Commitments (+) Speed of Diffusion
- 19. The Adoption Decision Process How an individual consumer acts . . . KNOWLEDGE PERSUASION DECISION IMPLEMENTATIONSCONFIRMATION TIM E
- 20. •Consumer is exposed to the innovations existence and gains some understanding of how it functions . •no judgment concerning the relevance of the product to a problem or recognized need. •perception is more likely to occur through the mass media than in late stages which are more influenced by opinion leaders.
- 21. •In this stage, usually attitude formation takes place that is consumer forms favorable or unfavorable attitudes toward the innovation. •Consumer may mentally imagine how satisfactory new product might be in use, i.e., “vicarious trial” of the product in consumer’s mind. •evaluation of consequences of using the product
- 22. •Consumer engages in activities that lead to a choice to adopt or reject the innovation (i.e., adoption or rejection). •Adoption can be defined as a decision to make full use of an innovation as the best course of action. This means continued use of the product unless situational variables (lack of availability, or money etc.) prevent usage. •Rejection means not to adopt an innovation. •There may be some persons who first consider adopting an innovation or at least give a trial, but then deciding not to adopt it. This is called an active rejection. Others never consider the use of the innovation, known as passive rejection.
- 23. •Puts the innovation into use. •Until this stage, the process is a mental exercise, but in this stage behavioral change is required Marketing plan is the determinant of whether a good product has been communicated effectively (i.e., actually sales). •Marketing mix planned should be such that purchase is made easy. This means proper coordination of the channels of distribution with new products and their communication process.
- 24. •Consumer seeks approval/reinforcement for the innovation decision, but may reverse this decision if exposed to conflicting messages about the product. •This stage is also influenced by communication sources and consumers evaluate their purchase experiences. •After evaluating, they try to support their behaviour and later decide to continue or discontinue using the product.
- 25. Life-Style Characteristics of Innovators and Non innovators Characteristics Innovators Non innovators Product Interest MORE LESS Opinion Leadership MORE LESS Personality: Dogmatism OPEN-MINDED CLOSE-MINDED Social Character INNER-DIRECT OTHER- DIRECT Category Width BROAD NARROW Venturesome ness MORE LESS Risk LESS MORE
- 26. Life-Style Characteristics of Innovators and Non innovators Characteristics Innovators Noninnovators Purchase and Consumption Traits: Brand Loyalty LESS MORE Deal Proneness MORE LESS Usage MORE LESS Media Habits: Magazine Exposure MORE LESS Television LESS MORE Specialized Magazine MORE LESS
- 27. Characteristics of New Product Success RELATIVE ADVANTAGE - is an enhanced bundle of benefits or clear-cut advantages over existing offerings (+)
- 28. Compatibility with existing habits, values and consumption behavior, similar usage as existing products Characteristics of New Product Success
- 29. Trial ability…experience or see the newness Easily tested Low risk Inexpensive No special equipment Free samples or coupons Characteristics of New Product Success
- 30. OBSERVABILITY - is the opportunity for buyers to see the newness (+) COMPLEXITY - is a disadvantage for new products which slows diffusion and may be offset by simplifying usage or through extensive education (-) Characteristics of New Product Success
- 31. Why Some New Products Fail and Others Succeed Failure to Meet Customer Needs Poor Timing Market Conditions Ineffective or Inconsistent Branding Technical or Design Problems Overestimation of Market Size Poor Promotion Insufficient Distribution 80 to 90% Fail. Why?
- 32. Communication Flows Two-Step Flow of Communication COMPANY MESSAGE OPINION LEADERS TARGET AUDIENCES
- 33. Positions of Status OPINION LEADER - one who occupies a position of informal influences over the attitudes and overt behavior of others. Opinion leadership is earned not assumed. 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 FOLLOWER - not a “passive patsy.” Actively seeks influence.
- 34. 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
- 35. Characteristics of Opinion Leaders in contrast with their followers More like, than unlike, their followers More technically competent More socially accessible More cosmopolitan More innovative (receptive to change) Higher media exposure (more informed) Higher social status More conformist with social norms and values