Consumer Decision

Making and Diffusion of

Innovation
CHAPTER 13
Introduction
Consumer Decision Varies.
◦ Extensive problem Solving
◦ Routinized Problem Solving
◦ Limited Problem Solving
Consumer
Decision
Making
Model
Decision Making: Process
Need Recognition
Pre-Purchase Search
◦ Online vs Tradition Information Search
◦ Task Complexity
◦ Information Organization
◦ Time Constraint

Brand Sets and attributes Considered During Evaluation

◦ Evoked Set (Consideration Set)
◦ Inept Set
◦ Inert Set
Decision Making: Process
Consumer Decision Making Rules:
◦ Compensatory Decision Rules
◦ Non-compensatory Decision Rules
◦ Conjunctive Decision Rules
◦ Lexicographic Decision Rules
◦ Affect Referral Decision Rules

Decision Rules and Marketing Strategy

Incomplete Information and Noncomparable Alternatives
Decision-Making: Output
Purchase No Purchase
Post Purchase Evaluation No Re-Purchase
Re-Purchase
Trust Loyalty
Diffusion Of Innovations
It is the process by which acceptance of an innovation is spread by
communication to members of the target market over a period of
time
4 Basic Elements of the diffusion process
The Innovation
The channel of communication
The social system
Time
4 Basic Elements of the diffusion process
(1) Innovation
(i) Firm oriented definition
when the product is new to the company it is considered new
(ii) Product oriented definition
- Continuous innovation : It involves the introduction of a
modified product rather than totally new product
4 Basic Elements of the diffusion process
Dynamically continuous innovation: It may involve the
creation of a new product or the modification of an existing
product
Discontinuous innovation: It requires consumers to adopt
new behavior patterns e.g. TVs, automobiles, Fax machines
etc….
4 Basic Elements of the diffusion process
(iii) Market oriented definition:
It judges the newness of a product in terms of how much exposure
consumers have to the new product
A product is considered new if it has been purchase by a relatively
small % of the potential market
A product is considered new if it has been on the market for a
relatively short period of time
4 Basic Elements of the diffusion process
(iv) Consumer oriented definition:
A “new” product is any product that a potential consumer judges to
be new
Newness is based on the consumer’s perception of the product
rather than on physical features or market realities
4 Basic Elements of the diffusion process (Product
Features That Affect Adoption)
Relative advantage:
The degree to which potential customers
perceive a new product as superior to existing
substitutes ( Flat TVs, DVDs Vs VCDs etc)
4 Basic Elements of the diffusion process (Product
Features That Affect Adoption)
Compatibility:
The degree to which potential consumers feel a new
product is consistent with their present needs, values and
practices
Complexity:
The degree to which a new product is difficult to
understand or use ( people soft – difficult, Gillette Mach 3 –
less difficult)
4 Basic Elements of the diffusion process (Product
Features That Affect Adoption)
Trialiblity:
The degree to which a new product is capable of being tried
on a limited basis ( free samples, Demo accounts in trading etc…)
Observability: (Communication)
The degree to which a product’s benefits or attributes can be
observed, imagined, or described to potential customer ( fashion
clothes, watches, mobiles etc….)
 4 Basic Elements of the diffusion process
(2) The channel of communication
(3) The social system:
The social system is a physical, social or cultural environment to
which people belong & within which they function
e.g. New drug - Specific medical specialty - All neurologists
Social system serve as boundary within which the diffusion of a
new product is examined
4 Basic Elements of the diffusion process
The orientation of a social system with it’s own special
values or norms is likely to influence the acceptance or
rejection of new products
4 Basic Elements of the diffusion process
(4) Time:
It is the backbone of the diffusion process
- The amount of purchase time
- The identification of adopter categories( Innovators, early
adopters, Early majority, Late majority, Laggards)
- The rate of adoption
The Adoption Process
Diffusion of Innovations:
- Diffusion process
- Adoption process
Adoption is the process through which an individual consumer
passes while arriving at a decision to try or not to try or to continue
using or to discontinue using a new product
The Adoption Process
Stages:
Awareness Interest evaluation

Adoption Trial