DIFFUSION OF INNOVATION & ADOPTION

Diffusion
 It is the process by which acceptance of an
innovation is spread by communication to
members of a social system
 Innovation: “an idea, practice, or object
perceived as new by an individual or other
unit of adoption”
 Various approaches to innovation
 Firm oriented approach

 Product oriented approach

 Market oriented approach

 Consumer oriented approach

 Firm oriented approach
 Treats newness of product from the
perspective of company producing or
marketing it

 Keeping this view in mind copies or

modifications of a competitors product would
qualify as new
 Product oriented approach
 Focuses on feature inherent in the product,
and the effect of these features on consumer
usage pattern

 According to it there are 3 types product

innovation namely continuous , dynamically
continuous, and discontinuous.
 Continuous Product innovation
Improvement of existing product

More & much more to come

 Dynamically Continuous Product
innovation
Innovation share certain features with early
generation , new features with added value
 Discontinuous
Create new market & new consumption pattern
Example
 Market oriented approach
 It judges the newness of product in terms of how
much exposures consumers have to the new product

 A product is new if it has been purchased by a

relatively small percentage of potential market

 A product is considered new if it has been on the

market for a relatively short period of time
 Consumer oriented approach
 According to it a new product is new if any
potential consumer judges it to be new

 Newness is based on consumers perception of

the product rather on physical features or
market realities
 Product Characteristic that Influence
Diffusion
 All products that are new do not have equal
potential for consumer acceptance

 According to diffusion researchers five

product characteristic influence consumer
acceptance of new product
 Product characteristic that
influence consumer acceptance of
new product
 Relative advantage

 Compatibility

 Complexity

 Trial ability

 Observability
 Relative advantage
 Degree to which potential customers perceive
a new product as superior to existing
substitutes is its relative advantage

 Apart from unique features promotional

program may also be perceived as offering
relative advantage and may lead to increased
acceptance
Example
Example
 Compatibility
Degree to which consumer feels a new product
is consistent with their present needs , values
and practices
Example
 Complexity
 Degree to which a new product is difficult to
understand or use , affects product
acceptance

 Issue of complexity is especially important

when attempting to gain market acceptance
for hi-tech consumer products
Example
 Trialability
 Degree to which a new product is capable of
being tried on a limited basis

 Greater the opportunity to try a new product

easier ,for consumer to evaluate it and
ultimately adopt it
Example
 Observability
 Ease with which a new product benefits or
attributes can be observed , imagined or
described to potential consumers

 Products that have a high degree of social

visibility are more easily diffused than
products that are used in private
Example
 Resistance to Innovation
 Product characteristic of an innovation help
determine the extent of consumer resistance
 This resistance increases when perceived
relative advantage is low and complexity is
high
 Channels of communication
 How quickly an innovation spreads though
market depends to a great extent on
communications between the marketer and
the consumer as well as communication
among consumers.
 It is important to uncover the relative
influence of impersonal sources and
interpersonal sources.
 New Channels of Communication

• Interactive marketing messages where

consumer is not just a passive message receipt.

• Consumer shows

• Consumers exhibits
 The Social System
• The diffusion of a new product usually takes place in a social
setting frequently referred to as a “social system”.

• It is physical, social or cultural environment to which people

belong and within which they function.

• Social system serves as a boundary within which the diffusion of

a new product is examined.

• When a social system is modern in orientation then acceptance

of innovations is high and vice versa.
 Time
Time is the backbone of the diffusion process.

• PURCHASE TIME-Amount of time that elapses between

consumer’s initial awareness of a new product/service and the
point at which they purchase or reject it.

• ADOPTER CATEGORIES-innovators, early adopters, early

majority ,late majority, laggards.

• RATE OF ADOPTION-how long it takes a new product/service

to be adopted by members of a social system.
 The Adopter Categories
“The classifications of individuals within a social
system on the basis of innovativeness”
•Innovators
•Early adopters
•Early majority
•Late majority
•Laggards
Diffusion of Innovation
 Innovators
 Venturesome and ready to try new things
 Their social relationships tend to be more
cosmopolitan than others
 Early Adopters
 Produce the most opinion leaders
 Are sought out for information about new
innovations
 Their advice is valued
 Respected for their willingness to try new
innovations
 Early Majority
 Includes people who do not wish to be the
first to adopt new ideas
 Prefer to deliberate before making a decision
 They legitimate an innovation.
 The Late Majority
 Skeptical
 Cautious about the benefits of adopting the
new idea
 Wait until the rest of the community has
adopted it first
 Peer pressure may be a motivator
 Economic necessity
 The Laggards
 Last to adopt
 Tied to the past
 Traditional
 Reluctant to try new things
 Diffusion Process

Learn about innovation

Adopt innovation or perform new behavior

Interact with others in a social network and either

encourage them to adopt new behavior or
confirm your own decision to adopt the behavior
Diffusion Process: Learning About the
Innovation
 Innovations that are difficult to understand
take longer to be adopted

 May learn about new innovation through:

-internet
– Television
– Newspaper
– Interpersonal contacts
 Diffusion Process: Adoption of the
Innovation
Incentives to adopt new innovations:
– Many benefits
– Self-efficacy
– Status symbol
– Individual values and perceptions of self
– Easy to test before adopting
 The Diffusion and Adoption Process
• Knowledge
– People become aware of new idea
• Persuasion
– Individual weighs advantages
• Decision
– Final decision of adoption or rejection
• Confirmation
– Seek validation and evaluate consequences
AIDA MODEL
Quiz
 #1
____________ is the process by which
acceptance of an innovation is spread by
communication to members of a social system
 Diffusion
 It is the process by which acceptance of an
innovation is spread by communication to
members of a social system.
 #2
Various approaches to innovation

1.
2.
3.
4.
 Various approaches to innovation
 Firm oriented approach

 Product oriented approach

 Market oriented approach

 Consumer oriented approach

 #3
______________ approach focuses on feature
inherent in the product, and the effect of these
features on consumer usage pattern
 Product oriented approach
 Focuses on feature inherent in the product,
and the effect of these features on consumer
usage pattern
 Firm oriented approach
 Treats newness of product from the
perspective of company producing or
marketing it

 Keeping this view in mind copies or

modifications of a competitors product would
qualify as new
 #4

Product oriented approach

According to it there are 3 types product
innovation namely________________,
_________ &______________.
 Product oriented approach

 According to it there are 3 types product

innovation namely continuous , dynamically
continuous, and discontinuous.
 #5
Improvement on existing product is
____________ innovation
 #6
__________________Innovation share certain features
with early generation , new features with added value
 Dynamically Continuous Product
innovation
Innovation share certain features with early
generation , new features with added value
 #7
________________ innovation Create new market & new consumption pattern
 Discontinuous
Create new market & new consumption pattern
 #8

In _______________ approach , product is new if it

has been purchased by a relatively small percentage of
potential market
 Market oriented approach

A product is new if it has been purchased by a relatively

small percentage of potential market
 #9

Newness is based on ____________of the

product rather on physical features or market
realities
 Consumer oriented approach

Newness is based on consumers perception of

the product rather on physical features or market
realities
 #10
Product characteristic that influence consumer
acceptance of new product

1
2
3
4
5
 Product characteristic that
influence consumer acceptance of
new product
 Relative advantage

 Compatibility

 Complexity

 Trial ability

 Observability
 #11
 Degree to which potential customers perceive
a new product as superior to existing
substitutes is its______________
 Relative advantage
 Degree to which potential customers perceive
a new product as superior to existing
substitutes is its relative advantage
 #12
_______________Is the degree to which
consumer feels a new product is consistent with
their present needs , values and practices
 Compatibility
Degree to which consumer feels a new product
is consistent with their present needs , values
and practices
 #13
 Degree to which a new product is difficult to
understand or use , affects product
acceptance

 Issue of complexity is especially important

when attempting to gain market acceptance
for ____________consumer products
 Complexity
 Degree to which a new product is difficult to
understand or use , affects product
acceptance

 Issue of complexity is especially important

when attempting to gain market acceptance
for hi-tech consumer products
 #14

Greater the opportunity to ____________a

new product easier for consumer to evaluate it
and ultimately adopt it
 Trialability
 Degree to which a new product is capable of
being tried on a limited basis

 Greater the opportunity to try a new product

easier for consumer to evaluate it and
ultimately adopt it
 #15
 Ease with which a new product benefits or
attributes can be observed , imagined or
described to potential consumers

 Products that have a high degree of

_____________are more easily diffused than
products that are used in private
 Ease with which a new product benefits or
attributes can be observed , imagined or
described to potential consumers

 Products that have a high degree of social

visibility are more easily diffused than
products that are used in private
 #16
 Product characteristic of an innovation help
determine the extent of consumer resistance
 This resistance increases when perceived
___________is low and ______ is high
 Resistance to Innovation
 Product characteristic of an innovation help
determine the extent of consumer resistance
 This resistance increases when perceived
relative advantage is low and complexity is
high
 #17

When a social system is modern in

orientation then ___________is high and
vice versa.
 The Social System
• The diffusion of a new product usually takes place in a social
setting frequently referred to as a “social system”.

• It is physical, social or cultural environment to which people

belong and within which they function.

• Social system serves as a boundary within which the diffusion of

a new product is examined.

• When a social system is modern in orientation then acceptance

of innovations is high and vice versa.
 #19
One Example for Brand which failed because of
complexity of the product
Nokia Lumia
 Time
Time is the backbone of the diffusion process.

• PURCHASE TIME-Amount of time that elapses between

consumer’s initial awareness of a new product/service and the
point at which they purchase or reject it.

• ADOPTER CATEGORIES-innovators, early adopters, early

majority ,late majority, laggards.

• RATE OF ADOPTION-how long it takes a new product/service

to be adopted by members of a social system.
 The Adopter Categories
“The classifications of individuals within a social
system on the basis of innovativeness”
•Innovators
•Early adopters
•Early majority
•Late majority
•Laggards
Diffusion of Innovation
 Innovators
 Venturesome and ready to try new things
 Their social relationships tend to be more
cosmopolitan than others
 Early Adopters
 Produce the most opinion leaders
 Are sought out for information about new
innovations
 Their advice is valued
 Respected for their willingness to try new
innovations
 Early Majority
 Includes people who do not wish to be the
first to adopt new ideas
 Prefer to deliberate before making a decision
 They legitimate an innovation.
 The Late Majority
 Skeptical
 Cautious about the benefits of adopting the
new idea
 Wait until the rest of the community has
adopted it first
 Peer pressure may be a motivator
 Economic necessity
 The Laggards
 Last to adopt
 Tied to the past
 Traditional
 Reluctant to try new things
 Diffusion Process

Learn about innovation

Adopt innovation or perform new behavior

Interact with others in a social network and either

encourage them to adopt new behavior or
confirm your own decision to adopt the behavior
Diffusion Process: Learning About the
Innovation
 Innovations that are difficult to understand
take longer to be adopted

 May learn about new innovation through:

-internet
– Television
– Newspaper
– Interpersonal contacts
 Diffusion Process: Adoption of the
Innovation
Incentives to adopt new innovations:
– Many benefits
– Self-efficacy
– Status symbol
– Individual values and perceptions of self
– Easy to test before adopting
 The Diffusion and Adoption Process
• Knowledge
– People become aware of new idea
• Persuasion
– Individual weighs advantages
• Decision
– Final decision of adoption or rejection
• Confirmation
– Seek validation and evaluate consequences
AIDA MODEL