12 Consumer Influence

04/09/23 Prof. U.M. Amin, CMS, JMI 1

Consumer Behavior

MBA MM 3201


Consumer Influence and Diffusion of innovations


Chapter concepts:

• Innovation.• Types of innovation.• Diffusion and innovation process.• Adoption and diffusion of innovation process.• Roger’s model of innovation decision process.• Adopter classes.• Sequence and proportion of adopter classes.• Insight and new product development.• Diffusion enhancement strategies.

Diffusion of innovations


• An innovation is any idea or product perceived to be

new when compared to existing products.

• It can also be defined as idea, behavior, or things that are qualitatively different from existing forms.

• Innovation is not limited to only products, but includes new ideas in every area, like packaging, new planning systems

and low cost manufacturing etc.




Types of innovations

• One way to classify innovations is based on their impact on behavior in the social structure. As per the same Innovations are of three types:

Continuous, Dynamically continuous and Discontinuous.



• A continuous innovation is the modification of the taste, appearance, performance or reliability of an existing product rather than establishment of a totally new product.

• A dynamically continuous innovation may involve either the creation of a new product or a significant alteration of an existing one, but does not generally alter established purchase or usage patterns.

• A discontinuous innovation involves the introduction of an entirely new product that significantly alters consumers’ behavior patterns and lifestyles.



Characteristics of successful innovative product

• Characteristics of successful new products are:

Relative advantage, Compatibility, Complexity, Triability and Observability.



Diffusion of innovations• Relative advantage refers to the degree to which

consumers may perceive the new product to offer substantially greater benefits than the product they currently use.

• Compatibility refers to the degree to which a new product is consistent with consumer’s existing practices, values, needs and past experiences of potential adopters.

• Complexity is the degree to which an innovation is

perceived as difficult to understand and use. The more complex is the product, more difficult it will be to gain acceptance.


Diffusion of innovations• Triability: New products are more likely to succeed

when consumers can experiment with or try the idea on a limited basis, with limited financial risk.

• Leasing is a strategy widely used by various manufacturers to introduce the users to new product models.

• Observability together with communicability reflects the degree to which results from using a new product are visible to peer group and neighbors.

• If consumers see others benefiting from the use of a new product, it is more likely to be successful and diffuse faster.


The Diffusion Process:

• It is defined as the process by which an innovation (new idea) is communicated through certain channels over time among the members of a social system.

• Diffusion process involves different stages:

Diffusion of information, Consumer decision process and Diffusion or demise of information.



Adoption and Diffusion of Innovation Process

Organization Influencer Consumer

Reject

Accept

Demise ofInnovation

Diffusion ofinnovation

X number of people

Diffusion of CommunicationAnd information X number of people

Consumer decision Process for innovation



Factors influencing Diffusion Process

• The factors that influence the diffusion process are:

Innovation (new product, service or idea), Communication (Through formal and informal

channels), Time ( For individuals’ adoption decision and rate) and Social system ( Interrelated people, groups, or other

systems).




Speed of Diffusion

• Marketer dominated factors like Product characteristics, pricing and resource allocation contribute to speed of diffusion. Other factors include:

Competitive intensity of supplier, Reputation of supplier, Vertical coordination and Resource commitments.



• The greater the competitive intensity of the supplier, the more rapid is the diffusion.

• The better the reputation of the supplier, the faster is the initial diffusion. It leads to source credibility that reduces uncertainty and risk in purchase decision.

• Vertical integration refers to degree of dependence and interlocking relationships among channel members.

• Higher vertical coordination increases the rate of diffusion.



• Resource commitments are positively related to innovations.

• These include greater R & D, advertising, personal selling and sales promotion expenditures.

• With improved technologies, diffusion becomes broader and more rapid.

• However, increasing rate of adoption has resulted in shorter product life cycle, that leaves less time with the management to move to next phase of product introduction.


Roger’s model of Innovation Decision Process

1. Knowledge 2. Persuasion 3. Decision 4. Implementation 5. Confirmation

Communication channels

Characteristics ofThe Decision-Making unit

Socioeconomic characteristics Personality variables Communication behavior

Perceived characteristics ofthe innovation

Relative advantage Compatibility Triability Observability

1. Adoption

2. Rejection

ContinuedAdoption

Later adoption

Discontinuance

Continued rejection



Adopter Classes:

• Consumers can be classified according to the time it takes for them to adopt a new product relative to other consumers.

• There are five major categories of consumers based on their adoption cycle time in relation to other adopters in their social system or market segment.

Innovators Early adopters Early majority Late majority Laggards



The sequence and proportion of adopter categories



• Innovators (A): They are young, venturesome risk takers.

• Early adopters (B): They take a calculated risk before using innovative products. Typically they can be opinion leaders and provide information to groups.

• Early majority (C): They tend to be more continuous and use the products after the innovators and early adopters.

• Late majority (D): They are doubtful and sceptical about innovation of new products.

• Laggards (E): Laggards are more traditional and are past oriented.



Insight and New Product Development: A strategic Perspective

Intuition Information

Concept tests

Insight

Research

Interpretation (Adoption)

Implications (diffusion)

Potential/newExisting

Gathering andidentifying insight

Confirmationof insight



Diffusion enhancement Strategies

S. No. Diffusion determinant Diffusion inhibitor

Diffusion enhancement strategies

1 Type of group Conservative traditional

Try other modern consumer markets

2 Perceived risk High Give guarantees, reduce risk by endorsement from credible sources

3 Trial Difficult Distribute free samples to early adopters.

4 Compatibility Conflict Stress attributes consistent with values and norms.

5 Complexity High Use skilled workforce and demonstration of product

6 Relative advantage Low Lower the price, redesign the product

7 Obsevability Low Expose the product more through promotion & ads.



Recap:

• Innovation.• Types of innovation.• Diffusion and innovation process.• Adoption and diffusion of innovation process.• Roger’s model of innovation decision process.• Adopter classes.• Sequence and proportion of adopter classes.• Insight and new product development • Diffusion enhancement strategies.


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12 Consumer Influence