Diffusion of Innovation Vvv

8/14/2019 Diffusion of Innovation Vvv

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DIFFUSION OF INNOVATION


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GROUP MEMBERSGROUP MEMBERS

VENUGOPAL ARRAVELLI

VENKAT SWAMINATH CHANNA

susheel

VASUDHAUBAD KHAN


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MEANINGThe diffusion of an innovation is the spread

of a product, process, or idea perceived asnew, through communication channels,among the members of a social system

over time. Innovations can be a newproduct or output, a new process or way ofdoing something, or a new idea or concept.

The newness of an innovation is

subjective, determined by the potentialadopter.


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CONTINUE.

The product will reach a maturitystage where little growth will

be seen & some products may also reach a decline stage,usually because the product category is being replaced bysomething better. For example, typewriters experienceddeclining sales as more consumers switched to computers orother word processing equipment.

The product life cycle is tied to the phenomenon of diffusion ofinnovation. When a new product comes out, it is likely to first beadopted by consumers who are more innovative than othersthey are willing to pay a premium price for the new product andtake a risk on unproven technology.

It is important to be on the good side of innovators since many

other later adopters will tend to rely for advice on theinnovators who are thought to be more knowledgeable aboutnew products for advice.


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PRODUCT LIFE CYCLE


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example, IBM did not invent the personalcomputer, but entered after other firms showed

the market to have a high potential. Products canbe new to the segmente.g., cellular phones andpagers were first aimed at physicians and otherprice-insensitive segments. Later, firms decided

to target the more price-sensitive mass market.

The diffusion of innovation refers to the tendencyof new products, practices, or ideas to spreadamong people. Usually, when new products orideas come about, they are only adopted by asmall group of people initially; later, manyinnovations spread to other people.


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The DIFFUSION PROCESS is the spread of aninnovation from its source to the ultimate

consumer that focuses on external forces.The s a t u r a t ion po i n t is the maximumproportion of consumers likely to adopt aproduct.


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Diffusion Process, Adopter Categories

INNOVATORS - are first to buy andtypically described as venturesome,younger, well educated, financially stable,

and willing to take risks.

EARLY ADOPTERS - are local opinion

leaders who read magazines and who areintegrate into the social system more thanthe average consumer.


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Diffusion Process,Adopter Categories

EARLY MAJORITY - solid, middle-classconsumers who are more deliberate andcautious

LATE MAJORITY - described as older, moreconservative, traditional, and skeptical of new

products


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Diffusion Process,Adopter Categories

LaggardsResist changeConservative

Like traditionOften older & lower in

socioeconomic status

Non adopters

Refuse to change

OK, we will

buy X.

If I

have tobuy it Iwill.

Noway!


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Diffusion of innovation research traces thespread of product acceptance across its

product life cycle

Total Industry

Profit

+

$ 0

MarketIntroduction

MarketGrowth

MarketMaturity

SalesDecline

Time

Total IndustrySales

Stage customers:

Early Adopters Early Majority Majority Laggards


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Characteristics That Encourage andDiscourage Diffusion

Encourage

1. Relative

advantage2. Compatibility

with past usage

3. Simplicity of use

4. Observability5. Trialability

6. Divisibility

Discourage

1. Value barrier

2. Usage barrier3. Complexity

4. Risk barrier


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Communication in the DiffusionProcess

2. Trickle Across

Since the post World War II period, a leveling effect in

socioeconomic status has occurred which makes trickle-down or up

effects less relevant. Mass media now communicate information oninnovations to all classes. A more likely process of diffusion is one

that occurs across groups, regardless of socioeconomic status,

known as a trickle-across effect.

1. Trickle Up and Trickle Down

The transmission of influence between socioeconomic groups

can be described as a trickle-downprocess from higher to

lower groups (the traditional view) or a trickle-up process.

Occasionally, a trickle-up direction occurs. For example,

innovators and early adopters of jeans and of bluegrass and

rock music were those in lower socioeconomic classes.


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Diffusion in organizations

TWO TYPES OF INNOVATION-DECISIONS

collective innovation decisions

Authority innovation decisions


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Communication Flows

Two-Step Flow of Communication

COMPANYMESSAGE

OPINIONLEADERS

TARGET AUDIENCES


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(Field test..

s OBSERVABILITYOBSERVABILITY - is the opportunity for- is the opportunity for

buyers to see the newness (+)buyers to see the newness (+)


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Characteristics of New ProductSuccess

yCompatibility with existing habits, valuesand consumption behavior, similar usageas existing products

COMPLEXITYCOMPLEXITY -is a disadvantage for newproducts which slows diffusion and may beoffset by simplifying usage or throughextensive education


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Why Some New Products Failand Others Succeed

1. Performance & Price

New product failures generally offer thesame or worse performance than

competing products with the same orhigher price 2. Inadequate Market Analysis

Offer a unique benefit (a differentialadvantage)

Solve a consumers problem or providean

opportunity, a reward

New Product

Success

80 to 90% Fail. Why?


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THANK YOUTHANK YOU

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Diffusion of Innovation Vvv