HOW A CONSUMER BECOMES A CUSTOMER

PRESENTING BY:

MANISH SHARMA

VIVEK SINGH

Customer Adoption ProcessDiffusion of Innovation &Situational Influences

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Diffusion

Diffusion is the process by which an innovation is communicated through certain channels over time among the members of a social system.

An innovation? is “an idea perceived as new by the individual.”

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The four main elements in the diffusion of new ideas are

(1) The innovation

(2) Communication channels

(3) Time

(4) The social system

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The innovation

Why do certain innovations spread more quickly than others? The innovation, to spread and be adopted should show: The characteristics

which determine an innovation's rate of adoption.

For example, consider the characteristics of HDTV (High-definition television) in relation to the rate of adoption.

Relative advantage (superior to existing products)

Compatibility (fits the values and experiences of potential customers)

Complexity (difficult to understand or use)

Divisibility (tried on a limited basis but still very expensive)

Communicability (results of using can be observed or described to others)

Relative advantage – new products that are most likely to succeed are those that appeal to strongly felt needs

Compatibility – degree to which the product is consistent with existing values and past experience of the adopters

Complexity – degree to which an innovation is perceived as difficult to understand and use

Trialability – the ability to make trials easy for new products without economic risk to the consumer

Observability – reflects the degree to which results from using a new product are visible to friends and neighbours

Types of Innovations

Continuous – modification or improvement of an existing product

Dynamically continuous – may involve the creation of either a new product or the alteration of an existing one ,but does not generally alter established patterns of customer buying and product use

Discontinuous – production of an entirely new product that causes customers to alter their behaviour patterns significantly

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Communication channel

Process by which participants create and share Mass media channels - effective in creating knowledge of

innovations Interpersonal channels - effective in forming and changing

attitudes toward a new idea Influences the decision to adopt or reject a new idea.

Most individuals evaluate an innovation, not on the basis of scientific research by experts, but through the subjective evaluations of near-peers who have

adopted the innovation.

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New Product Adoption Theory

ADOPTION PROCESS

The consumer decision stages that lead to innovation acceptance/rejection

A micro process that focuses on internal forces of the consumer

* Intra Personal (Psych) Influences

* Inter Personal (Social) Influences

* Product Selection Criteria

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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.)

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Introduction

The Adoption Process (also known as the Diffusion of Innovation) is more than forty years old.

It was first described by Bourne (1959), so it has stood the test of time and remained an important marketing tool ever since.

It describes the behavior of consumers as they purchase new products and services.

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Adoption process

1. Awareness

2. Interest

3. Evaluation

4. Trial

5. Decision

6. Confirmation

OK, we will

buy X.If I have to buy it I will.

No way!

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Categories

Adopter classes

Innovators - 2.5%Early adopters – 13%Early majority – 34%Late majority – 34%Laggards – 16%

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Innovators

First to adopt & display that they likely to want to be ahead To be the first to own new products, well before the average

consumer. They are often not taken seriously by their peers. They often buy products that do not make it through the early

stages of the Product Life Cycle (PLC).

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Early adopters

Are also quick to buy new products and services, So are key opinion leaders (KOLs) with their neighbors and

friends as they tend to be amongst the first to get hold of items or services.

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Early Majority

Look to the innovators and early majority to see if a new product or idea works and begins to stand the test of time.

They stand back and watch the experiences of others. Then there is a surge of mass purchases.

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Late Majority

Tends to purchase the product later than the average person. They are slower to catch on to the popularity of new products,

services, ideas, or solutions. There is still mass consumption, but it begins to end.

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Laggards

These tend to very late to take on board new products and include those that never actually adopt at all.

Here there is little to be made from these consumers.

Situational Influences

It includes all those factors particular to a time and place that do not follow from a knowledge of the stable attributes of the consumer and the stimulus and that have an effect on current behavior.

Consumers often behave very differently depending on situation.

4 Types of Situational Influence

Communication situation

Purchase situation

Usage situation

Disposal situation

Communication Situation

It is the situation in which consumers receive information has an impact on their behavior.

Whether one is alone or in a group, in a good mood or bad, in a hurry or not influences the degree in which one sees and listens to market communications.

Cont..

Consider the marketing difficulty for these situations: Your favorite team just lost the most important game of

the yearYour roommates watch only comedy programs You have the fluYou are driving home on a cold night without a working

heater

Purchase Situation

It is the situation in which a purchase is made can influence consumer behavior.

Marketers must understand the purchase situations in order to develop market strategies to enhance purchases of their product.

A mother shopping with her child can be more influenced by her child’s product preferences.

Cont..

How would you alter your purchase decision for a beverage in the following situations?

You are in a very bad mood A good friend says “That stuff is bad for you”The store you are in does no carry your brand There is a long line at the checkout stand

when you enter the store You are with someone you want to impress

Usage Situation

It is the knowledge of the situation in which products are, or may become, appropriate.

Using this knowledge, marketers can communicate how their products can create consumer satisfaction in each relevant usage situation.

Going further: expanded usage situation strategies can produce major sales gains for established products.

Cont..

What beverage would you want to consume in the following usage situations?

Friday afternoon after your last final exam With your parents for lunch After dinner on a cold snowy evening At dinner with a friend you have not seen in several yearsWhen you are feeling sad or homesick

Disposition Situation

Consumers most frequently dispose of products or product packages before or after product use.

The disposition situation can create significant social problems as well as opportunities for marketers

Marketers need to understand how situational influences affect disposition decisions to help them provide more effective and ethical products and marketing programs.

Cont..

How would your disposition decision differ in these situations?

You have finished a drink at a mall and there is a trash can nearby but no recycle. What do you do?

You and your friends have just finished drinks. Your friends toss them into the recycle. What do you do?

Four dimensions of situational influence

1. Physical surroundings

2. Social surroundings

3. Temporal perspectives

4. Task definition

Physical surroundings

Atmospherics is the sum of all the physical features of a retail environment.

Atmospherics influences consumer judgments of the quality of the store and the store’s image.

Atmosphere is referred to as service when describing a service business such as a hospital, bank or restaurant.

Examples of physical surrounds

Store location Interior decor Music Smell/aromas Temperature (air-conditioning or heating) Choice provided (by product category or

across the categories)

ColorsCertain colors and color characteristics create feelings of

excitement and arousal which are related to attention.Brighter colors are more arousing than dull ones.Warm colors such as reds and

yellows are more arousing than

cool colors such as blues and

grays.

MusicMusic influences consumers moods and in turn,

influences a variety of consumption behaviors.Firms exist to develop music programs to meet the unique

needs of specific retailers.An emerging trend is having music more in the

foreground so it becomes part of the shopping experience and drives store image.

CrowdingMost consumers find feelings of crowding to be

unpleasant resulting in:Less time in the store and less buyingFaster decisions and less use of informationCrowding can lead to less satisfactory purchases,

unpleasant shopping, and reduced likelihood of returning to the store.

Marketers need to design outlets to reduce crowding perceptions.

Social Surroundings

Social surroundings are the other individuals present in the particular situation.

Social influence is a significant force. Individuals tend to comply with group expectations,

particularly when the behavior is visible.Shopping is a highly visible activity.The use of many publicly consumed brands are subject to

social influences.

Cont..Embarrassment is a negative emotion influenced both

by the product and the situation.Certain products are more embarrassing than others, andEmbarrassment is driven by the presence of others.For extremely sensitive products,

strategies include home delivery

options.

Examples of social surroundingsTypes of customers in the store. Queues and crowding. Whether the consumer is likely to be known by others/

recognized. Whether there are high-profile people/celebrities

shopping at that store. Whether the product will be consumed privately or in

the presence of others.

Temporal Perspectives

Temporal perspectives deal with the effect of time on consumer behavior.

Limited purchase time often limits search Internet shopping is growing

rapidly as a result of the time

pressures felt by consumers.

Examples of temporal influencesWhether the product is seasonalWhether the product is urgently required (snack between

lectures)Time available for shopping limited/excess (the product

may be an excuse for shopping)How long the previous product lasted or was expected to

last.

Task Definition

Task definition is the reason the consumption activity is occurring.

Major distinction between purchases for self versus gift.Consumers give gifts for many reasons:o Social expectationso To elicit return favors

Examples of task influences

Is the product utilitarian or used as a status symbol? Is it a gift or for oneself?Must the product be long-lasting/tough? (e.g. an everyday

watch)

or decorative?

(e.g. a dress watch) Is the product intended for several uses? (e.g. a family

computer for study and internet access)

MoodsMoods tend to be less intense than emotions and may

operate without the individual’s awareness.Although moods may affect all aspects of a person’s

behavior, they generally do not completely interrupt ongoing behavior as an emotion might.

Consumers actively manager their mood states, often seeking situations, activities, or objects that will alleviate negative moods or enhance positive ones

Momentary ConditionsAs with moods, individuals attempt to manage their

momentary conditions, often through the purchase or consumption of products and services.

Thus, a great deal of marketing

activity is directed toward

momentary conditions

Examples of antecedent states Moods Feeling sad triggers buying sweets or seeing a funny

movie Feeling rejected triggers buying games software

Momentary conditionsCan’t eat ice cream because teeth hurtCan’t buy a book because the credit card was left at homeBuy more groceries because hungry before shopping

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