mk0011-slm-unit-11

Consumer Behaviour Unit 11

Sikkim Manipal University Page No. 303

Unit 11 Diffusion of Innovation

Structure:

11.1 Introduction

Objectives

11.2 Types of Innovation

Breadth of innovation

11.3 Time Factor in Innovation Process

Time of adoption

11.4 Diffusion Process

Rate of innovation adoption or diffusion

Caselet: Apple’s iPod – exemplary diffusion of innovation

11.5 Factors Affecting the Diffusion of Innovation

11.6 The Adoption Process

Barriers to adoption of innovation

11.7 Culture, Communication and Diffusion

Cultural context and diffusion of innovation

Role of communication

11.8 Summary

11.9 Glossary

11.10 Terminal Questions

11.11 Answers

11.12 Case Study

11.1 Introduction

After explaining all the determinants of consumer behaviour in the previous

unit, this unit explains innovations and behaviour of consumers in relation to

such innovations.

Consumers evaluate all new products based on their perceptions,

personality, attitude, motivation, cultural environment and social influences.

The ability to develop successful new products is critical to a company's

sales, future growth and long-term survival. Gabriella Stern reported that 49

percent of the total revenue of some of the world's leading companies came

from new products.

There is no universally accepted definition of "product innovation" or "new

product." Everett M Rogers (Diffusion of Innovation, 4th ed. Free Press,



1995) observes that some researchers have favoured a consumer-oriented

approach in defining an innovation.

According to Hubert Gatignon and Thomas S Robertson, an innovation is a

product, service, attribute, or idea that consumers within a market segment

perceive as new and has an effect on existing consumption patterns.

Diffusion of innovation refers to how a new innovation – an idea or

technology – spreads or is adopted by an entire market (technology) or

society (ideologies) in stages (diffusing).

Objectives:

After studying this unit, you should be able to:

Explain the types of innovations

Analyse the diffusion of innovation process and factors affecting

diffusion

Identify the stages in consumer adoption process, and barriers in

adoption

Explain the role of time, culture and communication in diffusion of

innovation

11.2 Types of Innovation

Continuous innovation –This entails introducing a modified product

instead of a completely new product. This type of innovation has minimal

disruptive impact on the existing consumption patterns. Adoption of such

products requires minor changes in behaviour that are unimportant to

consumers. Most new products that are introduced in the market

represent continuous innovations such as newer models of computers

and automobiles, etc.

Dynamically continuous innovation – This entails making of a new

product or modification of an existing one. It is moderately more

disruptive than a continuous innovation but yet does not alter greatly

existing practices of consumption. Adoption requires a moderate change

in an important behaviour or a major change in an area of behaviour that

is of low or moderate importance to the individual. The examples include

Internet shopping, disposable diapers, digital camera, notebook

computers, electric cars and cordless phones. Real Jukebox is a

dynamically continuous innovation because it requires changes in the



way we acquire, use and dispose of music and utilise other technologies

such as CD and DVD writers.

Discontinuous innovation – This represents a product so new that

consumers have never known anything like it before and impels

consumers to adopt new consumption behaviour practices. Products

such as electric bulbs, aeroplanes, computers, television, photocopying

machines, fax machines, inkjet and laser printers, heart transplant and

MRI scanning, medical self-test kits, etc. were all at the time of their

introduction discontinuous innovations

Innovations can also be categorised by the benefits that products or

services offer. Some services, attributes or ideas are functional innovation

because they provide functional performance benefits to consumers over

existing alternatives. For example, computer notebooks offer portability over

stationary computers. Functional innovations often take advantage of new

technology. For example, technological advances have offered consumers

the advantage of downloading images from the Internet and conducting

videoconferencing via their cellular phones. Figure 11.1 depicts the

innovation continuum.

Figure 11.1: Innovation Continuum

11.2.1 Breadth of innovation

Breadth of innovation describes new and different uses or applications of a

product. For example, baking soda has been used as a baking ingredient, a

tooth polisher, a carpet deodoriser and a refrigerator deodoriser. Teflon is a

product that was originally designed to prevent things from sticking to



cookware. Subsequently, its thin tapes have been used in plumbing to

prevent leakage from joints. Teflon is also used in men's suits. Nylon has

been put to several different uses such as producing clothing, diving suits,

balloons, parachutes, ropes, fishing lines, masts and many others.

Activity 1:

Look up advertisements and prepare a list of five products that you

consider as innovations. What category of innovation does each

product represent? Give reasons.

Hint: You may consider products that are completely new, or modified

versions of existing products or invented for the first time.

Self Assessment Questions

1. Mobile phones come in the category of _____________innovations.

2. iPod is an example of ______________ innovation.

11.3 Time Factor in the Innovation Process

The time factor refers to the speed with and extent to which individuals and

groups adopt the innovation.

11.3.1 Time of adoption

Everett M Rogers examined more than 500 studies on diffusion and

concluded that there are five categories of adopters classified by time of

adoption:

Innovators

They constitute, on an average the first 2.5 percent of all those

consumers who adopt the new product and are technology enthusiasts.

Their venturesome attitude is reflected in their risk taking willingness and

eagerness bordering obsession to try new products and ideas.

Innovators tend to be younger, better educated, have higher incomes,

are cosmopolitan, and more active outside of their community than non-

innovators.

They also tend to be less reliant on group norms, communicate with

other innovators (reference group) rather than local peers, are more self-

confident and make more extensive use of commercial media, sales

personnel and professional sources in learning of new products.



Early adopters

They represent, on an average, the next 13.5 percent who adopt the

new product.

They admire a technologically new product not so much for its features

as for its abilities to create a revolutionary breakthrough in the way

things are normally accomplished.

Though they are not among the earliest individuals to adopt the product,

yet they adopt the product in the early stage of its life cycle. They check

before adopting a new idea.

They are respectable as they are role models. This category contains

the greatest number of opinion leaders as they are more integrated into

the local social system.

They are successful, well educated and somewhat younger than their

peers. They tend to be more reliant on group norms and values than

innovators and are also more oriented to the local community rather

than having a cosmopolitan look.

They are willing to take a calculated risk on an innovation but are

concerned with failure.

Early adopters also use commercial, professional and interpersonal

information sources.

Since they tend to be opinion leaders, they are likely to transmit word-of-

mouth influence and, due to this reason, they are probably the most

important group in determining the success or otherwise of the new

product.

Early majority

They constitute the next 34% of the people to adopt an innovation and

adopt new ideas just prior or the average time.

They deliberate for sometime collecting information and evaluating other

brands, before adopting. They adopt innovations earlier than most of

their social group but only after the innovation is considered successful.

They look for innovations that offer incremental, predictable

improvements of an existing technology.

They tend to be price sensitive and like to see competitors enter the

market.



They are socially active, somewhat older, less educated and less

socially mobile than early adopters and seldom hold leadership

positions.

They rely heavily on interpersonal sources of information and are an

important link in the process of diffusing new ideas because of their

position between earlier and later adopters.

Late majority

They represent next 34 percent to adopt an innovation after the early

majority.

They are sceptical about innovations and adopt new ideas just after the

average time, approaching the innovations cautiously.

They are conservative, wary of progress, rely on tradition, and adopting

innovations may be both an economic necessity and a reaction to peer

pressures.

They tend to be older, with below average income and education and

have lower social status and mobility than those who adopt earlier.

In many developing countries, consumers who have just started learning

to use the Internet are considered late majorities in this product

category.

Laggards

They represent the last 16 percent of adopters.

They are traditional, most localite in outlook, dogmatic and oriented to

the past.

Like innovators they are least inclined to rely on the group’s norms.

By the time they adopt an innovation it is old and has been superseded

by something else.

They tend to be suspicious of new products and alienated from a

technologically progressing society and adopt innovations with

reluctance. In the personal computer market consumers who can afford

and have yet to buy a PC are likely to be regarded as laggards.


3. Karan buys a cellphone on the day of its launch. He is a/an ________.

4. _______ are most likely to be opinion leaders and influence others.

5. Late majority adopt a product when it is in its maturity stage but more

towards decline. (True/False)



6. Innovators are least inclined to rely on group norms and are tradition

bound. (True/False)

11.4 Diffusion Process

The diffusion process is the manner in which innovations spread over time

to other consumers through communication across a market. Diffusion

research traces the penetration and acceptance of an innovation across the

various stages of its life cycle by various adopter groups.

The diffusion process identifies innovators in the introductory phase of life

cycle; early adopters during growth period, the early majority and late

majority adopts the product in its maturity period and laggards (late

adopters) are the last to adopt the product. These life cycle phases are

important because they are linked to different marketing strategies during

the product life cycle.

During the introductory phase, the marketer’s objectives are related to

establishing distribution, building brand awareness in the target market and

encouraging trials to begin the diffusion process. As the product gains

acceptance, the marketer can define its early adopters. It now tries to

strengthen its foothold in the market by shifting from the objective of creating

brand awareness to one of broadening product appeals and increasing

product availability through increased distribution.

As the brand matures, competition intensity gradually increases and sales

begin to level off. The marketer starts emphasising price appeals, starts sales

promotions and may consider modifying the product to gain competitive

advantage. Majority of the adopters enter the market at this stage largely

because of the influence of early adopters. The majority that has already gone

through the process of product adoption does not rely much on mass media

anymore for information.

When the brand is viewed to have entered its decline phase, lower prices

become more relevant and the marketer considers revitalising the brand, or

adopts the strategy of harvesting or divesting. It is during the decaying

maturity and the decline phase of product life cycle that laggards enter the

market. as shown in Table 11.1.



Table 11.1: PLC Phases and Profile of Adopter Groups

PLC stages Introduction Growth Maturity Decline

Adopter groups

Innovators Early adopters

Early majority

Late majority

Laggards

Percentages (2.5%) (13.5%) (34.0%) (34.0%) 16.0%

Characteristics Venturesome Respectable Deliberate Skeptical Traditional

11.4.1 Rate of innovation adoption or diffusion

The rate of adoption refers to how long a new product takes to be accepted

by those consumers who will ultimately adopt it.

Marketers aim to gain wide acceptance of new products as soon as possible

in order to penetrate the market fast and attain market leadership before

competition sets in. A penetration strategy usually involves low introductory

price to dissuade competitors from entering the market.

Sometimes marketers avoid a rapid rate of adoption for a new product. For

instance marketers who intend to recover their development costs rapidly

adopt a skimming strategy which entails making the product available at a

high price initially and then slowly lowering the prices stepwise.

Rate of adoption also refers to the extent of adoption of an innovation over

time among groups.

There are four major reasons that explain why innovations are adopted more

quickly:

With the increase in household disposable income, new products are

likely to be more affordable.

Rapid technological advances require quicker adoption cycles.

As technology is becoming more standardised, it reduces consumers’

risk perception associated with the adoption of a new product. The rate

of diffusion of Pentium processor based PC was fairly quick because of

the acceptance of Disk Operating System (DOS) as the industry-wide

standard.

Information regarding innovation is communicated rapidly and is accessible

to the consumers conveniently. Obviously, the more quickly consumers

become aware and gain knowledge about a new product through mass

media and Internet, the faster is communication to various groups.



Caselet: Apple’s iPod – exemplary diffusion of innovation

Apple's iPod is a classic instance of Diffusion of Innovation Theory in action

in the area of technology. Apple’s introduction of iPod can be argued to be

an extension of the diffusion of portable music. The adoption of portable

music first came through the WalkMan, then DiscMan as the CD became

new technological medium of music, and then came the trend of getting

music from the internet as MP3s. Therefore, Apple benefited from an

interest in portable music devices which, was in its ‘late majority’ stage. This

denoted that many people were acquainted and comfortable with the use of

portable music devices. However, innovators and early adopters were

seeking new devices that could be used for acquiring music from the

internet; this process was in its ‘early adopter’ stages.

The iPod constituted the ideal new technology to exploit both the above

processes that were operational. iPod’s ease of use and handy Internet

interface of iTunes not only lured innovators, but were also contributing to

innovators explaining and demonstrating to early adopters, and to others

down the line.

Apple has benefitted immensely from the Innovation Diffusion Theory and

has exploited it to attract consumers from one innovation to another,

towards greater familiarity and acceptance of the entire Apple products

range. The trail of innovation and the mass appeal that accompanies this

trend is luring consumers in stages from buying one Apple product to

acquiring its whole range; from iPod Nano to MacBook. What started with

the introduction of a new portable music device is now being used by Apple

to gain a larger market share across its entire product range.

Impact of iPod on consumer behaviour

Apple iPod also serves as an outstanding example of an innovation diffused

and adopted speedily the world over. Apple has successfully used the iPod

to increase its revenue, enhance corporate image and research and develop

new innovations. Apple has widened the iPod market from including a group

of early adopters to the early majority without weakening the product’s cool

factor.

It can be deduced from secondary research that Apple iPod sales can be

linked to rate of adoption. Innovators are people who are fascinated by new

ideas and this takes them from a local circle into a cosmopolitan circle.



Sales were low and slow initially because the iPod lured innovators to

acquire and try the products before any other category of consumers trusted

the iPod with their disposable income. The ‘early adopters’ category

consists of the highest intensity of opinion leadership and owing to this

group’s social influence sales of iPods elevated in 2006, 2007 and 2008.

Apple had apparently benefited from its previous product launches. By

monitoring the behaviour of innovators and early adopters who grasped the

technology and were clear about what they wanted from a digital music

player, Apple was able to lucidly identify consumer need for the first time –

as “the ability to easily purchase, store, access and enjoy music”. By

enclosing the technology in an undeniable value proposition, and offering

customers an incredible usage experience, Apple set the imaginations of the

early and late majorities ablaze and sales exploded.

Figure 11.2 depicts that the iPod sales may be facing a decline as it’s the

last category in the social system called laggards who may be buying iPods

now. Sales may be diminishing because millions of people own iPods and it

may now need to match iPhone’s features.

Figure 11.2: Apple iPod Worldwide Sales

(Source: Apple Inc, financial statements (via Wikipedia))


7. ________ are identified with the introductory phase of product life

cycle.



8. Marketers begin to use price appeals and sales promotions in the

___________ stage.

11.5 Factors Affecting Diffusion of Innovation

The chances of a product’s adoption and subsequent diffusion are largely

dependent on its nature. The rate at which the diffusion of an innovation

takes place is a function of the following 10 factors:

Type of target group – The target market for the new product is an

important factor in influencing the rate of diffusion. Some groups are

more inclined to accept change than others. In general, affluent, young

and highly educated groups tend to try and accept new products readily.

Number of people involved in decision making – This refers to

whether the decision is made by an individual or a group. If fewer

individuals are involved in making the purchase decision, the innovation

is likely to spread more rapidly. When two or more family members are

involved in making the purchase decision, the diffusion will be slower

than innovations that primarily affect one individual.

Extent of marketing efforts involved – The diffusion of innovation is

very significantly influenced by the extent of marketing efforts

undertaken. No matter how wonderful an innovation, but unless

sufficient numbers are informed and convinced of what it can do for

them, the diffusion would be adversely affected. Thus, the rate of

diffusion is not completely beyond the control of the marketer.

Need fulfilment – The more involving and obvious the need that the

innovation satisfies, the faster the diffusion. The rate of diffusion of anti-

dandruff shampoos has been fast as they gained rapid trial among those

who had dandruff. Viagra, the male impotency drug, gained rapid trial

and its diffusion has been very fast. Rogaine, believed to be a cure for

certain types of hair loss or baldness, gained rapid trial among those

who felt uncomfortable with their hair loss problem.

Compatibility – It refers to the degree to which the innovation is

consistent with the individual’s and group’s needs, attitudes, beliefs and

past experiences. The more its consistency, the faster its diffusion.

Compatibility also refers to the amount of effort the users have to put in

so that the new product fits into their daily life. If it requires too much



adaptation, diffusion would be slow. The microwave oven was

introduced about three decades ago in India, but since it was not

compatible with Indian family values, its diffusion has been rather slow.

Internet banking or shopping is not consistent with established habits of

Indian consumers, resulting in very slow diffusion of this innovation.

Relative advantage – If consumers perceive an innovation as better or

superior in meeting their relevant need compared to existing substitutes,

the diffusion will be more rapid. While considering the relative product

advantage, consumers consider both the cost and the performance. To

be successful, an innovation must have either the performance or the

cost advantage over existing alternatives. For example, newer versions

of computer processors have performance advantage over earlier ones

and hence their diffusion has been rapid.

Complexity – If an innovation is difficult to understand and also difficult

to use, its diffusion would be slower. Product simplicity and ease of use

are important factors in speeding up the process of diffusion. Computer

manufacturers, such as IBM and Apple, have tried to overcome the

initial complexity of using personal computers by communicating with

consumers that their computers are user-friendly.

Observability – It refers to the ease with which consumers can observe

the positive effects of adopting an innovation. The diffusion will be more

rapid if the positive effects are easily observable. Products, such as

cellular phones, fashion items and autos etc., are highly visible.

Trialability – It is the degree to which a product can be tried before

adoption. This is much less a problem with low-cost or low-risk items

such as cold remedies, but cellular phones, fax machines and

computers etc., can be demonstrated in actual use and tried on a limited

scale. If consumers can purchase a product in small quantity, then trial

is relatively easy.

Perceived risk – The more the risk associated with trying a new

product, slower the diffusion process. The risk in adopting an innovation

can be financial, physical, performance, or social. Initially, adopters of

personal computers perceived economic and performance risks which

have been largely overcome by decreasing prices and improved

software. In case of fashion items, consumers feel social risk until



opinion leaders in consumers’ peer group adopt them. The most

effective way to reduce perceived risks in adopting an innovation is

through trial. Free samples are an effective tool in case of continuous

innovations of low-cost items such as detergents, or toothpaste etc.


9. ___________ refers to the degree to which the innovation is consistent

with the individual’s and group’s needs and beliefs.

10. If consumers perceive an innovation as better in meeting their relevant

need compared to existing ones, the diffusion will be more rapid. This

relates to the ___________ factor.

11.6 The Adoption Process

The adoption of an innovation requires that an individual or a group of

consumers decide on buying a new product. The process of diffusion starts

when early adopters influence their reference group members and other

acquaintances to purchase the product. Therefore, it is reasonable to view

adoption as the first step in the diffusion process.

The adoption of an innovation is likely to be a reasonably involving decision

for most of those who are among the first to buy the product and can be

represented by a hierarchy-of-effects model. Thus, the adoption process is

basically a term used to describe extended decision making by consumers

when a new product, service, or idea is involved. High involvement in

product or purchase situation is likely for discontinuous innovations. For

example, the decision to buy a DVD writer or have laser eye surgery will be

a high-involvement decision. Most continuous innovations probably trigger

limited decision making. In case of low-cost, low-risk innovations,

consumers’ involvement level is likely as below:

The process shows that:

In the first step, the consumer becomes aware and recognises the need

for the product.

In the next step, to acquire knowledge about the product is when the

consumer gets involved in information search.

In the third step, the brand is evaluated.

The next step is trial of the product before making a purchase decision.

In the final step, the consumer decides whether to adopt the product.



As a consequence of using the product, the consumer makes post purchase

evaluation. In this process of adoption, product trial is more important than

in most other decisions because the perceived risks are much higher with

the use of a new product. Certain types of products or services are difficult

or even impossible, to try on a sufficient basis such as electric cars or laser

eye surgery. Figure 11.4 depicts the stages in the adoption process.

Figure 11.3: Adoption Process and Extended Decision-making

The post purchase evaluation has important implications because of the

expenses involved or the complexity of many products and the rapid

changes in technology. For example, Apple Computers introduced their

Cube, which was believed to be something unique in computer design.

However, the company discontinued the model because of consumers’

rejection of the product. When Apple introduced their range of iMacs,

another breakthrough in computer design, consumer response was

overwhelming.

11.6.1 Barriers to adoption of innovation

Most of the above mentioned factors could cause consumers to reject an

innovation. However, S Ram and Jagdish N Sheth have mentioned three of

the above mentioned as major factors that inhibit adoption of innovation:

Value barrier refers to a product’s relative disadvantage compared with

the substitute products. When cellular phones were introduced, they were



too expensive for most general consumers relative to the value they could

get from commonly used telephones. More than a decade ago, BMW

introduced a 650cc motorcycle in India. The price was over Rs.5,00,000

and consumers perceived the cost as too high relative to value.

Usage barrier results when an innovation is incompatible with

consumers’ long established practices. For example, the dish washer

could never take off in India as vessels in India often need to be

scrubbed due to the cooking practices for which the dish washer was

found unsuitable.

Risk barrier is concerned with physical, economic, functional or social

risk for adopting an innovation. If the intensity of perceived risk is high,

consumers are likely to wait and watch till such time that they are

reasonably assured that there are no unusual risks associated with

product adoption.

Activity 2:

Make a report on the diffusion and adoption process of Apple iPhone

in India.

Hint: Look at articles in magazine or online sources for information.

Self-Assessment Questions

11. Online shopping and teleshopping do save time but still many don't like

to shop on web or on phone as it is not consistent with Indian shopping

habits. This is the _____________ barrier.

12. ____________ stage comes just before the adoption stage in the

adoption process.

11.7 Culture, Communication and Diffusion

11.7.1 Cultural context and diffusion of innovation

Culture may have an important influence on the diffusion of innovation. Two

concepts are worth considering in this regard - cultural context and cultural

homogeneity.

A high context culture is a culture that communicates chiefly through

implicit messages implying that non-verbal messages are considered

very important. In high context cultures, interpretation of messages



depends largely on contextual cues. What is left unsaid is often as

important (if not more) as what is said. Contextual cues could include

nature of relationships between the sender and receiver of the message

(in terms of gender, age, balance of power etc), the time and situation of

communication e. Such cultures also attach value to group conformity

rather than to individualism and to societal norms and rituals. Confucian

cultures (China, Korea and Japan) and Latin America are some typical

examples of high context cultures.

A low context culture is a culture that communicates chiefly through

explicit messages that are expressed in specific terms to be understood.

In such a culture verbal aspects and clarity are very important. In other

words, a low context culture lays most emphasis on the written and

spoken word. What is meant is what is said. The context within which

messages are communicated is very narrow. Australia, Scandinavia and

Germany are some examples of low context cultures.

Cultural homogeneity

Cultures differ greatly in terms of the degree of their homogeneity.

A homophilous culture is one where people share the same beliefs,

speak the same language and practice the same religion, for example

Korea, Japan and Scandinavian countries.

A heterophilous culture is one that has an enormous diversity, with

several languages spoken and religions practiced with varied belief

systems. India is a good example of a heterophilous culture. Most

countries can be considered heterophilous with a moderate amount of

differentiation.

Differences in cultural homogeneity and cultural contexts cause differences

in adoption rates of innovation. There is strong evidence that the rate of

innovation diffusion is rapid in high context and homophilous cultures.

11.7.2 Role of communication

Communication is a key element that influences diffusion across markets.

Consumers rely on marketer controlled mass media advertising for

information about new product introductions. Advertising campaigns are

designed to create awareness among potential consumers and

communicate relevant information about features and benefits. H David



Strutton and James R Lumpkin studied the adoption of self-diagnostic

medical devices among elderly consumers and reported that early adopters

were more dependent on mass media for information. Subsequently, they

show greater reliance on friends and family members to help them evaluate

new products and word-of-mouth influence increases in importance as early

adopters progress from awareness to knowledge, evaluation, trial and

adoption.

In the case of later adopters, word-of-mouth tends to be the most important

influence throughout the adoption process. They learn about innovations

from friends and neighbours rather than the mass media. To create

awareness among early adopters, the role of mass media advertising

providing informational content is more important in the process of diffusion.

For later adopters, advertisers can try to encourage favourable word-of-

mouth by using influential spokespersons.

Word-of-mouth influence across groups

For diffusion to occur across groups, positive word-of-mouth must first start

within groups. However, favourable word-of-mouth within just groups is not

sufficient for diffusion to occur but requires the spread of information across

different groups. This does happen because consumers spread information

by interacting with individuals outside their own groups.

A study by Jacqueline Johnson Brown and Peter H Reingen found that most

word-of-mouth occurred in homophilous groups (between friends and

relatives), while among heterophilous groups, word-of-mouth occurred in

only 18 percent of communications among individuals.

Activity 3:

Discuss any two cases where a new product failed to take off because of

cultural factors.

Hint: Consider products that were successful in some countries while

failures in others.


13. Individuals who form a part of hetrophilous group tend to have similar

choices and traits. (True/False)

14. The countries with low context cultures place more value on

interpersonal contacts and associations. (True/False)



11.8 Summary

Recapitulation of important concepts discussed in this unit:

There is no universally accepted definition of “product innovation” or

“new product.” Some researchers have favoured consumer-oriented

approach, which says that an innovation is a product, service, attribute

or idea that consumers within a market segment perceive as new and

that has an effect on existing consumption patterns.

The diffusion process refers to the manner in which innovations spread

over time to other consumers through communications across a market.

Adoption of an innovation requires an individual or a group of consumers

to decide on buying a new product.

Communication is a key element that influences diffusion across

markets as early adopters rely on mass media for information about new

products.

Members of low-context cultures rely primarily on verbal and written

communications in transmitting the meaning, place more value on

individual initiative, and rely more on mass communication. High-context

cultures rely primarily on non-verbal communication, with little difference

in norms, values and socio-economic status among groups.

11.9 Glossary

Breadth of innovation – It describes new and different uses that a product

can accomplish.

Compatibility – The extent to which potential customers consider a new

product to be consistent with their personal, needs, values and practices.

Complexity – The extent to which a new product is difficult to figure out

and/or use by potential customers.

Continuous innovation – A new innovation that is an enhanced or

modified version of an existing product rather than a completely new

product.

Diffusion process – The process by which the adoption of an innovation is

spread by communication to potential customers over a period of time.

Skimming policy – This entails making the product available at a high price

initially and then slowly lower the prices stepwise.



Trialability – The degree to which a product is capable of being tried by

potential customers in a restricted way before adoption (e.g. through

samples, small packages, trial offers, etc.).

11.10 Terminal Questions

1. Discuss the different types of innovations with examples.

2. Discuss the stages in adoption process. What are common barriers to

adoption of new products?

3. "Rate of Diffusion can vary according to the nature of the product".

Discuss.

4. "An innovation might fail if it is not communicated properly". Do you

agree? Give reasons quoting real life examples.

5. Discuss the role of communication and culture in diffusion of innovation.

11.11 Answers


1. Continuous

2. Dynamically continuous

3. Innovator

4. Early adopter

5. True

6. False

7. Innovators

8. Maturity

9. Compatibility

10. Relative advantage

11. Usage

12. Trial

13. False

14. False

Terminal Questions

1. The different types of innovation are continuous, dynamically

continuous, discontinuous and functional. For more details, refer section

11.2.



2. The various stages in the adoption process are awareness, knowledge,

evaluation, trial and adoption. The barriers are value, usage and risk

barriers. For more details, refer section 11.5.

3. The rate of diffusion depends on how consumers perceive the product

and its benefits. The rate of adoption refers to how long a new product

takes to be accepted by those consumers who will ultimately adopt it.

For more details, refer section 11.6.

4. People should know that an innovation has occurred and be aware

about its relevance to them; the first stage of adoption process. For

more details, refer section 11.7.

5. Communication and culture are important elements that influence

diffusion across markets. Consumers rely on marketer controlled mass

media advertising for information about new product introductions. For

more details, refer section 11.7.

11.12 Case Study

Technological Innovations

The common perception that the Internet can serve as a great time-saver

while simultaneously consuming large amounts of time is a paradox. A

paradox occurs when an object is both C and not X at the same time.

Paradoxes produce conflict and ambiguity, which lead to responses such as

avoidance, abandonment and mastery. Technology ranging from

dishwashers to computers often produces paradoxes for consumers. A

recent study uncovered several paradoxes associated with the consumption

of technological products.

Control/chaos – It can facilitate regulation and order as well as leading

to upheaval and disorder. An answering machine allows one to screen

messages and answer at one's own chosen time. It can also overflow,

provide a large number of messages at one time, and annoy some of

those who are trying to reach you.

Freedom/enslavement – It can reduce restrictions and increase

benefits or it can increase dependence and add restrictions. A computer

allows one to do many things better and faster. However, one quickly

becomes dependent on it and is unable to function effectively when a

computer is not accessible.



New/obsolete – It provides the newest benefits of scientific knowledge

but is soon outdated. Computers, software, cameras, stereo systems

and many other products are changing so rapidly that it is difficult and

extremely expensive to be "up-to-date."

Competence/incompetence – It may increase feelings of intelligence

and efficacy as well as feelings of ignorance and ineptitude. While one

may experience pleasure in mastering many aspects of a technological

product such as Excel, most also experience frustration at being unable

to fully utilise the capabilities of many such technologies.

Fulfils/creates desires – It fulfils desires while developing or increasing

awareness of other desires. The acquisition of a computer meets needs

for faster and better word processing but generates desires for printers,

zip drives and additional software.

Individuals who find such paradoxes stressful adopt four categories of

strategies for avoiding or minimising them:

Pre-acquisition avoidance strategies – These include ignoring

information about new technologies and refusing or delaying the

acquisition of new technological products.

Pre-acquisition confrontative strategies – Using someone else's

technology product temporarily; using buying heuristics such as buying a

familiar, widely known brand or a basic, less sophisticated model;

engaging in extensive pre-purchase learning and extended decision-

making; and buying extended warranties or maintenance contracts are

examples.

Consumption avoidance strategies – After acquiring the new

technology (often as a gift or in response to peer pressure) one may still

ignore, abandon, not repair or maintain it or use it only under restricted

circumstances (VCR is used for showing rental movies but not for

recording movies).

Consumption confrontative strategies – Accommodation (changing

one's behaviours to meet the requirements of the new technology);

partnering (developing an attachment to the technology) and mastering

(thoroughly learning the technology) are common strategies.



Consumers are aware of technology paradoxes and pursue a variety of

strategies to cope with them. They are not passive recipients of technology

and do not automatically assume that new technologies are net positive

benefits.

Discussion Question:

What are the implications for the diffusion of technological innovations?

Hint: Some people grab such innovations with both hands while others take

time.

(Source: "Paradoxes of Technology: Consumer Cognisance, Emotions, and Coping

Strategies." Journal of Consumer Research, September 1998.)

References:

Consumer Behavior by Leon G Schiffman and Leslie Lazar Kanuk,

Prentice Hall India

"Paradoxes of Technology: Consumer Cognisance, Emotions, and

Coping Strategies." Journal of Consumer Research, September 1998.

E-references:

http://cbu-socialmarketing.wikispaces.com,

Apple Inc, financial statements (via Wikipedia)

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