DIFFUSION OF INNOVATION CONSUMER ADOPTION PROCESS Diffusion Process

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DIFFUSION OF INNOVATION & CONSUMER ADOPTION PROCESS

DIFFUSION OF INNOVATION & CONSUMER ADOPTION PROCESS

Diffusion Process The process by which the acceptance of an innovation is spread by

Diffusion Process The process by which the acceptance of an innovation is spread by communication to members of social system over a period of time.

Adoption Process The stages through which an individual consumer passes in arriving at a

Adoption Process The stages through which an individual consumer passes in arriving at a decision to try (or not to try), to continue using (or discontinue using) a new product.

Elements of the Diffusion Process • • The Innovation The Channels of Communication The

Elements of the Diffusion Process • • The Innovation The Channels of Communication The Social System Time

Defining Innovations • • Firm-oriented definitions Product-oriented definitions Market-oriented definitions Consumer-oriented definitions

Defining Innovations • • Firm-oriented definitions Product-oriented definitions Market-oriented definitions Consumer-oriented definitions

Product-Oriented Definitions Continuous Innovation Dynamically Continuous Innovation Discontinuous Innovation

Product-Oriented Definitions Continuous Innovation Dynamically Continuous Innovation Discontinuous Innovation

Figure 15. 6 Continuous Innovation

Figure 15. 6 Continuous Innovation

Telephone Innovations Discontinuous Innovations Telephone Cell Phone Fax Machine Dynamically Continuous Innovations Telephone answering

Telephone Innovations Discontinuous Innovations Telephone Cell Phone Fax Machine Dynamically Continuous Innovations Telephone answering machines Call forwarding Call waiting Caller ID Banking by telephone Call-prompting systems Hold button Line-in-use indicator Redial button Auto dialing feature Touch-tone service 800 Numbers 900 Numbers Ability to send/receive email Incorporate PDA functions Calendar/Phonebook Voice-activated dialing Switch from analog to digital Include camera Ringer styles Play games Fax modem Mobile fax machines Home office systems (combined fax, copier, computer printer) Plain paper fax Speed dial buttons Delayed send Copy function Paper cutter

Product Characteristics That Influence Diffusion • • • Relative Advantage Compatibility Complexity Trialability Observability

Product Characteristics That Influence Diffusion • • • Relative Advantage Compatibility Complexity Trialability Observability

Ad Stressing Ease of Use and Convenience

Ad Stressing Ease of Use and Convenience

Characteristics That Influence Diffusion CHARACTERISTICS Relative Advantage Compatibility Complexity EXAMPLES Air travel over train

Characteristics That Influence Diffusion CHARACTERISTICS Relative Advantage Compatibility Complexity EXAMPLES Air travel over train travel, cordless phones over corded telephones Gillette MACH 3 over disposable razors, digital telephone answering machines over machines using tape Electric shavers, instant puddings

continued CHARACTERISTICS EXAMPLES Trialability Trial size jars and bottles of new products, free trials

continued CHARACTERISTICS EXAMPLES Trialability Trial size jars and bottles of new products, free trials of software, free samples, cents-off coupons Observability Clothing, such as a new Tommy Hilfiger jacket, a car, wristwatches, eyeglasses

Time and Diffusion • Purchase Time • Adopter Categories • Rate of Adoption

Time and Diffusion • Purchase Time • Adopter Categories • Rate of Adoption

Adopter Categories A sequence of categories that describes how early (or late) a consumer

Adopter Categories A sequence of categories that describes how early (or late) a consumer adopts a new product in relation to other adopters.

Adopter Categories Early Adopters 13. 5% Innovators 2. 5% Laggards Early Majority 34% Late

Adopter Categories Early Adopters 13. 5% Innovators 2. 5% Laggards Early Majority 34% Late Majority 34% Percentage of Adopters by Category Sequence 16%

Innovators: Description • 2. 5% of population • Venturesome • Very eager to try

Innovators: Description • 2. 5% of population • Venturesome • Very eager to try new ideas • Acceptable if risk is daring • More cosmopolite social relationships • Communicates with other innovators

Early Adopters: Description • 13. 5% of population • Respected • More integrated into

Early Adopters: Description • 13. 5% of population • Respected • More integrated into the local social system • The persons to check with before adopting a new idea • Category contains greatest number of opinion leaders • Are role models

Early Majority: Description • 34% of population • Deliberate • Adopt new ideas just

Early Majority: Description • 34% of population • Deliberate • Adopt new ideas just prior to the average time • Seldom hold leadership positions • Deliberate for some time before adopting

Late Majority: Description • 34% of population • Skeptical • Adopt new ideas just

Late Majority: Description • 34% of population • Skeptical • Adopt new ideas just after the average time • Adopting may be both an economic necessity and a reaction to peer pressures • Innovations approached cautiously

Laggards: Description • 16% of population • Traditional • The last people to adopt

Laggards: Description • 16% of population • Traditional • The last people to adopt an innovation • Most “localite” in outlook • Oriented to the past • Suspicious of the new

Stages in Adoption Process WHAT HAPPENS NAME OF DURING THIS STAGE Consumer is first

Stages in Adoption Process WHAT HAPPENS NAME OF DURING THIS STAGE Consumer is first Awareness exposed to the product innovation. EXAMPLE Janet sees an ad for a new MP 3 player in the magazine she is reading. Interest Consumer is interested in the product and searches for additional information. Janet reads about the MP 3 player on the manufacturer’s Web site and then goes to an electronics store near her apartment and has a salesperson show her a unit. Evaluation Consumer decides whether or not to believe that this product or service will satisfy the need--a kind of “mental trial. ” After talking to a knowledgeable friend, Janet decides that this MP 3 player will allow her to easily download the MP 3 files that she has on her computer. She also feels that the unit’s size is small enough to easily fit into her beltpack.

Stages in Adoption Process NAME OF STAGE Trial Adoption (Rejection) WHAT HAPPENS DURING THIS

Stages in Adoption Process NAME OF STAGE Trial Adoption (Rejection) WHAT HAPPENS DURING THIS STAGE EXAMPLE Consumer uses the product on a limited basis Since an MP 3 player cannot be “tried” like a small tube of toothpaste, Janet buys the MP 3 player online from Amazon. com, which offers a 30 -day full refund policy. If trial is favorable, consumer decides to use the product on a full, rather than a limited basis--if unfavorable, the consumer decides to reject it. Janet finds that the MP 3 player is easy to use and that the sound quality is excellent. She keeps the MP 3 player.

An Enhanced Adoption Process Model Discontinuation or Rejection Evaluation Pre-existing problem or Need Awareness

An Enhanced Adoption Process Model Discontinuation or Rejection Evaluation Pre-existing problem or Need Awareness Interest Evaluation Adoption or Rejection Discontinuation Trial Adoption or Rejection Postadoption or Postpurchase Evaluation

 • • Issues in Profiling Consumer Innovators Defining the Consumer Innovator Interest in

• • Issues in Profiling Consumer Innovators Defining the Consumer Innovator Interest in the Product Category The Innovator Is an Opinion Leader Personality Traits Media Habits Social Characteristics Demographic Characteristics Are There Generalized Consumer Innovators?

Ad Appeals to Fashion Innovators

Ad Appeals to Fashion Innovators

Consumer Decision Making and Beyond

Consumer Decision Making and Beyond

Levels of Consumer Decision Making Extensive Problem Solving Limited Problem Solving Routine Response Behavior

Levels of Consumer Decision Making Extensive Problem Solving Limited Problem Solving Routine Response Behavior

Models of Consumers: Four Views of Consumer Decision Making • An Economic View •

Models of Consumers: Four Views of Consumer Decision Making • An Economic View • A Passive View • A Cognitive View • An Emotional View

Goal Setting and Pursuit Feedback Goal Setting Goal Attainment/ Failure Formation of Goal Intention

Goal Setting and Pursuit Feedback Goal Setting Goal Attainment/ Failure Formation of Goal Intention Action Initiation/ Control Action Planning

A Simple Model of Consumer Decision Making External Influences Input Firm’s Marketing Efforts 1.

A Simple Model of Consumer Decision Making External Influences Input Firm’s Marketing Efforts 1. Product 2. Promotion 3. Price 4. Channels of distribution Sociocultural Environment 1. Family 2. Informal sources 3. Other noncommercial sources 4. Social class 5. Subculture and culture Consumer Decision Making Need Recognition Process Prepurchase Search Evaluation of Alternatives Psychological Field 1. Motivation 2. Perception 3. Learning 4. Personality 5. Attitudes Experience Postdecision Behavior Output Purchase 1. Trial 2. Repeat purchase Postpurchase Evaluation

Three Stages of Consumer Decision Making • Need Recognition • Prepurchase Search • Evaluation

Three Stages of Consumer Decision Making • Need Recognition • Prepurchase Search • Evaluation of Alternatives

Factors that are Likely to Increase Pre- purchase Search Product Factors Long interpurchase time

Factors that are Likely to Increase Pre- purchase Search Product Factors Long interpurchase time (a long-lasting or infrequently used product) Frequent changes in product styling Volume purchasing (large number of units) High price Many alternative brands Much variation in features

continued Experience First-time purchase No past experience because the product is new Unsatisfactory past

continued Experience First-time purchase No past experience because the product is new Unsatisfactory past experience within the product category Social Acceptability The purchase is for a gift The product is socially visible Value-Related Considerations Purchase is discretionary rather than necessary All alternatives have both desirable and undesirable consequences Family members disagree on product requirements or evaluation of alternatives Product usage deviates from important reference group The purchase involves ecological considerations Many sources of conflicting information

continued Product Factors Demographic Characteristics of Consumer Well-educated High-income White-collar occupation Under 35 years

continued Product Factors Demographic Characteristics of Consumer Well-educated High-income White-collar occupation Under 35 years of age Personality Low dogmatic Low-risk perceiver (broad categorizer) Other personal factors, such as high product involvement and enjoyment of shopping and search

Alternative Pre-purchase Information Sources for an Ultralight Laptop PERSONAL IMPERSONAL Friends Neighbors Relatives Co-workers

Alternative Pre-purchase Information Sources for an Ultralight Laptop PERSONAL IMPERSONAL Friends Neighbors Relatives Co-workers Computer salespeople Calling the electronics store Newspaper articles Magazine articles Consumer Reports Direct-mail brochures Information from product advertisements Internal web site

Issues in Alternative Evaluation • • Evoked Set Criteria Used for Evaluating Brands Consumer

Issues in Alternative Evaluation • • Evoked Set Criteria Used for Evaluating Brands Consumer Decision Rules Lifestyles as a Consumer Decision Strategy Incomplete Information and Non-comparable Alternatives Series of Decisions Decision Rules and Marketing Strategy Consumption Vision

The Evoked Set as a Subset of All Brands in a Product Class All

The Evoked Set as a Subset of All Brands in a Product Class All Brands Known Brands Unknown Brands Evoked Set Acceptable Brands Inept Set Unacceptable Brands (2) Purchased Brands Not Purchased Brands (5) (1) Inert Set Indifferent Brands (3) Overlooked Brands (4)

Inept Set Brands that a consumer excludes from purchase consideration.

Inept Set Brands that a consumer excludes from purchase consideration.

Inert Set Brands that a consumer is indifferent toward because they are perceived as

Inert Set Brands that a consumer is indifferent toward because they are perceived as having no particular advantage.

Ad Suggesting Criteria for Decision Making

Ad Suggesting Criteria for Decision Making

Consumer Decision Rules • Compensatory • Noncompensatory – Conjunctive Decision Rule – Disjunctive Decision

Consumer Decision Rules • Compensatory • Noncompensatory – Conjunctive Decision Rule – Disjunctive Decision Rule – Lexicographic Rule

Compensatory Decision Rules A type of decision rule in which a consumer evaluates each

Compensatory Decision Rules A type of decision rule in which a consumer evaluates each brand in terms of each relevant attribute and then selects the brand with the highest weighted score.

Noncompensatory Decision Rules A type of consumer decision rule by which positive evaluation of

Noncompensatory Decision Rules A type of consumer decision rule by which positive evaluation of a brand attribute does not compensate for a negative evaluation of the same brand on some other attribute.

Conjunctive Decision Rule A noncompensatory decision rule in which consumers establish a minimally acceptable

Conjunctive Decision Rule A noncompensatory decision rule in which consumers establish a minimally acceptable cutoff point for each attribute evaluated. Brands that fall below the cutoff point on any one attribute are eliminated from further consideration.

Disjunctive Rule A noncompensatory decision rule in which consumers establish a minimally acceptable cutoff

Disjunctive Rule A noncompensatory decision rule in which consumers establish a minimally acceptable cutoff point for each relevant product attribute.

Lexicographic Rule A noncompensatory decision rule consumers first rank product attributes in terms of

Lexicographic Rule A noncompensatory decision rule consumers first rank product attributes in terms of importance, then compare brands in terms of the attribute considered most important.

Affect Referral Decision Rule A simplified decision rule by which consumers make a product

Affect Referral Decision Rule A simplified decision rule by which consumers make a product choice on the basis of their previously established overall ratings of the brands considered, rather than on specific attributes.

Hypothetical Use of Popular Decision Rules in Making a Decision to Purchase an Ultralight

Hypothetical Use of Popular Decision Rules in Making a Decision to Purchase an Ultralight Laptop DECISION RULE Compensatory rule MENTAL STATEMENT “I selected the computer that came out best when I balanced the good ratings against the bad ratings. ” Conjunctive rule “I selected the computer that had no bad features. ” Disjunctive rule “I picked the computer that excelled in at least one attribute. ” Lexicographic rule “I looked at the feature that was most important to me and chose the computer that ranked highest on that attribute. ” Affect referral rule “I bought the brand with the highest overall rating. ”

Coping with Missing Information • Delay decision until missing information is obtained • Ignore

Coping with Missing Information • Delay decision until missing information is obtained • Ignore missing information and use available information • Change the decision strategy to one that better accommodates for the missing information • Infer the missing information

Types of Purchases Trial Purchases Repeat Purchases Long-Term Commitment Purchases

Types of Purchases Trial Purchases Repeat Purchases Long-Term Commitment Purchases

Outcomes of Postpurchase Evaluation • Actual Performance Matches Expectations – Neutral Feeling • Actual

Outcomes of Postpurchase Evaluation • Actual Performance Matches Expectations – Neutral Feeling • Actual Performance Exceeds Expectations – Positive Disconfirmation of Expectations • Performance is Below Expectations – Negative Disconfirmation of Expectations

Gifting Behavior Gifting is an act of symbolic communication, with explicit and implicit meanings

Gifting Behavior Gifting is an act of symbolic communication, with explicit and implicit meanings ranging from congratulations and love, to regret, obligation, and dominance.

Five Giver-Receiver Gifting Subdivisions GIVERS INDIVIDUAL GROUP INDIVIDUAL Interpersonal gifting Intercategory gifting RECEIVES “OTHER”

Five Giver-Receiver Gifting Subdivisions GIVERS INDIVIDUAL GROUP INDIVIDUAL Interpersonal gifting Intercategory gifting RECEIVES “OTHER” GROUP SELF* Intercategory gifting Intrapersonal gifting Intergroup gifting Intragroup gifting *This “SELF” is either singular self (“me”) or plural (“us”).

Reported Circumstances and Motivations for Self-Gift Behavior CIRCUMSTANCES MOTIVATIONS Personal accomplishment Feeling down Holiday

Reported Circumstances and Motivations for Self-Gift Behavior CIRCUMSTANCES MOTIVATIONS Personal accomplishment Feeling down Holiday Feeling stressed Have some extra money Need Had not bought for self in a while Attainment of a desired goal Others To reward oneself To be nice to oneself To cheer up oneself To fulfill a need To celebrate To relieve stress To maintain a good feeling To provide an incentive toward a goal Others

Gifting Subdivisions Intergroup Gifting Intercategory Gifting Intragroup Gifting Interpersonal Gifting Intrapersonal Gifting

Gifting Subdivisions Intergroup Gifting Intercategory Gifting Intragroup Gifting Interpersonal Gifting Intrapersonal Gifting

Gifting Relationships GIFTING RELATIONSHIP DEFINITION EXAMPLE Intergroup A group giving a gift to another

Gifting Relationships GIFTING RELATIONSHIP DEFINITION EXAMPLE Intergroup A group giving a gift to another group A Christmas gift from one family to another family Intercategory An individual giving a gift to a group or a group giving a gift to an individual A group of friends chips in to buy a new mother a baby gift Intragroup A group giving a gift to itself or its members A family buys a VCR for itself as a Christmas gift Interpersonal An individual giving a gift to another individual Valentine’s Day chocolates presented from a boyfriend to a girlfriend Intrapersonal Self-gift A woman buys herself jewelry to cheer herself up

A Simple Model of Consumption Choice or Purchase Decision Input Consumption Set Added to

A Simple Model of Consumption Choice or Purchase Decision Input Consumption Set Added to one’s assortment or portfolio Consuming Style How the individual fulfills his or her consumption requirements Process of Consuming and Possessing Output Consuming and Possessing Things and Experiences Using, Possessing, Collecting, Disposing Feelings, Moods, Attitudes, Behavior Altered consumer satisfaction, change in lifestyle and/or quality of life, learning and knowledge, expressing and entertaining oneself

Relationship Marketing aimed at creating strong, lasting relationships with a core group of customers

Relationship Marketing aimed at creating strong, lasting relationships with a core group of customers by making them feel good about the company and by giving them some kind of personal connection with the business.

A Broad-based Relationship Program AIRLINES Canadian Airlines International Cathay Pacific Airlines Hawaiian Airlines Qantas

A Broad-based Relationship Program AIRLINES Canadian Airlines International Cathay Pacific Airlines Hawaiian Airlines Qantas Airways Keno Air Singapore Airlines TWA US Airways HOTELS Conrad Hotels Forte Hotels Forum Hotels Hilton Hotels & Resorts Hilton International Hotels Holiday Inns HOTELS continued ITT Sheraton Hotels, Inns, Resorts & All-Suites Marriott Hotels, Resorts and Suites Vista Hotels Wyndham Hotels & Resorts CAR RENTAL Avis Rent a Car Hertz OTHER Citibank AAdvantage Visa or Master -Card application MCI Long-Distance American AAdvantage Money Market Fund

A Portrayal of the Characteristics of Relationship Marketing The Firm provides • Products/Services •

A Portrayal of the Characteristics of Relationship Marketing The Firm provides • Products/Services • Individualized attention • Continuous information • Price offers • Customer services • Extras and perks, etc. The Customer provides Trust and promises • Repeat Purchase • Increased Loyalty • Goodwill • Positive word-of-mouth • Lower costs for the firm

Consumers Are Less Loyal Why? • Abundance of choice • Availability of information •

Consumers Are Less Loyal Why? • Abundance of choice • Availability of information • Entitlement • Commoditization • Insecurity • Time scarcity