The Diffusion of Innovation Model – BMS Notes

Socioeconomic, cultural, technical, legal, and human factors including psychological traits and demography all have an influence on the diffusion of innovation and its subsequent acceptance. These forces are often “uncontrollable” by marketers.

Additionally, there are the more pertinent factors associated with the innovative product and/or service that make up the “controllable” and are under the marketer’s control. These factors can take the form of interpersonal or marketing communication, for example, and can be employed by the marketer in a way that expedites and simplifies the acceptance of the innovative offering. In addition to these, an invention may have other qualities that influence the spread and acceptance process. Scholars have discerned several elements that may function as catalysts and others that may impede the process of spread and adoption.

Process of Product Adoption

Introduction

Studies reveal that customers vary in the speed at which they choose to adopt (purchase) a product after they learn about it. The Diffusion of Innovation hypothesis by Everett M. Rogers examines the types of people who embrace goods at different phases of their life cycles. Five different sorts of buyers will come into contact with a product over its life cycle, according to Rogers’ Diffusion of Innovations hypothesis.

The categories of Roger’s Diffusion of Innovations Theory are explained in the figure below.

Stage of Innovation

According to Roger’s Diffusion of Innovations hypothesis, innovators account for 2.5 percent of all product purchases and are the first to buy a product. At the start of the product’s life cycle, innovators buy it. They are willing to spend more for items that match their lifestyle and are not hesitant to try new things. Since innovators only purchase products because they are new, sales to innovators often do not portend future sales.

Stage of Early Adopters

Early Adopters comprise 13.5 percent of all purchases, and they are the second largest category of buyers. Unlike innovators, this set of buyers adopts early, but only after giving it some consideration. Since early adopters often hold influential positions among their friends, family, and coworkers, their acceptance is essential to the product’s success. Early adopters contribute to a product’s transition into “socially acceptable” use.

Initial Majority Phase

34% of purchases are made by the cautious Early Majority category of buyers. This group, according to the Diffusion of Innovations hypothesis, won’t purchase a product until it has gained “social acceptance.” To obtain widespread approval, the product must be purchased by the majority of consumers early on.

Final Majority Stage

An additional 34% of sales are made up of the Late Majority, who often buy products in the latter half of their life cycles. Compared to the early majority, they are more circumspect and won’t buy the product until the majority of others have.

Stage of Laggard

Laggards are the last group of consumers to buy a product, according to the Diffusion of Innovations idea. Laggards, who account for 16% of overall sales, buy products that are nearing the end of their useful lives. While some product laggards never buy anything, others do so when their current product breaks and cannot be fixed or replaced with a similar one. Laggards could wait for the product to become less expensive, and by the time they do, a new version of the product is often available.

Conclusion on the Diffusion of Innovations

There will be opinion leaders in each of the five categories mentioned above that the group prefers to follow. Those who are adept at picking the newest technological advancement or fashion fad are known as opinion leaders. For businesses, convincing opinion leaders to use their product is a hurdle. Finding opinion leaders may be difficult as a person’s behaviour in adopting a product is determined by the sort of product they use. For instance, a person could lead the way in IT goods yet trail behind in kitchenware.

Causes of the Innovation Diffusion and Adoption Process

Relative advantage, compatibility, complexity, trialability, and observability are the five criteria that may influence the diffusion process and the pace of adoption. Certain product and service qualities can also influence customer acceptance of new goods and services.

Comparative benefit

The novel product or service offering’s relative advantage over already offered goods or services quickens the target market’s adoption rate. The relative advantage is the extent to which consumers believe a new product or service to be better than comparable, already-available options. A item or service that has an edge over competing offerings is likely better than competing ones and so has more “worth.” The rate of dissemination would increase with the degree of radicality and relative benefit. The product may have been altered to have better features, qualities, advantages, form, etc.; it may also be more affordable (better offers, discounts, conditions of payment, warranty, and exchange); it may be easier to get (available in physical stores or online); or it may have better communication. Therefore, even while advantages based on products are more alluring, relative advantage may also be derived from other elements of the marketing mix, such as price, position, and promotion. Flash drives against compact discs, laptops versus PCs, digital libraries versus conventional libraries, and ATMs over bank teller counters are a few examples of advancements that provide a relative benefit.

Compatibility

The acceptance of an innovative product or service by the general public is also influenced by how well it fits in with their current backgrounds, behaviours, and lifestyle choices. The degree to which a product or service aligns with requirements, norms and value systems, lifestyles, cultures, etc. is measured by its compatibility. Diffusion happens more quickly at higher compatibility levels and more slowly at lower compatibility levels. If a product doesn’t force users to alter their daily habits, beliefs, conventions, lifestyles, or cultures, it will spread more swiftly.

Innovations that are dynamically and continuously continuous score more on compatibility than those that are discontinuous. Fast food, such as pizza, burgers, noodles, and the like, took a long time to spread across Indian culture since it was so different from the idea of a dal roti meal. The 1990s saw a quickening in the adoption rate, which increased in the 2000s due to the inclination of the younger population towards packaged meals and fast food. Another example that can be given is that using coconut oil as a cooking medium would not be suitable for those living in North India. If introduced in North India, it may not succeed even if it were marketed as a “healthy and natural cooking medium.” South India would be more open to the same because of its greater cultural compatibility.

Complexity

The diffusion process is also impacted by the degree of complexity involved in the purchase and use of a product. When a new item is simple to comprehend, buy, and utilise, it will spread quickly. A product is more likely to be swiftly accepted if it is simple to use and comprehend, and vice versa.

When it comes to complexity, dissemination is hampered by technical complexity. Fear about the intricacy of the acquisition and use of new items causes people to reject their adoption. High tech businesses are aware of this. Let’s use the electronic products sector as an example, such as vacuum cleaners or microwaves. In order to promote speedier adoption, the marketer designs their communication with simplicity of use in mind. Prospects are given the opportunity to try and demo products, and when they make a purchase, plans are made for in-home installation. An additional illustration is the

mobile phone sector; acknowledging the complexity issue, more basic models are released for those who want a mobile device just for sending and receiving SMS messages and calls.

It is important to highlight that younger people are more technologically adept than previous generations, and they have embraced electronic devices like MP3s and 4s, computers, I-pods, ATMs, etc. considerably quicker. This is a result of the younger generation’s greater comfort level in handling complexity compared to the elder generation.

Trialability

The rate of acceptance is also influenced by how simple it is to test and try a product or service. The rate of dissemination would increase with increasing trialability.

This is so that the potential customers get a chance to test the product or service, evaluate it, and then choose whether or not to accept it. Trialability may be promoted by free samples, smaller packaging and sizes (compared to normal) for FMCG and home items, or even through trials and demonstrations (for consumer durables). Customers might test out the novel item, assess it, and then choose whether or not to commit to a purchase by accepting or rejecting it. Guarantees and warranties programmes may be used to promote trial purchases. Such trials facilitate the easy dissemination of a good or service.

Observability

• The term “observability” describes how simple it is to observe a product.
• The degree to which a prospective customer can watch, conceive, and experience the advantages of a product or service is known as observability in innovative products. The likelihood that the prospects will accept the innovative proposal increases with the degree of observability.
• The recently introduced products that are
• Tangible
• Be seen on social media
• whose advantages are easier to disperse than those that are intangible, lack social visibility, or take a long time to accrue.

The pace of spread is thus affected by relative benefit, compatibility, complexity, trialability, and observability. Despite the fact that they are all related to the product, these variables rely on how customers see them. The public is more likely to buy a product or service offering fast when it is comparatively better than what is now available, more consistent with current consuming behaviour and use, less difficult, easier to use, and noticeable.

Obstacles in the Way of Innovation Diffusion and Adoption

Additionally, there are certain elements that have a detrimental impact on the innovation’s dissemination and, in turn, the adoption process. Consumer researchers have addressed these obstacles in great detail, and models on innovation resistance have even included them. These might be anything from small-scale features of a product to larger-scale sociocultural, economic, situational, and technical variables.

Product features that increase diffusion and adoption rates, such as relative advantage, compatibility, trialability, and observability, can slow down the process because of consumers’ perceptions of their innovative goods’ perceived complexity. Technological, situational, sociocultural, and economic variables may potentially oppose innovations. The cutting-edge product may not fit in with societal mores, lifestyle standards, or economic classes. It could also be very complicated technologically, which might cause danger, obsolescence, and fear of use. The following are the main obstacles to diffusion: utilisation, value, danger, and psychological considerations.

Usage

When the target market (the social system) finds an innovation “incompatible” with their current consumption and usage patterns, it becomes difficult for them to accept and implement; in other words, they find it to be inconsistent with their current behaviours. This is known as “usage” as a barrier to innovation diffusion and adoption. The psychological barrier is more pervasive and stems from deeply ingrained attitudes, values, beliefs, and perceptions that lead to non-usage and non-acceptance behaviour. About instance, consumers often hesitate to trade money online out of concern for fraud and privacy invasion.

To get through this kind of barrier, a marketer may need to leverage celebrities, reputable spokespersons, and subject matter experts to inspire individuals to accept the innovation and alter their current ingrained behaviours. Rational and informative communication alone may not be enough.

Value

Customers may also be reluctant to embrace innovations because they don’t think the new offering is worth it; they may think it’s “nothing new” or “better in value.” For instance, when comparing mobile plans, people often compare the post-paid and pre-paid options for both rental and call costs, concluding that the former is more affordable even though the rental is higher.

Two possible reasons for the perceived lack of value are: I the product or service is expensive and doesn’t seem worth the cost; or (ii) it doesn’t provide significant advantage over the available alternatives.

The perception of a “high price” by consumers always triumphs over the perception of a product’s value or benefit; in fact, values are always evaluated in terms of price; additionally, price is a more “catchy” topic than the benefits attached; price seems more tangible than benefits; and consumers typically have a tendency to learn about price more quickly than benefits.

Risk

Another factor impeding the spread of innovation is risk. Customers that are afraid of taking chances are reluctant to adopt novel products or services. A consumer may encounter six different types of risks: functional risk (will the product work as intended); physical risk (will the product’s usage or consumption pose a threat); social risk (will the product put the user at risk of social embarrassment); financial risk (will the product be worth the money); psychological risk (will the innovation hurt users’ egos); and chronological risk (would it lead to wastage of time spent while making the purchase).

One of the main obstacles to the diffusion and adoption process is the perceived risk barrier. People continue to choose the current options rather than embracing new ones because they are afraid to buy, use, and consume innovative offers (for fear of making a wrong decision).

To get around this issue, marketers could use both interpersonal and marketing communication (through print, audio-visual, or company salespeople) (opinion leadership, word-of-mouth communication). Free or heavily discounted trials and face-to-face interactions with friends, coworkers, and peers may both support the customer’s personal experience and assist mitigate this risk.

psychological elements

Adoption of a new product or service offering by a consumer is also hindered by psychological factors. These elements have to do with an individual’s upbringing, worldview, values, way of life, and so forth. They might perceive the innovation as a psychological danger. The first is the barrier of tradition, and the second is the barrier of image.

The term “tradition barrier” refers to socially and culturally accepted behavioural norms that the target market believes to be “right and appropriate.” The use and acceptance of novel goods and services are considered psychologically dangerous, as is anything that is novel and contradicts established norms. For instance, it is frowned upon for women to dress in western attire in the

Middle East, and they would never try to wear pants or skirts as a result. Another example, Kelloggs Cornflakes, had trouble breaking through in India because of its positioning as a quick breakfast cereal to be consumed with cold milk rather than the country’s custom of consuming cornflakes or cereal with hot milk.

The term “image barrier” describes how a customer feels and acts toward a brand, a dealer, a product or service, or even their own country of origin. It has to do with personality and self-image as well (actual and ideal). If consumers are patriotic and ethnocentric, or if they don’t think the innovation or the marketer/dealer belong to their “class” in terms of socioeconomic status or even quality, they may be resistant to adopting new goods and services. Because of this, marketers attempt to create variations of their offerings and give distinct names to each variant based on the segment or segments they are targeting