Chapter Six MarCom’s Role in Facilitating Product Adoption

Chapter Six Objectives Appreciate the role of marketing communications in facilitating the introduction of new products Explain the innovation-related characteristics that influence consumers’ adoption of new products Describe the diffusion process and the various groups of adopters

Chapter Six Objectives Understand efforts employed by marketing communicators to manage the diffusion process Appreciate the role of word-of-mouth communications in facilitating new product adoption Use “buzz” to heighten the rate of product adoption

New Products and Marketing Communication Introducing new products is essential for most companies’ success and long- term growth Product failure-rate estimated 35-45% Marketing communications facilitate successful new product introductions and reduce the product failure rate

New-Product Adoption Process Model Free Samples Coupons Distribution Product Satisfaction Awareness Class Trier Class Repeater Class PriceAdvertising

New-Product Adoption Process Model Three stages of adopting a new product Awareness Class Trier Class Repeater Class

Introduction of Sony’s New Camera New Sony camera and the adoption process

New-Product Adoption Process Model Variables: free samples, coupons, advertising, and distribution Successful introduction of new products requires an effective advertising campaign, widespread product distribution, and extensive couponing and sampling Awareness Class Distribution AdvertisingCoupons Free Samples

New-Product Adoption Process Model Variables: coupons, distribution, and price Once the consumers becomes aware of a new product, there is an increased probability that they will actually try the new offering Trier Class PriceDistributionCoupons

New-Product Adoption Process Model Variables: advertising, price, distribution and product satisfaction Consumers repeat the purchase if advertising reminds them about the brand, if the price is reasonable, if the brand is accessible in retail outlets, and if product quality is satisfactory Repeater Class Product Satisfaction DistributionPriceAdvertising

Adoption Process Innovation Related Characteristics Relative Advantage Compatibility Complexity Trialability Observability

Relative Advantage A product innovation is perceived as better than existing alternatives Positively correlated with an innovation’s adoption rate Exist when a new product offers: »Better performance, increased comfort, saving in time and effort, or immediacy of reward

Relative Advantage An illustration of relative advantage

Relative Advantage An illustration of relative advantage

Relative Advantage Another illustration of relative advantage

Relative Advantage Advertising a competitors’ relative disadvantages

Relative Advantage An illustration of relative advantage

Relative Advantage Another illustration of relative advantage

Relative Advantage Relative advantage of the U.S. mail service

Compatibility An innovation is perceived to fit into a person’s way of doing things The greater compatibility, the more rapid a product’s rate of adoption Overcome perception of incompatibility through heavy advertising to persuade consumers

Compatibility Compatibility

Compatibility A compatibility problem

Compatibility An effort to regain compatibility

Complexity An innovation’s degree of perceived difficulty The more difficult, the slower the rate of adoption

Complexity Offsetting perceived product complexity

Trialability An innovation can be used on a limited basis prior to making a full blown commitment The trial experience serves to reduce the risk of a consumer’s being dissatisfied with a product after having permanently committed to it through outright purchase

Adoption Process Trialability

Observability The product user or other people can observe the positive effects of new product usage Higher the visibility, more rapid the adoption rate

Observability High Visibility

Innovators (2.5%) Early Adopters (13.5%) Early Majority (34%) Late Majority (34%) Laggards (16%) Mean Time of Adoption Diffusion Process Concerned with the broader issue of how an innovation is communicated and adopted throughout the marketplace The process of spreading out Adopter categories »Five different type of consumers »Normal distribution

The Diffusion Process Innovators (2.5%) Early Adopters (13.5%) Early Majority (34%) Late Majority (34%) Laggards (16%) Mean Time of Adoption

Diffusion Process Innovators 2-3%, the first to accept a new idea or product Venturesome and willing to take risks Cosmopolites: willing to seek social relationships outside of their local peer group Rely heavily on impersonal information sources

Diffusion Process Early Adopters 13%, the second to adopt an innovation Localites: well integrated within the community and respected by friends Often sought for advice and information about new products from peers Opinion leaders primarily come from the early adopter group

Diffusion Process Early Majority 34%, adopt the product prior to the mean time of adoption Deliberate and cautious Spend more time in the innovation decision process Slightly above average in education and social status

Diffusion Process Late Majority 34%, just following the average adoption time Skepticism Peers are the primary source of new ideas Make little use of mass media Below average in education, income and social status

Diffusion Process Laggards 16%, the final to adopt an innovation Bound in tradition “It it was good enough for my parents, it’s good enough for me.” Closely tied to local community and have limited contact with the mass media

Objectives Managing the Diffusion Process 1. Secure sales quickly - rapid takeoff 2. Achieve rapid acceleration - rapid acceleration 4. Maintain sales as long as possible - long-run franchise 3. Secure maximum sales potential - maximum penetration

Desired and Typical Diffusion Patterns Time of Adoption Potential Adopters “Desired” Pattern Introduction “Typical” Pattern

Managing the Diffusion Process Advertisement of Clomicalm

Managing the Diffusion Process Rapid takeoff can be facilitated by: Aggressive sales force to secure trade support for new products Intensive advertising to create awareness Sufficient sales promotion activity to generate trial-purchase behavior

Managing the Diffusion Process Rapid acceleration accomplished by: Ensuring quality product that will promote positive word-of-mouth Continuing to advertise heavily to reach later adopter groups Sales force provides reseller support Using sales promotion creatively to encourage repeat-purchase behavior

Managing the Diffusion Process Maximum penetration approached by: Continuing the same strategies that stimulated rapid acceleration Revise the product and advertising strategies to appeal to the needs of later adopters

Managing the Diffusion Process Long-run franchise maintained by: Old product continues to meet the market’s needs Distribution suitable to reach the market Advertising continued to remind the market about the product

Stimulating Word of Mouth Influence Impersonal sourcesImpersonal sources: information received from television, magazines, the Internet, and other mass-media sources Personal sourcesPersonal sources: word-of-mouth influence from friends, acquaintances, and from business associates

Opinion Leader A person who frequently influences other individuals’ attitudes or overt behavior An informer, persuader, and confirmer Influence is typically limited to one or several consumption topics Influence moves horizontally through a social class

Opinion Leaders Characteristics More cosmopolitan More gregarious Slightly higher socioeconomics status Generally more innovative Willing to act differently

Opinion Leaders Market Mavens Individuals who have information about many kinds of products, places to shop, and other facets of markets, and initiate discussions with consumers and respond to requests from customers from market information

Stimulating Word of Mouth Influence Positive word-of-mouth communication is critical in the success of a new product of service Unfavorable WOM have devastating effects because consumers seem to place more weight on negative information in making evaluations

Creating “Buzz” Creating and epidemic Igniting explosive self-generated demand