1. DIFFUSION OF INNOVATION
CONSUMER BEHAVIOR

2. Drivers of Innovation Technology advances Changing customer needs
Increased world-wide competition
Shortening of product life cycles
(Cooper 2001)

5. Innovation - definitions
An innovation is …
… an idea, practice or object that is perceived as new by an individual or other unit of adoption (Rogers 2003)
… new if it has been on the market for five years or less, and includes extensions and significant improvements (Cooper 2001)
… interchangeably used with the term “new product”

6. The product is the first of its kind on the market
What is a new product?
Newness can be defined in two senses:
New to the company
Firm has never made or sold this type of product before, but other firms might have
New to the market
The product is the first of its kind on the market
(Cooper 2001)

7. All new products are new, but some are newer than others
High
20 %
10 %
New product lines
Innovativeness
New to the world products
New to the Company
26 %
26 %
Additions to existing product line
Revisions / improvements to existing products
11 %
7 %
Repositionings
Low
Cost reductions
Low
High
New to the Market

8. Radical vs Incremental innovations
Markets
Customer need fulfillment per dollar
Low
High
Newness of technology
Technology
Incremental innovation
Market breakthrough
Technological breakthrough
Radical innovation
(Chandy and Tellis 1998)

9. ‘New-to-the-World Product’
Sony AIBO
Launched in 1999
Success or Failure?
Launch price $2500: prevented these robots from going mainstream and conquering the world!
Production stopped in 2006!

10. ‘New-to-the-World Product’
Honda Asimo
Advanced Step in Innovative MObility
Success or Failure?
In October 2010: 10th anniversary!

11. ‘New Product Line’ Founded in April 2004 by Stelios Haji-Ioannou
Sold to Hellenic Seaways in August 2009

12. ‘Line Extension’
Lipton Green

13. 50% Most firms feature a mixed portfolio of new products:
Line extensions and product improvements are common to almost all firms
However, many firms stay clear of the most innovative categories:
what % of firms do not develop new-to-the-world products?
and, another 25% develop no new product lines.
Higher technology industries launching more innovative products
50%

14. Golden New Product Failure Rules
These condensed decision rules may seem intuitively right, but they are not:
The faster, the better!
Position a new product as a successor of …!
Change your positioning frequently!
A low price is key!
A good new product sells itself!
Aim for the mass-market to achieve success!

15. Risk Minimization!
High failure rates and high costs make NPD risky, but
NPD can be managed so that:
the risks are minimized, and
the profit maximized!

16. How many ideas needed for one successful launch?(

17. Investment risk over time(

18. Market Testing: When and How?

19. Adopter categories based on innovativeness
Innovativeness is the degree to which and individual is relatively earlier in adopting new ideas than other members of a social system (Rogers, 1995)
(Rogers, 1995)

20. Crossing the chasm model
Moore:
the firm should consider developing a value proposition that will work for pragmatists, and
develop a launch strategy designed to reach pragmatists.
Visionaries
Look for:
The newest thing
Performance features
It’s coolness
Pragmatists
Look for product that:
Works pretty well
Ease of use
Is not so expensive
(Geoffrey Moore 1991)

21. Tailoring marketing plan to intended adopters
Innovators, early adopters
Technical content
Leading-edge nature of innovation
Channels that enable high content and selective reach
Early majority
Communicate:
Product’s completeness
Ease of use
Consistency with life
No detailed technical info
Channels with high reach and high credibility
Late majority, laggards
Communicate:
Reliability
Simplicity
Cost-effectiveness
Channels similar as early majority
(Schilling 2011)

22. Trying to convince the mass of a new idea is useless
Convince innovators and early adopters first!
But, who will be the innovators and early adopters?

23. Innovators and Early Adopters
First iPhone 5s buyer of the world: Jimmy Gunawan

24. Can we identify these innovators and early adopters in advance so as to focus our early marketing on them?

25. Profile Early Adopters of iPhone
Van Everdingen - Marketing of Innovations 2011

26. Van Everdingen - Marketing of Innovations 2011
Adopter categories
Adopter category
Characteristics
Venturesome, financial resources, ability to understand complex knowledge, ability to cope with high uncertainty
Innovators
Opinion leaders, other adopters ask them for advice, decrease uncertainty, serve as role model
Early adopters
Adopt just before the average member, deliberate, important link in diffusion process, many informal social contacts
Early majority
Late majority
Skeptical towards innovation, scarce resources, lower SES
Laggards
Traditional, limited resources, need certainty, tend to be suspicious
Neighbors and friends are main info sources
(Rogers, 1995)
Van Everdingen - Marketing of Innovations 2011