1. Diffusion of Innovation
Module III:
By Srikanth Venkatswamy

2. Module III: Diffusion of Innovation The adoption Process
Classification of Adopters
Diffusion of Consumer Innovations
Diffusion of Industrial Innovations

3. The Adoption Process

4. The Adoption Process
“Adoption is the decision of an individual to become a regular user of a product” Kotler.
The adoption Process:
“the Mental process through which an individual passes from first hearing about a innovation to final adoption”
Diffusion: Refers to the spread of a new idea from the source of invention or creation to its Ultimate users or adopters

5. “An innovation refers to any good, service or idea that is perceived by something as new”
Innovation takes time to spread

6. Stages in the Adoption Process
This CTR relates to the material on pp
Stages in the Adoption Process 6
Awareness
Interest
Evaluation
Trial
Adoption
Stages in the Adoption Process
The new product adoption process parallels the buyer decision process but focuses more on the interaction of consumer needs with product adoption. The new product adoption process may work best to explain how regularly used products requiring re-purchase are considered for inclusion in the consumer's consumptive Behaviour patterns but may also apply to some durables as well.
Awareness. In this stage the consumer is aware of the new product but lacks further information about it.
Interest. The consumer is motivated to seek information about the new product.
Evaluation. The consumer determines whether or not to try the new product.
Trial. The consumer tries the new product on a small scale to test its efficacy in meeting his or her needs. Trial can be imagined use of the product in some cases.
Adoption. The consumer decides to make use of the product on a regular basis. 6

7. Stages in Adoption Process
NAME OF STAGE
WHAT HAPPENS DURING THIS STAGE
EXAMPLE
Awareness
Consumer is first exposed to the product innovation.
Jayaram sees an ad for a new MP3 player in the magazine he is reading.
Interest
Consumer is interested in the product and searches for additional information.
Jayaram goes to an electronics store and has a salesperson show him 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, Jayaram decides that this MP3 player will allow him to easily download the MP3 files that he has on her computer. He also feels that the unit’s size is small to fit backpack. The price is affordable 7

8. Stages in Adoption Process8
Trial
Consumer uses the product on a limited basis
Since an MP3 player cannot be “tried” like a small tube of toothpaste, Jayaram buys the MP3 player from a store, which offers a 30-day full refund policy.
Adoption (Rejection)
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.
Jayarama finds that the MP3 player is easy to use and that the sound quality is excellent. He keeps the MP3 player.
NAME OF STAGE
WHAT HAPPENS DURING THIS STAGE
EXAMPLE

9. Roger Model of Five Stages in the Innovation-Decision Process

10. Knowledge – person becomes aware of an innovation and has some idea of how it functions,
Persuasion – person forms a favorable or unfavorable attitude toward the innovation,
Decision – person engages in activities that lead to a choice to adopt or reject the innovation,
Implementation – person puts an innovation into use,
Confirmation – person evaluates the results of an innovation-decision already made.

11. An Enhanced Adoption Process Model11
Pre-existing problem or Need
Awareness
Interest
Evaluation
Trial
Adoption or Rejection
Post adoption or Postpurc hase Evaluation
Discontinuation
Discontinuation or Rejection
Rejection

12. Adoption of Innovations
This CTR corresponds to Figure 6-10 on p. 210 and relates to the material on pp
Adoption of Innovations 12
Percentage of Adopters
Time of Adoption
Early
Late
Innovators
Adopters
Early Majority
2.5%
13.5%
34%
16%
Laggards
Late Majority
Individual Differences in
Innovativeness
Innovators. Innovators include the first 2.5% of buyers who adopt a new product idea. Innovators help get the product exposure but are not often perceived by the majority of potential buyers as typical consumers. Innovators like risk taking and enjoy buying new products. Innovators may purchase at skimming prices.
Discussion Note: You might discuss the ethical implications of skimming. Is it fair? Also, are there cost considerations associated with new product development that make skimming to recover high start up costs more ethical than it may seem?
Early Adopters. Early Adopters comprise about 13.5% of the buyers who adopt new products. This group serves as opinion leaders to the rest of the market and their product usage outcomes serve as motivation to later buyers to get the product.
Early Majority. Early Majority are some 34% of buyers adopting the product. They are deliberate consumers who adopt new ideas before the average person but seldom lead the market.
Late Majority. Late Majority comprise another 34% of buyers adopting the product. This group is skeptical of new products and only buys after the majority of the market has tried it.
Laggards. Laggards are the final 16% of adopters and are tradition-bound. They are suspicious of change and only adopt innovation that have already become something of a tradition.
Ugra Raj Enterprises Privated Limited 12

13. Category Description %
Innovators
Venturesome –eager to try new ideas, Daring risk, social
2.5
Early adopters
Respect – role models, opinion leaders, moderate risk
13.5
Early majority
Deliberate – more thoughtful in approach, rarely leaders
34.0
Late Majority
Skeptical – adopt after average time due economic necessity or peer pressure, cautious
Laggards
Traditional – past oriented and suspicious of the new,
16.0 13

14. Profile of Innovator Characteristics Innovator Product Interest More
Opinion leadership
Personality
Dogmatism
Open minded
Need for uniqueness
Higher
Social character
Inner directed
Optimum stimulation level
Variety seeking 14

15. Less More Younger Higher higher
Perceived risk
Less
Venturesomeness
More
Media habits
Special interest magazine
Television
Demographics
Age
Younger
Income
Higher
Education
Occupational status
higher
Consumption Traits
Social Characteristics 15

16. Innovators: Description16
2.5% of population
Venturesome
Very eager to try new ideas
Acceptable if risk is daring
More cosmopolite social relationships
Communicates with other innovators

17. 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 17

18. Early Majority: Description18
34% of population
Deliberate
Adopt new ideas just prior to the average time
Seldom hold leadership positions
Deliberate for some time before adopting

19. Late Majority: Description19
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

20. Laggards: Description20
16% of population
Traditional
The last people to adopt an innovation
Most “localite” in outlook
Oriented to the past
Suspicious of the new

21. 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. 21

22. Diffusion Of Consumer Innovation: Roger-5 factor Model
Influences
Relative
Advantage
Communi-
cability
Divisibility
Compatibility
Complexity

23. Rogers 5 Factor model : Consumer innovation
Relative Advantage. This refers to the degree to which the innovation appears superior to existing products
Compatibility. This refers to the degree to which the innovation fits the values and experiences of the potential consumers.

24. Complexity. This refers to the degree to which the innovation is difficult to understand or use.
Divisibility. This refers to the degree to which the innovation can be tried on a limited basis.
Communicability. This refers to the degree to which the results of using the innovation can be observed or described to others

25. Trialability is the degree to which an innovation may be experimented with on a limited basis.
New ideas that can be tried on the installment plan will generally be adopted more quickly than innovations that are not divisible.
An innovation that is trialable represents less uncertainty to the individual who is considering it for adoption, who can learn by doing.

26. Diffusion of Industrial Innovations
Industrial innovation is of two types:
Products
Processes
These are quite sensitive to factors of price, quality, technology
The rate of diffusion varies widely depending on the industry.

27. Mansfield Four Factors
The speed with which a new industrial product ,or process is adopted according to E .mansfield:
Economic Advantage: New products or processes, that are perceived to be more profitable will be adopted more rapidly than those with lower expected return.
Commitment: The commitment towards the customer requirements and beyond will make the degree of adoption more feasible.

28. Mansfield Four Factors
Uncertainty:
The roles of risk, uncertainty and learning in the adoption of new technologies are reviewed. Although they have been emphasized in many commentaries about the adoption process, they have been directly addressed in only a minority of the large process relating to the adoption of innovations.
Risk, uncertainty and learning play a number of distinct roles in the process of adopting new technologies.

29. Mansfield Four Factors
Risk reduction:
The results show that the extent to which a organization-side has pursued a strategy aimed at positioning the innovation in the marketplace or has focused on reducing the risk of adoption has a positive and significant effect on the probability of innovation adoption.
The evidence collaborates that not only adopter-side variables significantly influence innovation, but supply-side variables as well.