DIFFUSION

DIFFUSION OF
OF
INNOVATION
INNOVATION
 Diffusion . . .
... . . refers to the idea that substances and ideas can
gradually spread through a medium of some type
and reach a state of equilibrium.

. . . in the consumer behavior setting, refers to the

process by which innovative ideas, products, and
services spread through the consumer population.
 INNOVATION
An innovation is an idea, practice, or product
perceived to be new by the relevant individual
or group.

The manner by which a new product spreads

through a market is basically a group
phenomenon.

New products can be placed on a continuum

from no change to radical change, depending on
the market’s perception.
 Categories of Innovation
• Continuous Innovation - Adoption of this type of innovation
requires relatively minor changes in behavior(s) that are
unimportant to the consumer.

• Dynamically continuous Innovation - Adoption of this type

of innovation requires a moderate change in an important
behavior or a major change in a behavior of low or moderate
importance to the individual.

• Discontinuous Innovation - Adoption of this type of

innovation requires major changes in behavior of significant
importance to the individual or group.
 Diffusion of Innovation
• It is the process by which
acceptance of an innovation (new
products or new service or new idea)
is spread by communication (mass
media, sales people, informal
conversation) to members of the
target market over a period of time.
Elements Of Diffusion Process

• Innovation
• Channels of communication
• Social system
• Time
 Innovation

Allen & Hamilton identified six categories of new

product in terms of their newness to the company and
to the market place. They are:

• New to the World

• New product lines
• Additions to the existing product lines
• Improvements or revision to existing products
• Repositioning
• Cost Reductions
Channels of Communication

Two types of communication:

• Communication between marketers & consumers

• Communication among consumers

Consumer information source
categories
• Commercial sources – Sales people, advertising, sales
promotion techniques.

• Personal sources – Family, friends, neighbours,

acquaintances.

• Experimental sources – Demonstrations, handling

samples.

• Public sources – Mass media, Consumer rating

organizations
 Social system

• A social system is a physical, social or

cultural environment to which people
belong and within which they
function.
• Modern Social system
• Traditional Social system
 Time
• Time is the important factor for
estimating the rate of diffusion.

• Early
• Late
• Average
Consumer’s Adoption Process
Consumer’s Adoption Process
– Awareness - the individual is exposed to the innovation
but lacks complete information about it

– Interest - the individual becomes interested in the new

idea and seeks additional information about it

– Evaluation - individual mentally applies the innovation to

his present and anticipated future situation, and then
decides whether or not to try it

– Trial - the individual makes full use of the innovation

– Adoption - the individual decides to continue the full use

of the innovation
 Adopter Categories

• Innovators
• Early Adopters
• Early Majority
• Late Majority
• Laggards
 Innovators - Venturesome
• Interest in new ideas leads them out of
local circle of peer networks
• Clique of innovators regardless of
geographical distance
• Control of substantial financial resources
• Ability to understand and apply technical
knowledge
• Must cope with high degrees of
uncertainty
 Early Adopters - Respect

• More integrated part of local social system

• Greatest degree of opinion leadership
• The person to check with
• Sought by change agents
• Respected by their peers
• Makes judicious innovation-decisions
 Early Majority - Deliberate
• Interact frequently with peers
• Seldom hold leadership opinion positions
• Will deliberate for some time
• Innovation-decision period is longer
• Most numerous - one-third of the
members of the system
 Late Majority - Skeptical
• Adopt just after the average member
of a system
• Adoption because of economic necessity
• Also increasing pressures from peers
• Skeptical and cautious in their approach
• Peer pressure necessary
• Most of the uncertainty must be
removed
 Laggards - Traditional

• Last in a system to adopt

• Point of reference is the past
• Many are near isolates in the social
network of their system
• Interact primarily with others who have
traditional values
• Suspicious of innovations and change
agents
 Factors affecting
diffusion
• Innovation characteristics

• Individual characteristics

• Social network characteristics

• Others…
Innovation characteristics
• Observability
– The degree to which the results of an innovation are visible
to potential adopters
• Relative Advantage
– The degree to which the innovation is perceived to be superior
to current practice
• Compatibility
– The degree to which the innovation is perceived to be
consistent with socio-cultural values, previous ideas, and/or
perceived needs
• Trialability
– The degree to which the innovation can be experienced on a
limited basis
• Complexity
– The degree to which an innovation is difficult to use or
understand.
 Individual characteristics
• Innovativeness
– Originally defined by Rogers: the degree to
which an individual is relatively earlier in adopting
an innovation than other members of his social
system

– Modified & extended by Hirschman (1980):

• Inherent / actualized novelty seeking
• Creative consumer
• Adoptive / vicarious innovativeness
 Social Network
characteristics
• Reliance on others as source of
information

• Adopter threshold

• Need-for-change / Need-for-
cognition
 Network characteristics

• Opinion leadership: number of

nominations as source of information

• Number of contacts within each

adopter category

• Complex structure
 Other possible factors:

– Social environment of diffusion of

innovation

– Marketing strategies employed

– Institutional structures (e.g.,

government)