The Concept

Acceptance of new products and services is

a major issue for companies
The framework of exploring consumers
acceptance of new products is known as
diffusion of innovations
Diffusion process is the manner in which
innovations spread throughout a market
The market size can vary depending upon
the product e.g. Launch of a new soft drink
or a new automated snack outlet

The Concept
The Diffusion and Adoption Process are
closely related
Adoption is the micro process for an
individual consumer while deciding to
buy or reject a new product
Consumer innovators are those who are
the first to purchase new products
It is important for marketers to identify
this group

Innovation Product oriented

Definition
Continuous Innovation - Introduction of
modified product rather than totally new
product. Requires minor change in behaviour
or changes in behaviour that are unimportant
to the customer
Dynamically Continuous Innovation - This
requires a moderate change in an important
behaviour or a major change in a behaviour of
low or moderate importance to the individual
e.g. Digital cameras, Digital video recorders ,
diapers etc

Innovation Product oriented

Definition
Discontinuous Innovation This
requires major changes in behaviour
of significant importance to the
individual or group. New behaviour
pattern are adopted.
Examples are airplanes, radios, TV ,
the Internet

Firm oriented
When the product is new to the
company- Micromax smart TV

Market oriented definition

New if purchased by very small % of
customers
New if it has been inexistence for
short period of time

Stages in the adoption

process
Awareness

Interest

Evaluation

Trial

Adoption

Factors Affecting the Spread of

Innovation
1. Type of Group
2.Type of Decision
3. Marketing Effort
4. Fulfilment of felt need
5. Compatibility
6.Relative Advantage
7. Complexity

Factors Affecting the Spread of

Innovation
8.Observability
9.Trialability
10. Perceived Risk the probability that the
innovation will not perform as desired, the
consequences of its not performing as
desired, the ability to reverse, and the cost
of reversing, any negative consequences
11. Culture shelf stable milk, resistance to
innovations also vary from country to
country

Adopter Categories

Innovators first 2.5 % to adopt

Early Adopters next 13.5 %
Early majority next 34 %
Late majority next 34 %
Laggards last 16 %

Marketing Strategies
Market Segmentation:
Focus on individuals within the target
market more likely to be innovators and
early
innovators.
Marketing
Communications should focus on the new
technical features
As innovation gains acceptance the focus of
attention should shift to the other segments
Diffusion Enhancement Strategies- Analyse
from target markets perspective

 Receptive innovations- use

traditional methods
Resistant innovations i) if industry
wide goal -> horizontal co-operation
ii) if purely competitive advantage
for company -> consider vertical
cooperation

 Channels of communication - New

media like podcast, social networking
Social system- Orientation of social
system i.e the segment likely to
influence acceptance or rejections
Time- purchase timings, adoption
categories
Rate of adoption also depends on
penetration policy

Profile of consumer
innovator
Defining the innovativeness of the
innovator
Interest in product category
Personality traits dogmatism, inner
directedness, OSL, variety seeking
Perceived risk social, financial,
physical, psychological, performance,
network externality
Domain specific Vs global innovators

The Indian Context

Value, Convenience and Cultural association
are important
Good Nights mosquito coils drive away
insects
Vatica hair oil with combination of lime and
coconut ingredients
Nokia mobile phone model had FM and torch
useful in rural india
Sachets brought a big change in Indian
market e.g. shampoo