Diffusion of Innovation

AS and A Level ICT

LONDON COLLEGE OF COMPUTING AND MANAGEMENT

Session 2004-2005

Consumer behaviour

Assignment: Diffusion of Innovation

Innovation → “an idea perceived as new by the individual”

Diffusion → “the process by which an innovation spreads.”

By Everett M. Rogers

Examiner: T Graham

Prepared by: Mohammed Mohsin

Contents

Introduction 2

Definition 2

The Consumer-adoption process 2

Mechanism of Diffusion 3

Elements of Diffusion 3

Innovation 3

Communication 5

Social System 5

Time 6

Adopters 6

Conclusion 8

Bibliography 8

Introduction

Have you ever as a child thought becoming a hero over night to save the world from bad people? Why do children think of becoming a hero at that age, rather than becoming a tycoon like Bill Gates? Where as when you grow up you daydream about how you could have been rich if you would have thought about speed courier like DHL or may be some other innovation which no one had given a thought about or even if they did, it was not known to social system. As child every one has this perception that only heroes are successful and worthy of respect with regards to rich people, because we were influenced by our friends that the stronger is cool…This was how we used to be influenced or in other words those comic books were the best way of diffusing the innovation of those authors. But now we know that money matters a lot. The idea about innovation of a new product or service always brings in a huge pile of money if it is successfully communicated through a social system. All our perceptions change over time due to the kind of influence it has upon us. Since we want to make more money we think of new ideas or concepts, which are known as Innovation.

Let’s study a bit in detail to understand the concept of innovation and how it is diffused.

Definition

Diffusion of Innovation is “The process by which an innovation is communicated through certain channels over time among the members of a social system” [1]

By innovation, it is understood that any idea or concept which has been introduced to the segment or the market is new. The next step we seek to do is to make sure that this innovation is spread through to the right segment targeted.

Diffusion, the word it self talks about how any information or news or any thing is spread or passed on. But did we ever think of how the world would have been if no one would have introduced wheel??? Well this is the best example of invention and since we all know about it, may it be through our parents teachers or any other source, it is called diffusion.

Innovation-adoption

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Awareness

↓

Interest

↓

Evaluation

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Trial

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Adoption

The Consumer-adoption process

How do potential customers learn about new products, try them and adopt or reject them? Years ago, new-product marketers used a mass-market approach to launch products. This approach had two main drawbacks: it called for heavy marketing expenditures, and it involved many wasted exposures. These drawbacks led to a second approach, heavy-user target marketing. This approach makes sense, provided that heavy users are identifiable and are early adopters. However, even within the heavy-user group, many heavy users are loyal to existing brands. New-product marketers now aim at consumers who are early adopters.

The theory of innovation diffusion and consumer adoption helps marketers identify early adopters.

There is a Mechanism in any behavior or act. This mechanism could be applied both for communication and channels through any information is passed upon.

Mechanism of Diffusion

Even though no decision is collective or authoritative, every single member of any social group has to look into their own decisions of innovations which follow five kinds of process. [2]:

Knowledge/Awareness – a man or a woman has an idea of how innovation functions because he/she is aware of it.
Persuasion/Interest – like or ...

This is a preview of the whole essay

The theory of innovation diffusion and consumer adoption helps marketers identify early adopters.

There is a Mechanism in any behavior or act. This mechanism could be applied both for communication and channels through any information is passed upon.

Mechanism of Diffusion

Even though no decision is collective or authoritative, every single member of any social group has to look into their own decisions of innovations which follow five kinds of process. [2]:

Knowledge/Awareness – a man or a woman has an idea of how innovation functions because he/she is aware of it.
Persuasion/Interest – like or dislike kind of attitude towards innovation is formed by a person.
Decision/Evaluation – adopt or reject innovation is the kind of decision made by a person because he/she involves in such activities that lead to this kind of decision.
Implementation/Trail – innovation is implemented or considered to be used by a person.
Confirmation/Adoption – because the results have been evaluated, people’s decision is made to use innovation.

Most of the time it happens that, decision to use innovation depends heavily on the other systems of the social system or other segments of the group. In fact, empirically we see the successful spread of an innovation follows an S-shaped curve [2].

ELEMENTS OF DIFFUSION

Innovation of diffusion has 4 main elements.

The innovation → any item, thought, or process that is viewed to be new by the consumer
The communication → the process of the new idea traveling from one person to another or from one channel to the individual
The social system → the group of individuals that together complete a specific goal (adoption)
Time → how long it takes for the group to adopt an innovation as well as the rate of adoption for individual [3]

Innovation

When we are studying the diffusion of innovations it is important to understand that we are not merely talking about the contiguousness of an innovation through a society but rather the spread of different forms of innovations through a society. As stated earlier, an innovation is an item, thought, an idea or process that is new to a certain area but not necessarily to entire globe. There are 3 main forms/types of innovations that are diffused in different manner.

Continuous Innovation

This type of innovation is a simple changing, altering or improving of an already existing product/service where the adopter still uses the product in the same way as they had been using before. An example of a continuous innovation is now seen in the telecom/mobile telephone industry as it continues to change and develop.

Dynamically Continuous Innovation

This type of innovation can either be a creation of a new product/service or a radical change to an existing product/service. Here the consumption patterns of people are altered some. An example of this type of innovation would be internet.

Discontinuous Innovation

This is a totally new product in the market. This is the big idea innovation. In this situation, because the product has never been seen before, there are total changes to consumers buying and using patterns. One example to this kind of innovation could be i-pods.

Now, that we have reviewed the three types of innovations, natural progression moves us straight to the next topic of the 5 different characteristics of innovations. Each characteristic affect the rate of adoption of an innovation differently. Like a lot of things in life, the innovation does not have to be favorable or easier to use than the product/service it is competing with, but only be perceived to be better to use by the consumer. This idea of perception is stronger than information is seen throughout the media.

Relative Advantage

This characteristic expresses to what extent the new product is better than the one it is replacing. Of course the first thought would be greater profit potential. Although profit does fit into the equation all the time, relative advantage can be judged on other factors like user friendly and storage facilities.

Compatibility

No matter how superior or efficient an innovation is, it will not be successful if it does not take into consideration culture, local values and customs of the adopters. Compatibility is the level at which an innovation fits into the specific society. The smoother the innovation fits into the culture, the faster the rate of adoption. The diffusion of certain types of birth control capsules in certain areas is unattainable due to religious beliefs and cultural values.

Complexity

This type of innovation is the extent of how difficult it is for an adopter to understand and use an innovation. It is very logical to think that the harder an innovation is to use, or at least perceived to use, the less likely that an adopter would be to consume it. A contemporary example would be the Internet. Although the Internet is easy to use, for someone who has never been on a computer it is extremely scary.

Divisibility

This refers to the ability of the consumer to give the innovation a test run before deciding whether to adopt it or not. When we are able to try out a product before purchase, it helps to increase the rate of adoption significantly.

Communicability

This means that if an innovation does not help to solve the problem of any consumer directly or indirectly, there are few chances that it will diffuse through society as quickly as compared to an innovation that is more of help and more of a solution to their problems.

It is important to note that these five characteristics are not the only ones that affect the rate of adoption. Also the adoption of an innovation is not always a positive occurrence. Over-adoption, where adopters act irrationally without all the information or without full understanding of an innovation can actually be harmful to the diffusion process.

Communication

With the addition of steps to the communication process, the idea of personal influence comes into play. Personal influence refers to any communication between two individuals where one individual creates a change in consumer behaviour in the other. A more practical way of stating personal influence is peer pressure. Looking at the three different types of selectivity shows why personal influence can be a stronger factor in the diffusion process than mass media.

Selective exposure – the idea that an individual will be more vulnerable to channels of communication, that already agree with their current attitudes and feelings (an American will listen to American media and not Arab so they will never hear the other side).
Selective perception – the idea that an individual will view new ideas in relation to their old ones.
Selective retention – the idea that an individual will mainly remember a new idea if directly relates to their own situation or medication on specific problem. (an advert showing how you could stop u hair fall)

Social Systems

Social systems are referring to the group or segments of people that an innovation diffuses through. Earlier it was mentioned that who the people are can determine how they will adopt innovations. Social systems can be split into two categories of norms: traditional and modern. [4]

According to Rogers traditional norms are characterized by:

A less developed or complex technology
Low levels of literacy and education
Little communication between the social system and outsiders
Lack of economic rationality
One-dimensional in adapting and viewing others

According to Rogers modern norms are characterized by:

A developed technology with complex jobs
Strong importance placed on education
Acceptance of free thought and new ideas
Strong preparation and high importance on economic considerations
Ability to see and understand other peoples situations.

Not only do modern systems accept and adapt to innovation faster and easier than traditional system but the individual is more likely to be innovative in thinking and doing in a modern society.

Time

In medical school when students are learning about the human body they first have to understand it at a cellular level. Like biology, to truly understand the diffusion of innovations, one has to understand the adoption process of the individual consumer. As stated earlier, the difference between the diffusion process and the adoption process is the “who”. The diffusion process deals with people or groups while the adoption process focuses on the individual person. To realize how an innovation diffuses through a society you must first understand how one person adopts an innovation. The adoption process is the steps a consumer take as they accept a new product, idea, or service. The process can be broken down into five stages. Keep in mind that these stages occur in all fields where adoption of innovation occurs. The first stage of the adoption process is awareness. At this stage the innovation is introduced to the person but there is no true knowledge of the product. Because of this lack of information the person does not feel the need to run out and find out more information, much less consider consuming it. The awareness stage merely sets the groundwork for the following stages. It is argued that a person often stumbles upon the innovation on accident during the awareness stage it will provide little incentive to get more information. Others feel that for a person to become aware, the innovation must fill a particular need in their life for them to notice. The second stage is interest. Here the person decides to invest time and energy into finding out more about the innovation. At this point the person feels good about the innovation but does not really know how or if it can be useful in their life. The interest stage is purely to gather knowledge, not to decide whether to adopt. The third stage is evaluation. Here the person firsts begins to make a decision about the innovation. How could I use it? Do I really need it? Would it be to my advantage if I had it? These are all question the consumers ask themselves during the evaluation stage. Then if the innovation appears to be positive for their life they will try it out. If the innovation has a negative connotation to the individual they may seek the advice and knowledge of their peers. This leads into the next stage called the trial stage. Here the individual physically gives the innovation a chance by trying it out for a limited basis. What they are looking to find out during this trial stage is how the innovation can fit into their needs and desires. Research proves that most people will not adopt an innovation without personally testing it first to see if it really “works”. The final stage is the adoption stage. Here the individual uses information that they have gathered in the interest and evaluation stages and with the outcome of the trial stage decides to adopt the innovation. At this point in the adoption process the individual not only adopts the innovation but embraces it for the future. There is, however, another possible stage to adoption process. After the individual adopts the innovation they may decide to reject it for whatever reason. This decision to reject the innovation after agreeing to adopt it is called discontinuance.

Adopters

Now it is time to turn our attention to the adopters’ side of the diffusion process. Although this is not one of the four main elements of the diffusion of innovation it does have importance to the process. Like the innovations side, there are certain characteristics that break adopters down into categories, which help us understand who they are and how they consume. It is very clear that people adopt innovations at different times and for different reasons. An example of this for everyone who ever attended high school is fads. Although fads are not necessarily innovations it is a good example to begin to see the idea of adopters. When a fad starts to become popular, not everyone is immediately involved. Only a few people adopt the fad in the beginning. As time goes by, more and more people adopt the fad until the majority is included. The point to be made with this example is not only do people adopt a fad at different a time, each group affects the following group. Also it is important to note that not everyone is involved. Complete adoption is not required for the diffusion process to work. There are five main categories of adopters.

∙Innovators – These are the risk takers. They are the ones who put themselves up in front. Generally they are well educated and have a high income to absorb a mistake. They are the smallest in size of only two and half percent. They enjoy the rush of taking a risk but they also are willing to accept the consequences of failure.

∙Early Adopters – This group are the next thirteen and a half percent. They are highly educated and wealthy like the innovators but are more visible and respected among their peers. Early adopters play a key role in the adoption process determining the time an innovation will be adopted by others and to what extent. Because of this reason they are the best target market for new innovations.

∙Early Majority – They constitute thirty-four percent of adopters. They do not take the risk of being the first to adopt, like the innovators and early adopters, but do accept an innovation before the average person. They generally take a long time to fully adopt an innovation. They are above average in education and income but are followers in their social groups.

∙Late Majority – They jump on right after the average person. Their education and income are limited and they are not willing to take a chance unless the majority has already fully adopted the innovation. Reasons for the late majority to adopt are either economic or peer pressure but are constantly weary. This group also contains thirty-four percent.

∙Laggards – This is the final adoption group and it consists of the final sixteen percent. They are more in-tuned with the past than the future. They are skeptical of all new ideas and frequently by the time they adopt an innovation there is a new one already beginning to take its place. Their educations are small and generally laggards are socially surrounded by other laggards.

These five categories have developed through years of research and observation in the diffusion process in many different fields. Although there are exceptions in each group, this gives a good general breakdown of adopters of innovations. [5]

What we have disused could be understood by looking at its graph given:

Source: [6]

Conclusion

We have been able to study different ways of consumer-adoption process, mechanism and elements of diffusion. The conclusion that can be drawn is that, every one can innovate, yet does not do so because it is not so simple and innovation is meaningless without its diffusion. Knowing proper channels of communication and diffusion is not enough; one has to realize and be prepared for the result of the diffused innovation. He/she has to be fully prepared for the risk involved in it. “The process of the diffusion of innovation has been around since the first new idea popped into some ones head. Before Gabriel Tarde people did not just adopt an innovation because they got a free coupon. They went through the same process as we do today. The diffusion process is not a math equation or a chemical reaction but rather a natural progression of peoples’ attitudes, opinions, and feelings towards accepting a new idea”. [5]

The diffusion of innovations has four main elements: an innovation that is communicated in a particular social system over a certain amount of time. It is in its simplest form it is a communication process that can be plotted on an S-shaped curve. All four elements have many different factors that affect the outcome of the process as well as act intimately to affect each other. It is also evident that the diffusion process holds constant for social system adopting an innovation no matter that filed it is in.

When looking at the diffusion process it is hard not to see the importance to the advertising world. Learning the process an individual as well as a society goes through before they will accept an innovation is vital to the success of any company that plans to be on the frontier of innovation. Just coming up with the idea first only gets you a part of the way there. You must realize and be catalysis for its diffusion into society.

Bibliography

Blackwell, Rogers D., Engle, James F., Miniard, Paul W. (1995). “Diffusion of Innovations” in Consumer Behavior. Dryden Press.
Rogers, Everett M. (1962).Diffusion of Innovation. The Free Press. New York.
Rogers, Everett M. (1976) “New Product Adoption and Diffusion,” Journal of Consumer Research, pp.290 – 301.
Weiss. (1969) “The Role of Interpersonal Communication,” in “Effects of the Mass Media of Communication,” in Lindzey and Aronson, Handbook of Social Psychology, Vol. 5, pp. 141 –177.