Meaning & Definition Of Diffusion Of Innovations

Diffusion of innovation is the process by which the adoption of an innovation spreads over a period of time to other consumers through communication.

Group communication are an important (or primary) source of information and can influence the consumer decision making. Group communication can occur within or across groups. Communication within groups refer to word-of-mouth influence which is considered to be highly credible since it comes through family, friends, peers and neighbours. Communication across groups takes place through the above mentioned process of diffusion of innovation and influence.

The process of diffusion will occur for new products as informational influence and is likely to affect the adoption of new products across groups. Consumer researchers trying to explore the area of consumer acceptance of new products are primarily interested in understanding two closely related processes

• The diffusion process.

• The adoption process.

The diffusion process is a macro process related to the spread of a new innovation from its source (or manufacturer) to the final consumers. Whereas, adoption is a micro process focusing on the stages through which an individual passes when deciding to accept or reject a new innovation. Over and above these two interrelated processes, marketers are also interested in identifying the "Consumer innovators", those who are first to purchase a new product for it is felt that this group will play a major role in the success or failure of the innovation.

A consumer is likely to find a new idea, or product or even a new service attractive. But the organisation which is trying its hand at the new innovation is likely to be concerned about how fast the diffusion of the innovation is likely to take place. Even though, it is only after an intensive research that a new concept or product is launched, there is always an element of risk involved. Through research, answers to certain questions are sought.

• Does the innovation cater to the need of the target customer

• Have the target consumer understood how the innovation is relevant to their need? 

• Is the new product available and being demonstrated widely?

• Has the firm identified the opinion leaders? If yes, is the firm making efforts to convert opinion leaders into committed customers?

• Is the company providing suitable incentives to sceptics to get them converted to adopters?

These questions are pertaining to certain broad areas which can be of concern to marketer launching new products. One way of educating customers about new innovations will be by communicating the benefits the new innovations would provide. Thus diffusion of innovation is a challenge before the marketer to identify the 'value added benefits' which can be associated with the product and communicate it to the consumer.

Table below gives an overview of certain innovations which had gained acceptance among consumers because of the benefits communicated across.

The Diffusion Process

The diffusion process is concerned with the acceptance of an innovation (a new- product or service or idea or practice), when spread by communication (mass media, sales personnel or informal communication) to members of a social system (the target market) over a period of time. Thus the diffusion process includes four basic elements: 

• The innovation 

• The channels of communication

• The social system

• Time.

The Innovation

There are various approaches used to define an innovation. These can be classified as firm oriented, product oriented, market oriented and consumer oriented definitions of innovations.

Firm oriented approach will consider newness of a product or service from the perspective of the manufacturer or marketer. This definition ignores the newness of the product or service at the market place. For, as long as the innovation is 'new' to the company it is treated as new. However, if one is trying to understand the consumer acceptance of a new product, this definition may not hold good.

Product oriented approach focuses on the inherent features of the product and the effect they are likely to have on consumer's established buying patterns. As per this product oriented framework the innovations can take the form of:

• A continuous innovation involves introducing a modified product instead of a totally new product. For example, revised versions of Zen (Zen Estilo), Lifebuoy soap, latest version of Microsoft windows etc.

• A dynamically continuous innovation though more disruptive than a continuous innovation, will not result in changing an established behaviour. It could take the form of creation of a new product or the modification of an existing product. For example, the 8 mm camcorder, C.D players (Compact Disk) etc.

• A discontinuous innovation will result in consumers adopting new behaviour patterns. For instance, Airplanes, radio, T.Vs, personal computers, internet etc.

Market oriented approach will look into the newness of the product in terms of how much exposure consumers have of the new product. There are two market oriented definitions of product innovation which been used extensively in consumer studies.

a. A product is considered to be new if it has been purchased by a relatively small though fixed percentage of the potential market.

b. A product is treated as new if it has been available in the market for a relatively short period of time.

The above two market oriented definitions are basically subjective in nature, for, the researchers will be required to establish the degree of sales penetration with the market which will quantify the product as an “innovation” (say the first five percent of the new product users) or define the time period within which the product available in the market can be considered as 'new'.

Some marketers have defined an innovation using a consumer oriented approach. As per this view, newness of the product will be based on the potential consumer's judgment on the 'newness' of the product and not necessarily on the its physical features or the market realities.

The Channels Of Communication

Communication also plays a big role in determining how quickly an innovation spreads through a market. This communication can be of two types: a) communication between marketers and consumers, b) Communication among consumers (word of mouth communication). Consumer information sources fall into four categories:

• Personal sources - Family, friends neighbours, acquaintances.

• Commercial sources - Sales people, advertising, sales promotion techniques. 

• Public Sources - Mass media, consumer rating organisations.

• Experimental sources - Demonstration, handling samples.

Apart from the above traditional communication media, today, marketers are looking out for an integrated marketing communication media. This includes off-line activities (like road shows, exhibitions, point of purchase danglers and posters). Direct marketing (direct mail), telemarketing etc., and Internet marketing (on-line direct marketing).

Depending upon the innovation (new product) and the prospective customers, firms try to adopt a cost effective way of communicating with them.

Consumer's shopping behaviour cannot be understood or predicted outside the context as neither the consumer nor the product (or brand) exist in isolation. Consumers have the tendency to go through a process of 'see-touch-sense-select' while shopping. Here again the behaviour will vary depending upon the brand and product category.

In order to influence the purchasing power of customers, marketers make use of point-of- purchase systems and make them aware of new brands available in the market. For instance, Johnson & Johnson used environment friendly teddybear multiple options of displays made of paper board, with multicoloured printing to showcase the baby products in a cost effective manner. Titan Slim and Titan Fast Track Watches are displayed on cylindrical poles which are made of plywood and attached to the base or alternatively having digital display image made on one side. In this way various communication channels are used to attract consumer's attention.

The Social System

The diffusion of a new product and the consumer behaviour occurs in a social setting or social system. The social system is a physical, social or cultural environment to which people belong and within which they function.

The social system serves as the boundary within which the diffusion of the new product must exist. The orientation of our social system has its own special values or norms, which is likely to influence the acceptance or rejection of new products. With the changes occurring in the social system, a lot of changes are taking place in the outlook of the consumers.

In the past, consumers had to depend on neighbourhood Kirana shops for purchasing groceries or travel all the way to the centre of the city to purchase certain products. Now with a positive change in the mind set of the consumers, they are looking out for cost effectiveness, convenience and personalised services. This has resulted in easy acceptance of the concepts of 'Supermarket' and Mall shopping.

Today, more and more young girls are keen to participate in various fashion shows and contests. There is seen a growing awareness of the killer diseases 'AIDS' and Hepatitis-B'. Many public and other social organisations and NGO's are actively involved in organising programmes to increase the awareness of the problems associated with the above diseases. There are many consumer action groups to protect the consumer from any wrong practices adopted by the traders and business firms. The social system will act as a barrier and not allow them to adopt values and norms which go against the society at large. Organizations and marketers have to bear this in mind while launching new products or services. For, these aspects are likely to determine the acceptance or rejection of new products.

Time

Time also plays a very important part in the diffusion process. This can be understood by determining (a) the purchase time, (b) determining the various adopter categories and (c) the rate of adoption.

a. Purchase time

There is usually a time gap between consumer's initial awareness of a new product or service and the time when he or she makes the purchase or rejection of it. Knowing the purchase time will help the marketer to determine the average time a consumer is likely to take to adopt the new product. This information in turn will be a predictor of the overall length of time taken by the product to achieve widespread adoption.

Firms are using innovative ways to inform the consumers about their new products or services and also going out of way to build relationship with them. For instance, when the new concept of "Home land" supermarket was introduced by Asha Chavan in (then the suburb) Pune, apart from offering a variety of quality products, they also gave an unconditional guarantee of replacement or refund, home delivery to all, even single item telephonic orders at no extra cost. And beyond business, Homeland also offered free services like phone, electricity, credit card and cell phone bill payments.

Consumers, with an increase in disposable income are increasingly looking towards shopping at malls offering products (and services) along with entertainment. Retail activity in malls primarily include branded apparel, discount and department stores. In order to woo customers, these retailers use creative promotions, charity fund raisers, VIP party events, drawings and fun contests. Take the example of Fun Republic, a chain promoting out-of-home entertainment concept. Fun Republic, the young-adult entertainment center, at Andheri, Mumbai had come out with a unique 'Rewards programme' with its Ginnie Combo offer, wherein the customer who spends a minimum of Rs. 65 takes home a guaranteed prize. For instance, when a consumer watches a movie at Fun Republic, she gains access to the concession area of the theatre and there on the purchase of any combo (Pepsi + Popcorn), she gets a scratch card that entitles her to win gifts ranging from a Kinetic Zing to Air conditioners, Refrigerators, Colour Televisions, Walkmans or even Free Movie Tickets, Snack Coupons and so on. The unique aspect of the Ginnie offer is that scratch cards come with assured gifts which can be used at the purchase time.

b. Rate of adoption

The rate of adoption determines how long it will take for a new product or service to be adopted by the members of a social system. The rate of adoption will indicate how quickly a new product or service will be accepted and then adopted by them. We can take the example of clothes. Firms are interested in knowing the rate of adoption for clothes. Apparel firms are looking to fashion and trends before launching brands. Take the example of corporate dressing. Indigo Nation has Contra Formals which is targeted at corporate executives who are interested in making a statement through their clothes. Surveys had indicated that these corporates did not want to wear outfits (or brands) catering to their 40 plus bosses. This led to the launch of Contra Formals, with distinct styling options in over 50 designs crafted from high quality 100 percent cotton and CVEs fabrics. Contra formals promises to be a pioneer in setting fashion trend for men in their late 20's or early 30's.

Depending upon the product category and target audience, marketers are using various marketing strategies to increase the speed of the rate of adoption. For example, Ray Ban sunglasses from Bausch & Lomb used premium pricing to convey that their product matched the lifestyle of the rich and famous (using Hollywood celebrities in its advertisements).

Two well known examples of the new products and services gaining fast acceptance from consumers can be narrated by explaining the marketing strategies used by Akai and Narula's fast food chain.

In the mid-nineties, Akai realised that there was a growing segment of consumers who had bought a colour T.V. set in the 80's and wanted to exchange it for a new T.V. set. These consumers also wanted some value for the old TV's they possessed while expecting a reasonably Good feature-Price performance ratio on the new TV they planned to purchase. That is when "Akai" became the first firm to come up with a scheme of exchange offers. There was wide acceptance among the consumers and even the competitors in the colour Television market had to follow suit.

Another example can be of the Narula's fast food chain of restaurants in Delhi. Narula's creation for the customer a fast food chain based on Indian cuisine, had made it one of the pioneers to offer fast food in Indian delicacies. Of course, now the fast food market has many global restaurant chains like Kentucky Fried Chicken, Pizza Hut and so on.

In the above cited examples, the rate of adoption for the new product and services was very fast.

c. Adopter categories

It must be remembered that people vary remarkably in their readiness to try out new products or an innovation. Everett M. Rogers has defined a person's innovativeness as the degree to which an individual is relatively earlier in adopting new ideas than other members of his social system. Just as any product goes through a product life cycle, for each new product there are adopter categories too. We can categorise adopters of the new products based on the relative time of consumers' adoption of the innovations. This adoption process curve shape is almost similar to the PLC (Product Life Cycle) of a product.

The diffusion process shown in figure above takes the shape of a normal distribution (a bell shaped) curve, when considered over a period of time. The process starts with a slow beginning, then picks up momentum with more number of persons adopting the innovation, then after a certain number reaching the peak, there is a decline with less number of adopters remaining. A brief description of the category of adopters is given here under:

1. Innovators

After being aware of and seeking more information of new products, only 2.5 per cent of all the customers normally try out the new products. These people are referred to as the pioneers or innovators of the new product. Innovators are venturesome. They are easily acceptable to new ideas. They do not deliberate when new products are launched in the market. There is always a willingness on their part to try out new products even at the risk, that being the 'consumption pioneers', there is no feedback available on the use of the innovation from others. These people are usually found to be outgoing, gregarious, more educated and generally follow a lifestyle matching the high social class 'status'. They consider it a chip to their shoulders when referred to as the innovators of the new product. Though, it may be remembered that this category of innovators of the new product is only a negligible 2.5 per cent of the entire target potential customers identified for the new product.

2. Early Adopters

The early adopters are the next 13.5 per cent of the buyers who adopt the new idea or new product. These people do not immediately plunge into buying as soon as a new product is available in the market. However, they also purchase the new product reasonably early though only after carefully verifying and gathering information about the new idea or new product from authentic sources. Companies have identified that the early adopters are usually recognised as opinion leaders in their social circles or community. These people are looked upon with respect, as they are social leaders of the community. Their views, opinions and facts expressed are heard with lot of respect and concentration by the community members. Their personality traits indicated that they are educated, of high social status with a favourable financial position, more successful than average and with a willingness to try new products or innovations, if convinced about the same. Due to these characteristics, early adopters are identified by companies and considerably exposed to information from all sources especially the mass communication media.

3. Early Majority

The early majority are the next 34 per cent of the consumers to adopt the new product. These people are more deliberate when compared to the innovators or early adoptors. These people are more thoughtful and shrewd and will not easily get swayed by the new products or innovation. They prefer to wait and watch and learn by hearing from the experience of the early adopters, before thinking of adopting an innovation. They can be referred to as the middle class persons with reasonable education, occupation and income. These people though rarely leaders, adopt new ideas before the average person. Once the innovation is adopted by this early majority of people, it ceases to be a luxury or a novelty item because it is an accepted fact that the early majority are deliberate in their behaviour to accept innovations.

4. Late Majority

The next 34 per cent of buyers of new products are referred to as the late majority to adopt the innovation. These people unlike the earlier mentioned categories of adopters are more conservative in their approach and do not immediately respond in favour of a change. Their acceptance of the new product will come into effect only after a public opinion is in favour of the new product or innovation. These late majority are people with limited education, an average social status, drawing limited salary and consequently having limited purchasing power. They are more skeptical and will adopt an innovation only after a majority of the people have tried it.

5. Laggards

This is the last category of buyers to adopt a new product, comprising of 16 percent of the total market. As the term 'laggards' indicate, these are people who lag behind in their acceptance of an innovation. These people are very conservative, tradition bound and are vary or suspicious of changes. A lot of deliberation, caution and suspicion is exhibited in their buying behaviour for new products. They generally prefer to mingle with people who share a similar traditional outlook. They will adopt the innovation only because the innovation has taken a step in the direction of tradition in itself.

The above mentioned classification of adopters of a new product suggest that the firm introducing a new product should do research on the demographic, psychographic and media characteristics of innovators, and early adopters and specially work out communication programmes, directed at them. An understanding of how a consumer seeks and processes information about new products and the decision making process adopted by him can improve the adoption rate of new products. As seen above only 16 percent of all the customers, namely the innovators (2.5 per cent) and early adopters (13.5 per cent), normally try out new products soon after the launch. So firms can exploit the natural tendency of this section by meeting their needs, in particular, and accelerate the pace of acceptance. This is because, these segments endorsement of the product will have a positive impact in terms of appeal to the other categories of adopters comprising the 34 per cent of early majority, another 34 per cent of late majority and the remaining 16 per cent of the laggards.

This method was followed by Dabur India, in 1996, when it launched 'Real' a natural fruit juice a first of its kind in a market familiar with canned juices. The company had aimed at the early adopters, identified as the health conscious SEC Al, A2 housewife. The product 'Real' was made available at 1400 select outlets out of the 20,000 outlets in the capital, concentrated in the affluent part of South Delhi. Added to this the company had also used attractive 'P.O.P' material all over the stores and even advertised on 'Star Plus' communicating that the product held out real value especially to early adopters of the product. The basic objective of the company was to ensure usage by these adopters rather than trying to broad base the appeal.

Since each new product will be unique in its usage, the innovating firms have to work out dynamic ways to tap the target market especially by concentrating on the top two segment categories of adopters.

Non Adopter Categories

There is another opinion to include the category of non adopters also, which will be in accordance to the market place reality, because not all potential consumers will necessarily adopt a product innovation. Suresh Subramanian and Robert A. Mittelstaedt (mentioned in Consumer Behavior, L.G. Schiffman, L.L. Kanuk, 6th edn, pp. 540) have given another classification of the different types of non adopters. These are:

1. The unaware group - Those consumers who are not aware of the new product 

2. Symbolic-rejectors - Who, though aware of the product, have decided against buying it. 

3. Symbolic adoptors - Who know the product will be useful for them but have not tried it.

4. Trial adopters Who have tried the product but have not gone for a repurchase or actual purchase.

5. Trial rejectors - Who have tried the product and also rejected the same.

Role of Communication in the Diffusion Process 

As seen in the definition of the diffusion, communication is a key element in the process. During the initial stages of a new product's launch, consumers tend to rely more on the mass media for information. Advertisements in mass media such as magazines, Newspapers, Radio FM and TV can be used to create an awareness as well as convey product information to the target consumers at large.

Once consumer awareness is created, early adoptors will look upon friends and close relatives to help in the evaluation of the new products. As seen in figure above, early adopters will rely more on mass media for information. Further, when they move across the various stages in the adoption process-from awareness to evaluation, trail and adoption, the word of mouth communication increases in importance. While for later adopters, the word of mouth communication is likely to be the dominant influence throughout the adoption process. Initially, these late adopters learn about the innovation from friends, relatives and neighbours rather than from the mass media. From this, it can be said that marketers must work at encouraging diffusion by using an informational campaign initially to create awareness among early adopters. Subsequently, they can then work towards stimulating favourable word-of-mouth communication among the late adopters.

Spykar Lifestyles which markets Spykar Jeans had used the magic of films-the 70 mm screen to gain the mind share of the movie goers (prospects) by strategically weaving their products as the films are played on screen. In order to increase awareness and knowledge of their brand Spykar jeans, the company had done in-film advertising in more than seven Hindi movies such as Kya Cool Hain Hum, Namastey London etc., and established their presence in the North and West of India.

For entering the southern market, Spykar jeans planned to take the mass media route like advertising in Surya's (a leading Tamil Movie Star) movies apart from other southern films. To woo the late majority the company was to focus at below the line activities such as sponsoring college events and popularising the brand.

Seiko Watch India before launching its products (watches) targeted at the premium watch segment, had a pre-launch campaign where it had advertised with a teaser campaign with 100 sports on TV (mass media). Post the launch, the company continued communication programme through print and other mass media and also had a tie up with FI Sport. It had assumed that post launch, the early adopters (the self assured individuals) will provide the necessary word of mouth to motivate the other adopter categories.