modeling 3 g technology adoption timing across countries

Modeling 3G Technology Adoption Timing Across Countries

Presented To: Dr. Hisham Dinana

Prepared By: Amany AramNoha MansourMohamed Ibrahim

1/15/2009 Marketing Theory /292

Literature Review

Conceptual Framework and Hypotheses

Methodology

Sample

Measures

Data Analysis and Results

Testing of Hypotheses

Discussion

Managerial Implications

Limitations

Contents


Literature Review

Diffusion of Innovations

Roger’s theory states that innovation diffusion is a process that occurs over time through five stages:

Knowledge

Persuasion

Decision

Implementation

Confirmation

Bass diffuion model:


Literature Review

Globalization: Modeling Technology Adoption Timing Across Countries

Diffusion theory in international marketing context (M. G. Dekimpe et al., 2000)

Communication processes driving cross-country adoption of new innovations

• Breadth of Adoption

• Depth of Adoption

Country profiles of early technology adopters and laggards (M. G. Dekimpe et al., 2000)

Exogenous factors

• Country demographic factors

• Economic/political factors

• Social factors

Endogenous factors• Accumulated experience with the innovation (demonstration effect)• Incremental demonstration effect from similar countries


Literature Review

Modeling And Forecasting The Diffusion of Innovation – A 25-Year Review

Modeling the effect of different national cultures on the diffusion process gives insight into the effect of national differences on the rate of adoption of the innovation

Lynn and Gelb (1996) compiled an index of national innovativeness based on ownership of a range of recently introduced products.

They explain this index in terms of the national traits developed by Hofstede (1983): individualism, uncertainty avoidance and purchasing power

These variables were significant in explaining the index, but not for all individual new products

Steenkamp, Hofstede and Wedel (1999) found that individualism and masculinity were positively related to innovativeness, and uncertainty avoidance was negatively related


Literature Review

Cross-Country Differences in ICT Adoption: A Consequence of Culture?

The diffusion or adoption of a new technology is considered to be a major factor in driving the pace of economic growth (Rogers, 1995)

Major economic factors that affect the adoption decision are the human capital, the level of income and a country’s openness to trade (Caselli & Coleman, 2001)

even across countries with similar income levels and human capital, differences in ICT diffusion exist

The variation observed in ICT adoption among countries with similar economic conditions creates the need to explore other explanatory variables that may play a role in this phenomenon

Meijer & Ling (2001) have drown attention to the possible effects of political and cultural factors alongside the economic and technological factors


Literature Review

Cross-Country Differences in ICT Adoption: A Consequence of Culture? (Cont.)

Fife & Pereira (2002) have highlighted the importance of social and cultural factors for broadband adoption

Findings

Countries with a high Power Distance score will show a lower rate of ICT adoption than countries with a low one

Countries with a high Uncertainty Avoidance score show a lower rate of ICT adoption than countries with a low one

Countries with a high Individualism score show a higher rate of ICT adoption than countries with a low one

Countries with a high Masculinity, achievement & competition, score show a higher rate of ICT adoption than countries with a low one


Literature Review

The Effects of Country characteristics, Cultural Similarity & Adoption Timing on The Diffusion of Wireless Communications

Factors explaining cross-national diffusion may be grouped into three points:

country effect (wealth, trade, mobility and cosmopolitanism)

cultural effect (cultural indices)

time effect (lead - lag)

A consistent finding in cross-country diffusion studies is that a cross-national learning effect exists. Later adopting countries seem to have faster domestic diffusion patterns


Literature Review

Moderating Effect of National Attributes And the Role of Cultural Dimensions In Technology Adoption Takeoff

Study the effect of Hofstede's national cultural dimensions (individualism, uncertainty avoidance, masculinity, power distance and long term orientation) on the innovation adoption timing

Find the moderating effect of three national attributes on the role of the cultural dimensions to affect the innovation adoption timing:

national wealth

population density

illiteracy rate

Findings

The paper conforms with the main project model in two variables:

• The national wealth was found to have a moderating effect on the role of the cultural dimensions in affecting the national level innovation adoption timing

• The population density was found to have a moderating effect on the role of the cultural dimensions in affecting the national level innovation adoption timing


Literature Review

Lead Markets: Country-Specific Drivers of the Global Diffusion of Innovations

Study the lead advantages of a country expressed as the nation-specific factors (attributes) which can explain why an innovation design initially refined to a local market becomes a globally dominant design and provide ability of an innovation design to diffuse internationally and squeeze out other locally preferred designs

Findings

The paper conforms with the main project model in four variables:

Demand advantages (high income per capita)

Price advantages (high market growth)

Transfer advantages (demonstration effect)

Market structure advantages (degree of competition)

Export advantages (incremental demonstration effect)


Literature Review

What is 3G?

2G Wireless

The technology of most current digital mobile phones Features includes: - Phone calls - Voice mail - Receive simple email messages Speed: 10kb/sec Time to download a 3min MP3 song: 31-41 min

2.5G Wireless

The best technology now widely available Features includes: - Phone calls/fax - Voice mail -Send/receive large email messages - Web browsings - Navigation/maps - New updates Speed: 64-144kb/sec Time to download a 3min MP3 song: 6-9min

3G Wireless

Combines a mobile phone, laptop PC and TV Features includes: - Phone calls/fax - Send/receive large email messages - High-speed Web Navigation/maps Videoconferencing - TV streaming - Electronic agenda meeting reminder. Speed: 144kb/sec-2mb/sec Time to download a 3min MP3 song: 11sec-1.5min



Cross-Country Level

H1: Cultural characteristics of nations affect its adoption timing of 3G

H2: A country’s adoption timing of 3G is negatively related to its society’s heterogeneity

H3: The higher the relative advantage of the 3G for a country, the sooner the country adopts it

H4: Isolated economies tend to adopt 3G later

H5: Markets growing faster will adopt 3G sooner

H6: Wealthier countries adopt 3G earlier



Consumer Level

H1: The better the consumer perception towards 3G services, the higher the services usage will be

H2: The higher the consumer socio-economic level, the higher the service usage will be



Relative advantage

Country Adoption

timing

Market growth rate

Nation’s wealth

Economy Openess

Society’s heterogen-

eity

Cultural C/Cs


Methodology

Cross-Country Level

sample

97 countries that have adopted 3G technology (the whole population)

data sources

World Fact Book (WFB) ----(GDP per-Capita), (Population Growth rate), (No. of Ethnic groups)

Hofstede website-------------(4 Culture indices)

UN statistics------------------ (degree of Urbanization)

wireless intelligence portal--(3G Adoption time)

AT Kearny website ---------- (globalization index)

Measure (SPSS)

Pearson correlation

Frequencies, mean, standard deviation


Methodology

Consumer Level

sample

convenience sample of 73 consumers

63 responses were received

50 valid responses

Method of data collection

survey questionnaire (personal: in office, electronic: internet)

handling response errors

elements of implicit information, used to cross-check the validity of responses

Measure (SPSS)

Pearson correlation

Frequencies, mean, standard deviation



ScenarioEstimated From Past

Data

Estimated From Past

Data

Estimated From Past

Data

Estimated From Past

Data

Estimated From Past

DataTotal Market Potential 110 120 130 140 150Parameter p 0.005057425 0.005953118 0.006526055 0.006849081 0.006997975Parameter q 0.217577587 0.187491001 0.166058138 0.150283494 0.138273541Pearson's R² 0.688949921 0.660251573 0.621215668 0.581572543 0.545689994

Highest Correlation

Cross-Country Level (Breadth of Adoption)

Bass model: parameters estimation



Bass model: per period adoption

0

2

4

6

8

10

12

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Periods

Ad

op

tio

ns

per

Per

iod

Past Data

Model



0

20

40

60

80

100

120

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Periods

Cu

mu

late

d A

do

pti

on

s

Past Data

Model


Bass model: cumulated adoption




Bass model: three years forecast

Period / Forecasting Scenarios

Estimated From Past

Data

Estimated From Past

Data

Estimated From Past

Data

Estimated From Past

Data

Estimated From Past

DataTotal Market Potential 110 120 130 140 150Parameter p 0.005 0.006 0.007 0.007 0.007Parameter q 0.218 0.187 0.166 0.150 0.13828 100.03 102.94 104.80 106.04 106.9129 102.05 105.78 108.33 110.14 111.4630 103.70 108.22 111.47 113.87 115.6931 105.02 110.28 114.23 117.24 119.5932 106.08 112.01 116.64 120.26 123.1533 106.92 113.46 118.71 122.95 126.3934 107.59 114.66 120.50 125.31 129.3035 108.11 115.65 122.02 127.39 131.9236 108.53 116.46 123.32 129.20 134.2437 108.85 117.12 124.42 130.77 136.3038 109.10 117.67 125.34 132.13 138.1239 109.30 118.11 126.12 133.30 139.71




Hypotheses testing (SPSS)Pearson

CorrelationSig. (2-tailed) N Supported

PDI .349** .006 61

IDV -.412** .001 61

MAS -.101 .439 61

UAI .111 .393 61

H2 Ethnic Groups .118 .249 97

H3 Urbanization -.398** .003 54

H4 Globalization -.628** .000 71

H5 Pop. Growth Rate .432** .000 97

H6 GDP/Capita -.609** .000 97

**. Correlation is significant at the 0.01 level (2-tailed).

Supported

Partially supported

Not supported

H1



Gender

54%46%

male female

Age

2%

47%

37%

14%

below 20 20-30 31-40 41-50

Education

48%46%

6%

university advanced degree other

Income

15%

38%

47%

1001-3000 3001-5000 above 5000

Consumer Level (Depth of Adoption)

Demographics of survey respondents




3G services usage

3G Services Usage

0 1 2 3

Video Calls

Web Browsing

Downloads

Mobile TV

Gaming

Mobile Office

Financial Services

Never Rarely Occasionally Frequently




3G services semantic image

1

2

3

4

5

6

7

Unavailable Unreliable Slow Difficult Expensive Useless

Available Reliable Fast Easy Cheap Useful





Demographic profile of 3G user

male 1.48 2.81 1.78 1.15 1.52 2.52 1.41

female 1.87 1.96 1.91 1.22 1.74 1.96 1.30

below 20 1.00 2.00 1.00 1.00 2.00 2.00 1.00

20-30 1.87 2.35 2.00 1.26 1.70 2.09 1.22

31-40 1.56 2.61 1.94 1.17 1.67 2.33 1.28

41-50 1.29 2.14 1.29 1.00 1.29 2.43 2.00

university 1.79 2.42 1.79 1.21 1.75 2.25 1.25

advanced degree 1.48 2.48 1.83 1.13 1.43 2.39 1.52

other 2.00 2.00 2.33 1.33 2.00 1.33 1.00

1001-3000 1.71 2.00 1.86 1.14 2.14 1.71 1.29

3001-5000 1.83 2.28 2.22 1.28 1.67 2.17 1.11

above 5000 1.52 2.57 1.61 1.13 1.43 2.52 1.61

Income

Education

Age

Financial Services

Mobile Office

GamingMobile TVDownloadsWeb

Browsing

Gender

Video Calls




Ranked order of the importance of different factors to 3G success:

Speed

Price

Reliability

Simplicity



Hypotheses testing


Pearson Correlation

Sig. (2-tailed) N Supported

Availability .342* .015 50

Reliability .271 .057 50

Speed .313* .027 50

Easiness .351* .012 50

Affordability .139 .337 50

Usefulness .187 .193 50

Mobile Bill-Mobile Office .380** .006 50

Handset Price .228 .123 47

Age-Financial Services

.343** .016 49

Education -.100 .490 50

Income-Gaming -.288* .047 48

**. Correlation is significant at the 0.01 level (2-tailed).

Partially supported

Not supported

H1

H2


Discussion

Managerial Implications (Cross-Country Level)

profile of the innovative country is one that is wealthy (on a per capita basis), has a highly concentrated population, and is open (part of the global economy). Laggard countries have an opposite profile

countries can be segmented based on their likely adoption timing

managers playing the “global game” must prioritize countries by creating temporal segments equivalent in nature to those characterized by Rogers


Discussion

Managerial Implications (Consumer Level)

In order for 3G services to encounter successful rollout, operators have to pay attention to the following factors:

Effective segmentation: users of 3G services have specific demographic characteristics. Accordingly, operators have to understand the needs and attitudes of these segments better, in order to design the most suitable marketing mix for them.

Strong propositions: unless there is a convenient service with clear value perceived by the customer, 3G services are likely to face stumbling future. Operators also have to take care of the different factors important for successful customer experience with 3G services.

Targeted communication: advertising has to talk the same language of the target segments and should tell customers specific life situations where 3G services present real benefits


Discussion

Limitations

On the cross-country level, the requirement to use covariates which measure international differences across all countries leaves us with a limited set of variables

On the consumer level research, there is a limitation in terms of sample type and sample size. The chosen sample is not a random probability, representative sample


Thank You

modeling 3 g technology adoption timing across countries

Business

effect of national differences

adoption decision

rateof adoption

innovation adoption

innovation diffusion

country effect wealth

ahigher rate of ict

national traits