Product Adoption and Diffusion

• The life cycles of all new products are highly dependent upon howthe market responds to these products. As a result, we need tospend some time examining a conceptual model of how consumersadopt new products and how these new products diffuse throughsocial systems over time.

• The new product adoption process is and individual process inwhich a consumer decides to adopt a new product for his or herpersonal use.

• The new product diffusion process is the spread of a new productthrough a given social system.

Product Adoption

The concept of product adoption is concerned with new product.

There are basically there methods for developing new product:

INNOVATIONS

Innovations implies research and

Development activities.

MODIFICATIONS

1) Quality modifications

2) Functional modifications

3) Style modifications

“ME TOO PRODUCTS”

Producing same goods and services those have already rocked the market.

• Product adaptation is concerned with how customers learn about the new product for the first time and make decisions to become its regular users.

• It is the mental process through which an individual passes form first learning about an innovation (new product) to its final adoption.

Awareness:

Awareness is the point at which consumers first become aware of the new product’s existence but lacks enough

information.

Awareness is a function of, and is highly dependent on, marketing communications and consumer word-of -mouth

behavior.

Creating awareness and interest in the new product is probably the most critical promotion objective associated with any

new product launch.

Advertising, publicity, and sales promotions are crucial for creating awareness and interest in new products.

Interest:

When the product catches the consumer’s attention and she herself tries to discover more and more about it.

Once aware of the new product, consumers may establish an interest in that product if they perceive a fit between the

benefits the products delivers and their own wants and needs.

Consumers who are interested in new products will be more attentive in search of information about those products.

For example, consumers interested in a new brand of high performance computer may actively seek information about that

computer from internet sites, retail stores, and articles in computer magazines. The consumer also will be more attentive

to advertising for the brand.

Evaluation:

In this stage, the consumer has enough knowledge about the product and s/he considers its relative benefits and

evaluates it in terms of various factors as cost, aesthetics, competitors’ offering, etc.

Trial:

If the evaluation is favorable, consumers are more likely to take the next step, trial. During trial, the product is

sampled on a limited basis and further evaluated.

Trial can be stimulated by marketing activities. Free samples and coupons are quite effective at stimulating trial

as they effectively reduce the potential risk surrounding trial for many consumer non-durable products,

particularly convenience goods.

Reducing the risk of trial is most critical for consumer durable products because these products are typically

more expensive. Marketers reduce the perceived risk of trial for such products by offering generous warranties

and return policies. Some products actually can be 'test driven' prior to purchase. Obvious examples are cars and

microcomputers.

Adoption or Rejection decision:

This is the stage when the consumer has made up his/her mind whether to remain with the product or switch

back to her earlier product.

Product Diffusion

• the diffusion process describes the spread of a new product or innovation through a social group. It

refers to the market development process of new product. The speed with which a new product

diffuses through a social group is a function of the fact that different people adopt new products at

different rates.

• Some people will adopt products more quickly than others. Often the people who adopt the product

first are very different than those people who adopt the product in later time periods.

• Marketers attempt to identify the characteristics of these initial adopters and construct marketing

strategies to influence them. Carefully constructed advertising programs supported by sales

promotions, trade promotions and personal selling efforts that are targeted specifically to the initial

adopters of new products can dramatically speed the diffusion process.

• Because consumers adopt new products at different rates, we can divide up the total population of

all consumers who adopt a given product into five basic categories

Pioneers or Innovators:

Innovators typically are characterized as higher on the socio-economicladder than are consumers in subsequent adopter categories. They buyproducts during introduction stage of PLC

They are said to be more venturesome, educated, financially stable, andwilling to take risks associated with new product purchase and adoption.

Innovators are certainly important from the standpoint that they are thefirst consumers to adopt new products. However, innovators are not asinfluential as are the individuals in the next category of adopters -- the earlyadopters -- when it comes to convincing others to try new products. In otherwords, innovators generally do not contribute significantly to word-of-mouth communications.

Early Adopters Early adopters are also quick to buy new products and services, and so are key opinion leaders with

their neighbors and friends as they tend to be amongst the first to get hold of items or services.

the early adopter category consists of 13% to 15% of the adopter population. Early adopters areimportant early in a product’s life cycle because this category contains opinion leaders. Theinfluence of opinion leaders can determine a new product's success or failure in the market place.As a result, marketers are particularly interested in identifying these individuals and positivelyinfluencing their purchase decisions. Marketers direct a substantial amount of promotion atopinion leaders very early in a product’s life cycle in order to generate favorable word-of-mouthcommunications.

Effectively targeting and developing demand with the early adopter is perceived as a critical step inlaunching a successful new product. Targeting early adopters can be relatively easy.

Early adopters may have specific preferences for advertising media, such as the types of magazinesand newspapers read, types of television shows viewed, and preferred radio stations. Astutemarketers will target the appropriate communications media required to reach these opinionleaders with a substantial portion of their promotion budget.

Early majority

The early majority tends to be more deliberate and morecautious than innovators and early adopters.

Members of the early majority category are characterized as"solidly middle class consumers."

They are somewhat average in socio-economic status.Successfully targeting the early majority determines whethera new product will eventually succeed in general use or willremain a product that serves primarily a narrower nichemarket.

late majority

The late majority category is quite similar to the earlymajority with respect to its members' characteristics andpropensity to take risks.

The late majority typically adopt when the product isapproaching or has reached the mature phase of the productlife cycle.

Thus, the product has already been widely accepted, whichserves to reassure the risk averse consumer in this categoryof the product’s merits. Moreover, price competition probablyhas substantially lowered the realized price of the product.Given their lower standing on the socio-economic ladder,many consumers in this category may only at this point intime be able to afford this product.

Laggards

Laggards resist new product adoption almost to the point thatthey will adopt only after the product has become obsolete and isin imminent danger of replacement by new products, often basedon new technologies.

Laggards are characterized as highly resistant to challenges oftradition, more orientated toward the past, and as highly risk-averse. These consumers tend to be older in age and lower insocio-economic status than members of other adopter categories.