In Chapter 5, the book touches on Diffusion of Innovation onpage 152 but I wanted to provide you with a little more detail onthe topic. It's really important when you think about change- thiscould be the kind of change that comes when you develop a newproduct, modify an existing one, or make any kind of organizationalchange. It's all about how to people adopt (or accept)innovation.
The process by which the use of an innovation- whether aproduct, a service, or a process- spreads throughout a marketgroup, over time and across various categories of adopters isdiffusion of innovation. The theory arounddiffusion of innovation helps marketers understand the rate atwhich consumers are likely to adopt a new product or service. Italso helps them to identify potential markets and predict sales fortheir new products.
In the diffusion of innovation theory, five adopter groups havebeen identified: innovators, early adopters, early mainstream, latemainstream, and laggards (or lagging adopters). I've attached avisual representation of the diffusion of innovation- you willnotice it makes a bell curve.
Innovators- are buyers who want to be the firstto have a new product or service. They enjoy taking risks and areregarded as highly knowledgable. They are generally very wellinformed about a certain product category. While they representonly 2.5% of the total market for a new product, they are crucialto the success of any new product because they usually talk a lotabout the products and review them vocally.
Example: Think of a person who drives a self-driving carprototype as an innovator OR think of Steve Jobs and the folks atApple as they created iPhones/iPads, etc.
Early Adopters- This group consists of about13.5% of all buyers. They generally don’t take as much risk asinnovators (they wait to see what innovators say about a product)but they are regarded as opinion leaders for particular productcategories as the other three buyer categories often rely on theirfeedback.
Example: When the iPhone was first released, the very firstbuyers would be early adopters.
Early majority- this group represents about 34%of all buyers. This group is crucial because a product usuallydoesn’t become profitable until this large group purchases it. Ifthis group never becomes large enough, the product or service canfail. The early majority doesn’t take as many risks and tends towait until the bugs are worked out of a particular product orservice.
Example: When the bugs were worked out on the iPhones, thisgroup bought. They waited until the product was purchased andreviewed by the early adopters.
Late majority- this group also represents about34% of all buyers. This is the last group of buyers to enter a newproduct market. When they do, the product has achieved its fullmarket potential. By the time this group enters the market, salestend to level off or may be in decline.
Example: After several versions of the iPhone were released,they finally decided to ditch their Blackberry andpurchase.
Laggards- this group represents about 16% ofthe market. These consumers like to avoid change and rely ontraditional products until they are no longer available.
Example: Laggards STILL use flip phones. They will probablyuse flip phones until they are no longer manufactured. They resistchange at all costs.
I use the example of phones but it's important to keep in mindthat the Diffusion of Innovation can apply to just about anything.It's also important to remember that people are not set in theiradopter group for every product- it can vary. For example, mystepdad would be a laggard when it comes to phones (he still uses aflip phone). However, he might be considered an early adopter orearly mainstream when it comes to golf clubs. He's much more likelyto purchase a newer model of golf club than a new phone.So....don't think of people as being stuck in their adopter group,it can certainly vary based on the product/service/process.
What affects the rate of adoption?
Some of the things that affect the rate include:
Relative advantage- this is the degree to whichthe innovation appears superior to existing products. Example:Electric cars were adopted quickly because of their advantage overgas powered cars.
Compatibility- The degree to which theinnovation fits the values and experiences of potential customers.Example: Electric cars are driven the same way as gas poweredcars so they fit the experiences of drivers.
Complexity- The degree to which the innovationis difficult to understand or use. Example: This is whereself-driving cars may struggle because it's hard to understand howthat could be safe.
Divisibility- The degree to which theinnovation may be tried on a limited basis. Example: consumerscan test-drive electric or self-driving cars which helps increasethe adoption rate.
Communicability- The degree to which theresults of using the innovation can be observed or described toothers. Example: If you can easily describe or demonstrate howto use a self-driving car and how the technology works, you willincreased adoption.
Discussion Board Assignment Instructions:
1. Identify a product or service you use where you may beconsidered an early adopter. Explain.
2. Identify a product or service you use where you may beconsidered early mainstream or late mainstream. Explain.
3. Identify a product or service you use where you may beconsidered a laggard. Explain. (We are all laggards in some area.Confession- I still love have the old school Uggs but I don't wearthem in public anymore).
