Innovation DiffusionConcept of diffusionConcept of adoptionDiffusion TypesInnovation diffusion theoryInnovation adoption by organizationsMarketing strategies and diffusion process

Concept of diffusionProcess through which innovation spreads throughout a social system over time.The process is complete when-A sufficient number of customers are using the innovation to payback the amount used to develop it.It starts to make profit.

Concept of AdoptionCustomer response to the new products and services is referred to as innovation adoption.

Diffusion typesDifferent types of innovation require different diffusion efforts-Breakthrough innovationIf technology is new to both the market and the company, adopters of the technology have to educate on its use.ImprovementsIf the technology is a modification or improvement of existing technology.

Innovation Adoption by OrganizationsCharacteristics of the innovation is important in determining its adoption-CredibilityCompatibilityPower politicsInternal policies

Marketing Strategies and Diffusion ProcessIn order to develop an effective promotional program the marketer must consider these points-Not all consumers have the same speed for the adoption process.Communication forms vary over the different stages in adoption process.

AwarenessInterestEvaluationTrailAdoptionStrategies Based on Adoption Stages-

Strategies based on Product AttributesCompatibilityEmphasize attributes consistent with normative values.Relative AdvantageLower PriceRedesign ProductComplexityUse product demonstrationsDistribute through high service outlet

ObservabilityUse extensive advertisingTrialability- Use free samplesOffer special pricesPerceived RiskDocument successProvide Guarantees

Strategies based on Target MarketMarketing strategies should be based on characteristics of target market and innovator adoption-Innovators and Early adopters-Stress excitement of ownership.Explain how product is new and revolutionary.Distribute trial size of product to homes.Use publicity for new product announcements.

Early Majority-Use of mass advertisingStress benefits and compare brands in ads.Use Price oriented ads to gain market share.Late Majority-Demonstrate product in storeUse on package couponsStress extended warranty protection and service/repair centers.Laggards-Spend money on promotion because interest in product is disappearing

Marketing Strategies based on Innovation ResistanceTwo factors account for resistance to innovation-HabitPerceived RiskBased on these two, four types of innovations are there.

RiskHabitWeakLowHighStrong

No Resistance Innovations(New & Improved versions of products)Risk Resistance Innovations (Discontinuous & Replacement Innovation)Habit Resistance(Continuous & replacement innovations)Dual Resistance Innovation(Social Innovation)

Habit Resistance Innovations-E.g. car that work on electric power rather than gas and would require to recharge their batteries regularly. In order to learn this new habit, they would need substantial incentive.Risk Resistance Innovation-More risk associated with trying an innovation, the slower the diffusion process.E.g. Laser eye surgeryDual Resistance Innovation-E.g. Soft Drinks

Marketing Strategies to Overcome Barriers-

TypeBarrierStrategiesFunctional Usage BarrierUse of Packaging Innovation with preceding activities Value BarrierImprove Product PerformanceReduce the price.Risk BarrierUse a well-known brand namePsychologicalTradition barrierEducate customers.Understand and respect traditions.Image BarrierBorrow brand image. Create a unique image