Role of opinion leaders in diffusion of innovation

We as consumers always find a new innovation-idea or product or even new service attractive. However, for the firm which is trying its hand at the new innovation, there is always a question hanging around. How fast will the diffusion of the innovation take place? This is to say that any innovation has got an element of risk involved. The firm will introduce a new concept or a new product after an intensive research is carried out by it. Thus we see that the process of diffusion of innovation is very critical to a firm.

Diffusion

Diffusion is a macro process concerned with the spread of a new product an innovation from its source to the consuming public. Adoption is a micro process that focuses on the stages through which an individual consumer passes when deciding to accept or reject a new product.

Diffusion of innovations is the process by which acceptance of an innovation (new products or new service or new idea) is spread by communication (mass media, sales people, informal conversation) to members of the target market over a period of time.

Some new product innovation, which were easily accepted by customers

New Product	Benefit Communicated
Vacuum cleaner (Eureka Forbes)	Compact, easy to use vacuum cleaner to keep home clan and tidy, home delivery after demonstration
Fire extinguisher (Real Value)	Portal piece of safety equipment-fire extinguisher
Plastic water tank (Sintex)	A convenient low cost alternative to the traditional metal or concrete water tank
Utensil cleaner cake (Rin cake)	Premixed scouring solution in the form of bar instead of waste prone powder
Mosquito repellent matt (Good Knight)	A mosquito repellent-which has no smoke, no fumes, no ash, no cream, no mosquitos
Diaper (Huggys)	Drier, more comfortable than cloth, disposable diaper for babies.

The Diffusion Process

The diffusion process follows a similar pattern, overtime, irrespective of the social group or innovation. The typical diffusion process shows a slow growth or adoption. It later rises rapidly, and then a period of slow growth is noticed. In fast diffusion process, the product clicks immediately. The spread of innovation is very quick. People patronise the product immediately, and later on there is again slow diffusion. In slow diffusion process, the product takes a lot of time to diffuse or spread, and the consumer follows a pattern of adoption slowly by getting acquainted with the product.

Diffusion is the process by which the acceptance of an innovation (a new product, a new service, new idea or new practice) is spread by communication (mass media, salespeople, or informal conversations) to members of a social

system (a target market) over a period of time. The four basic elements of this process are:

1. The Innovation
2. The channels of Communication
3. The Social System
4. Time

 

Fig.4.2. Diffusion Process

These studies show that the products take a certain amount of time, from when it gets introduced to its saturation. The marketer therefore has to understand what determines the spread of innovation in a given market segment, and how do the early buying consumers differ from those of late purchasers.

1. The Innovation:

Various approaches which have been taken to define a new product or a new service include

a) Firm-oriented definitions: A firm oriented approach treats the newness of a product from the perspective of the company producing or marketing it. When the product is new to the firm it is considered to be new.

b) Product oriented definitions: Product-oriented approach focuses on the features inherent in the product itself and on the effects these features are

likely to have on consumers‘ established usage patterns. Three types of product innovations could be: Continuous innovation having the least disruptive influence on established patterns involving the introduction of a modified product, rather than a totally new product. E.g., latest version of Microsoft Office; dynamically continuous innovation which may involve the creation of a new product or the modification of an existing product e.g., disposable diapers, CD players; discontinuous innovations requiring consumers to adopt new behavior patterns e.g., TV, fax machines, Internet

c) Market oriented definitions: Judges the newness of a product in terms of how much exposure consumers have to the new product. The definitions could be:

A product id considered new if it has been purchased by a relatively small (fixed) percentage of the potential market.

A product is considered new if it has been on the market for a relatively short (specified) period of time.

d) Consumer oriented definitions: A new product is any product that a potential consumer judges to be new.

2. The channels of Communication:

How quickly an innovation spreads through a market depends to a great extent on communications between the marketer and consumers, as well as communication among consumers i.e., word-of-mouth communication. Thus this communication will include two types of communication:

1. Communication between marketers and consumers
2. Communication among consumers i.e., word of mouth.

Consumer information sources fall into four categories:

Personal sources: Family, friends, neighbors, and acquaintances.

Commercial sources: sales people, advertising, sales promotion techniques.

Public sources: Mass media, consumer rating organisations

Experimental sources: Demonstration, handling samples.

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

3. The Social System

The diffusion of a new product usually takes place in a social setting frequently referred to as a social system. In our case, the terms market segment and target segment may be more relevant than the term social system used in diffusion research. A social system is a physical, social, or cultural environment to which people belong and within which they function. For example, for new hybrid seed rice, the social system might consist of all farmers in a number of local villages.

The key point to remember is that a social system‘s orientation is the climate in which marketers must operate to gain acceptance for their new products. For example, in recent years, the World has experienced a decline in the demand for red meat. The growing interest in health and fitness thought the nation has created a climate in which red meat is considered too high in fat and calorie content. At the same time, the consumption of chicken and fish has increased, because these foods satisfy the prevailing nutritional values of a great number of consumers.

4. Time

Time pervades the study of diffusion in three distinct but interrelated ways:

a) The amount of purchase time: Purchase time refers to the amount of time that elapses between consumers‘ initial awareness of a new product or service and the point at which they purchase or reject it. For instance, when the concept of Home Land‖ super market was introduced by Asha Chavan in Pune, apart from offering a variety of quality products, also give an unconditional guarantee of replacement or refund, home delivery of all, even single item telephonic orders at no extra cost. And beyond

business, Homeland also offers free services like phone, electricity, credit card and cell phone bill payments.

b) The identification of adopter categories: The concept of adopter categories involves a classification scheme that indicates where a consumer stands in relation to other consumers in terms of time. Five adopter categories are frequently used viz., innovators, early adopters, early majority, late majority, and laggards. Let us discuss about these categories later in the chapter.

c) The rate of adoption: The rate of adoption is concerned with how long it takes a new product or service to be adopted by members of a social system i.e., how quickly it takes a new product to be accepted by those who will ultimately adopt it.

The marketing objective for launching new products is to gain wide acceptance from the market as quickly as possible. So as to obtain huge market share with the new product, marketers either adopt a Penetrating strategy, i.e., low introductory price to discourage competitors from entering the market or go for a Skimming strategy.

Influence of Product Characteristics on diffusion

The rate of spread of innovation depends on a number of factors listed below:

1. Type of group: Some groups, who are young, affluent and highly educated, accept changes faster than the old, traditional and poor groups. This shows that the target market is an important determinant of the rate of diffusion.
2. Perceived risk: The more the risk associated with changing to new innovation, the slower is the rate of diffusion. The risk consists of the product not performing as expected, the risk of the consequences of change-over, and the risk of reverting back to the old product, if not satisfied with the innovative product.
3. Type of decision: An individual vs. a collective decision. Individual decisions lead to faster diffusion than collective ones.

4. Marketing effort: This also affects the diffusion process. More aggressive marketing effort, consisting of high and continuous advertising expenditure, diffuses faster than otherwise.
5. Trial: The trial can be taken at low cost and low risk, the diffusion is faster. Some products can be borrowed, rented or, their trial can be taken at retail outlets. These products like medicines and other low priced items have faster diffusion. These days even car outlets are giving free trials and rides to prospective customers, to make their new models of cars diffuse faster.
6. Fulfillment of felt need: The faster a need is satisfied or fulfilled by a product, the greater is the rate of its diffusion.
7. Compatibility: The more the product is compatible with the beliefs, attitudes and values of the individual or group the faster the diffusion – vegetables soup for vegetarians, ordinary microwave no roasting.
8. Relevant advantage: The advantage could be of price, quality, ease of handling, product quality. To have quick diffusion, the product must offer either a price advantage or a performance advantage. Washing machine is expensive, but a labour saving device.
9. Complexity: If the product is complex (difficult to understand and use) the diffusion is slower. The product may be complex but its use must be easy. Complexity may be because of many attributes (at- tributes complexity which are difficult to under- stand). The other complexity may be trade off complexity. The trade off takes place between cost of purchase and economy. Convenience vs. space or speed of cooking, vs. quality of cooking, as in microwave ovens.
10. Observability: The more easily the positive effects of the products can be observed, the more discussion takes place and faster the diffusion process, e.g. cell phones.

Classification of Adopters

Adopters can be classified into five groups based on the time when they adopt.

Innovators: The first 2.5 per cent to adopt innovation.

Early adopters: The next 13.5 per cent to adopt.

Early majority: The next 34 per cent to adopt.

Late majority: The next 34 per cent to adopt.

Laggards: The final 16 per cent to adopt.

Innovators

Innovators are venturesome risk takers. They are younger, more educated and socially mobile. They have the capacity to absorb risk associated with the new product. They are cosmopolitan in outlook, are aware and make use of commercial media, and are eager to learn about new products, are progressive, ready to use new products.

Early adopters

They take a calculated risk before investing and using new innovations. They are opinion leaders and provide information to groups, but they are also concerned about failure. Therefore, they weigh advantages and disadvantages of the product before plunging in for a purchase.

Early majority

They tend to be more continuous and use the product after the innovators and early adopters seem to be satisfied with it. They are elders, well educated and less socially mobile. They rely heavily on inter-personal source of in- formation. They constitute 34 per cent of the consumers.

Late majority

They are doubtful and skeptical about the innovation of new products. They tend to use the product not so much because of innovation, but because of other pressures, non-availability of the product and social pressures. They have less social status, and are less socially mobile than the previous group.

Laggards

They are more traditional. They possess limited social interaction and are oriented to the past. They adopt the innovations with great reluctance. They constitute a small portion of 16 per cent of the consumers.

As depicted in figure 4.4 below adopter categories are generally depicted as taking on the characteristics of a normal distribution i.e., a bell-shaped curve that describes the total population that ultimately adopts a product.

Non adopter Categories

A classification of the non-adopter categories would include:

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 adopters: Who know the product will be useful or them but have not tried it.
4. Trial adopters: Who have tried the product and also rejected the same.
5. Trial rejectors

Adopter Category	Descriptio	Relative percentage within which the population that eventually adopts
Innovators	Venturesome-very eager to try new ideas; acceptable if risk is daring; more cosmopolite social relationships; communicates with other innovators	2.5%
Early Adopters	Respect- more integrated into the local social system; the persons to check with before adopting a new idea; category contains greatest number of opinion leaders; are role models	13.5%
Early Majority	Deliberate-adopt new ideas just prior to the average time; seldom hold leadership positions; deliberate for some time before adopting	34.0%
Late majority	Skeptical-adopt new ideas just after the average time; adopting may be both an economic necessity and a reaction to peer pressures; innovations approached cautiously	34.0%
Laggards	Traditional-the last people to adopt an innovation; most ―localite‖ in outlook; oriented to the past; suspicious of the new	16.0%

Role of Personal Influence

Personal influence is another important factor, which plays a role in the adoption process of new products. This refers to what effect the statements made abut ‗a new product‘ by one person will have on another person‘s change in attitude or probability. This means that based on the comments or views expressed by ones personal friend or acquaintance one may change the decision to adopt a new product or innovation. It is usually observed that consumers and especially women prefer to consult one another‘s friends and value the opinions expressed by them about new products, the quality differences among the different brands, store at which to purchase to experience shopping and so on.

Market strategy related to diffusion.

There are differences in the early purchasers or innovators and late purchasers (Laggards). The strategy for the target market adopted is a “moving target market” approach. First the general target market is selected, and then the focus shifts to innovators, early adopters, early majority, late majority and laggards. This takes place as the product keeps getting acceptance from the consumers. There is then a change in the media and advertising themes for different target groups.

Diffusion enhancement strategies

The idea is to find out the diffusion inhibitors and to eliminate them for the enhancement of diffusion. For this the diffusion determinants are analysed, and diffusion strategies framed, as given in table below.

Diffusion Determinant	Diffusion inhibitor	Diffusion enhancement strategies
1. Type of group	Conservative	Try other markets modern traditional and consumer
2. Perceived risk	High	Give guarantees, reduce risk by endorsing with credible sources
3. Type of decision	Group	Choose media to reach all decisions deciders and provide conflict reduction themes
4. Marketing effort	Limited	Extensive and aggressive marketing effort
5. Trial	Difficult	Distribute free samples to early adopters. Use high service outlets
6. Fulfillment of felt need	Weak	Show importance of benefits use extensive advertising
7. Competibility	Conflict	Stress attributes consistent with values and norms
8. Relevant advantage	Low	Lower the price-redesign the product
9. Complexity	High	Use extensive marketing effort. Use skilled sales force. Use demonstration of product
10. Observability	Low	Expose the product more through promotion and advertising