Reference no: EM133493261

Assignment: Diffusion of Innovation

In Chapter 5, the book touches on Diffusion of Innovation on page 152 but I wanted to provide you with a little more detail on the topic. It's really important when you think about change- this could be the kind of change that comes when you develop a new product, modify an existing one, or make any kind of organizational change. It's all about how to people adopt (or accept) innovation.

The process by which the use of an innovation- whether a product, a service, or a process- spreads throughout a market group, over time and across various categories of adopters is diffusion of innovation. The theory around diffusion of innovation helps marketers understand the rate at which consumers are likely to adopt a new product or service. It also helps them to identify potential markets and predict sales for their new products.

In the diffusion of innovation theory, five adopter groups have been identified: innovators, early adopters, early mainstream, late mainstream, and laggards (or lagging adopters). I've attached a visual representation of the diffusion of innovation- you will notice it makes a bell curve.

Innovators- are buyers who want to be the first to have a new product or service. They enjoy taking risks and are regarded as highly knowledgable. They are generally very well informed about a certain product category. While they represent only 2.5% of the total market for a new product, they are crucial to the success of any new product because they usually talk a lot about the products and review them vocally.

Example: Think of a person who drives a self-driving car prototype as an innovator OR think of Steve Jobs and the folks at Apple as they created iPhones/iPads, etc.

Early Adopters- This group consists of about 13.5% of all buyers. They generally don't take as much risk as innovators (they wait to see what innovators say about a product) but they are regarded as opinion leaders for particular product categories as the other three buyer categories often rely on their feedback.

Example: When the iPhone was first released, the very first buyers would be early adopters.

Early majority- this group represents about 34% of all buyers. This group is crucial because a product usually doesn't become profitable until this large group purchases it. If this group never becomes large enough, the product or service can fail. The early majority doesn't take as many risks and tends to wait until the bugs are worked out of a particular product or service.

Example: When the bugs were worked out on the iPhones, this group bought. They waited until the product was purchased and reviewed by the early adopters.

Late majority- this group also represents about 34% of all buyers. This is the last group of buyers to enter a new product market. When they do, the product has achieved its full market potential. By the time this group enters the market, sales tend to level off or may be in decline.

Example: After several versions of the iPhone were released, they finally decided to ditch their Blackberry and purchase.

Laggards- this group represents about 16% of the market. These consumers like to avoid change and rely on traditional products until they are no longer available.

Example: Laggards STILL use flip phones. They will probably use flip phones until they are no longer manufactured. They resist change at all costs.

I use the example of phones but it's important to keep in mind that the Diffusion of Innovation can apply to just about anything. It's also important to remember that people are not set in their adopter group for every product- it can vary. For example, my stepdad would be a laggard when it comes to phones (he still uses a flip phone). However, he might be considered an early adopter or early mainstream when it comes to golf clubs. He's much more likely to 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:

1. Relative advantage- this is the degree to which the innovation appears superior to existing products. Example: Electric cars were adopted quickly because of their advantage over gas powered cars.

2. Compatibility- The degree to which the innovation fits the values and experiences of potential customers. Example: Electric cars are driven the same way as gas powered cars so they fit the experiences of drivers.

3. Complexity- The degree to which the innovation is difficult to understand or use. Example: This is where self-driving cars may struggle because it's hard to understand how that could be safe.

4. Divisibility- The degree to which the innovation may be tried on a limited basis. Example: consumers can test-drive electric or self-driving cars which helps increase the adoption rate.

5. Communicability- The degree to which the results of using the innovation can be observed or described to others. Example: If you can easily describe or demonstrate how to use a self-driving car and how the technology works, you will increased adoption.
Task

Question A. Identify a product or service you use where you may be considered an early adopter. Explain.

Question B. Identify a product or service you use where you may be considered early mainstream or late mainstream. Explain.

Question C. Identify a product or service you use where you may be considered a laggard. Explain. (We are all laggards in some area. Confession- I still love have the old school Uggs but I don't wear them in public anymore).

Again, this assignment is meant for you to reflect. There are no right or wrong answers, I just want you to demonstrate that you are thinking critically.