Diffusion of Innovation
Products tend to go through a life cycle. Initially, a product is introduced. Since the product is not well known and is usually expensive (e.g., as microwave ovens were in the late 1970s), sales are usually limited. Eventually, however, many products reach a growth phase—sales increase dramatically. More firms enter with their models of the product. Frequently, unfortunately, the product will reach a maturity stage where little growth will be seen. For example, in the United States, almost every household has at least one color TV set. Some products may also reach a decline stage, usually because the product category is being replaced by something better. For example, typewriters experienced declining sales as more consumers switched to computers or other word processing equipment. The product life cycle is tied to the phenomenon of diffusion of innovation. When a new product comes out, it is likely to first be adopted by consumers who are more innovative than others—they are willing to pay a premium price for the new product and take a risk on unproven technology. It is important to be on the good side of innovators since many other later adopters will tend to rely for advice on the innovators who are thought to be more knowledgeable about new products for advice.

At later phases of the PLC, the firm may need to modify its market strategy. For example, facing a saturated market for baking soda in its traditional use, Arm ü Hammer launched a major campaign to get consumers to use the product to deodorize refrigerators. Deodorizing powders to be used before vacuuming were also created.
It is sometimes useful to think of products as being either new or existing.
Many firms today rely increasingly on new products for a large part of their sales. New products can be new in several ways. They can be new to the market—noone else ever made a product like this before. For example, Chrysler invented the minivan. Products can also be new to the firm—another firm invented the product, but the firm is now making its own version. For example, IBM did not invent the personal computer, but entered after other firms showed the market to have a high potential. Products can be new to the segment—e.g., cellular phones and pagers were first aimed at physicians and other price-insensitive segments. Later, firms decided to target the more price-sensitive mass market. A product can be new for legal purposes. Because consumers tend to be attracted to “new and improved” products, the Federal Trade Commission (FTC) only allows firms to put that label on reformulated products for six months after a significant change has been made.
The diffusion of innovation refers to the tendency of new products, practices, or ideas to spread among people. Usually, when new products or ideas come about, they are only adopted by a small group of people initially; later, many innovations spread to other people.

The bell shaped curve frequently illustrates the rate of adoption of a new product. Cumulative adoptions are reflected by the S-shaped curve. The saturation point is the maximum proportion of consumers likely to adopt a product.

In the case of refrigerators in the U.S., the saturation level is nearly one hundred percent of households; it well below that for video games that, even when spread out to a large part of the population, will be of interest to far from everyone.
Several specific product categories have case histories that illustrate important issues in adoption. Until some time in the 1800s, few physicians bothered to scrub prior to surgery, even though new scientific theories predicted that small microbes not visible to the naked eye could cause infection. Younger and more progressive physicians began scrubbing early on, but they lacked the stature to make their older colleagues follow.
ATM cards spread relatively quickly. Since the cards were used in public, others who did not yet hold the cards could see how convenient they were. Although some people were concerned about security, the convenience factors seemed to be a decisive factor in the “tug-of-war” for and against adoption.
The case of credit cards was a bit more complicated and involved a “chicken-and-egg” paradox. Accepting credit cards was not a particularly attractive option for retailers until they were carried by a large enough number of consumers. Consumers, in contrast, were not particularly interested in cards that were not accepted by a large number of retailers. Thus, it was necessary to “jump start” the process, signing up large corporate accounts, under favorable terms, early in the cycle, after which the cards became worthwhile for retailers to accept.
Rap music initially spread quickly among urban youths in large part because of the low costs of recording. Later, rap music became popular among a very different segment, suburban youths, because of its apparently authentic depiction of an exotic urban lifestyle.
Hybrid corn was adopted only slowly among many farmers. Although hybrid corn provided yields of about 20% more than traditional corn, many farmers had difficulty believing that this smaller seed could provide a superior harvest. They were usually reluctant to try it because a failed harvest could have serious economic consequences, including a possible loss of the farm. Agricultural extension agents then sought out the most progressive farmers to try hybrid corn, also aiming for farmers who were most respected and most likely to be imitated by others. Few farmers switched to hybrid corn outright from year to year. Instead, many started out with a fraction of their land, and gradually switched to 100% hybrid corn when this innovation had proven itself useful.
Several forces often work against innovation. One is risk, which can be either social or financial. For example, early buyers of the CD player risked that few CDs would be recorded before the CD player went the way of the 8 track player. Another risk is being perceived by others as being weird for trying a “fringe” product or idea. For example, Barbara Mandrell sings the song “I Was Country When Country Wasn’t Cool.” Other sources of resistance include the initial effort needed to learn to use new products (e.g., it takes time to learn to meditate or to learn how to use a computer) and concerns about compatibility with the existing culture or technology. For example, birth control is incompatible with strong religious influences in countries heavily influenced by Islam or Catholicism, and a computer database is incompatible with a large, established card file.
Innovations come in different degrees. A continuous innovation includes slight improvements over time. Very little usually changes from year to year in automobiles, and even automobiles of the 1990s are driven much the same way that automobiles of the 1950 were driven. A dynamically continuous innovation involves some change in technology, although the product is used much the same way that its predecessors were used—e.g., jet vs. propeller aircraft. A discontinous innovation involves a product that fundamentally changes the way that things are done—e.g., the fax and photocopiers. In general, discontinuous innovations are more difficult to market since greater changes are required in the way things are done, but the rewards are also often significant.
Several factors influence the speed with which an innovation spreads. One issue is relative advantage (i.e., the ratio of risk or cost to benefits). Some products, such as cellular phones, fax machines, and ATM cards, have a strong relative advantage. Other products, such as automobile satellite navigation systems, entail some advantages, but the cost ratio is high. Lower priced products often spread more quickly, and the extent to which the product is trialable (farmers did not have to plant all their land with hybrid corn at once, while one usually has to buy a cellular phone to try it out) influence the speed of diffusion. Finally, the extent of switching difficulties influences speed—many offices were slow to adopt computers because users had to learn how to use them.
Some cultures tend to adopt new products more quickly than others, based on several factors: * Modernity: The extent to which the culture is receptive to new things. In some countries, such as Britain and Saudi Arabia, tradition is greatly valued—thus, new products often don’t fare too well. The United States, in contrast, tends to value progress. * Homophily: The more similar to each other that members of a culture are, the more likely an innovation is to spread—people are more likely to imitate similar than different models. The two most rapidly adopting countries in the World are the U.S. and Japan. While the U.S. interestingly scores very low, Japan scores high. * Physical distance: The greater the distance between people, the less likely innovation is to spread. * Opinion leadership: The more opinion leaders are valued and respected, the more likely an innovation is to spread. The style of opinion leaders moderates this influence, however. In less innovative countries, opinion leaders tend to be more conservative, i.e., to reflect the local norms of resistance.
It should be noted that innovation is not always an unqualifiedly good thing. Some innovations, such as infant formula adopted in developing countries, may do more harm than good. Individuals may also become dependent on the innovations. For example, travel agents who get used to booking online may be unable to process manual reservations.
Sometimes innovations are disadopted. For example, many individuals disadopt cellular phones if they find out that they don’t end up using them much.
Diffusion of Innovations Theory the adoption of new ideas, media, etc.
(or: Multi-step flow theory) History and Orientation
Diffusion research goes one step further than two-step flow theory. The original diffusion research was done as early as 1903 by the French sociologist Gabriel Tarde who plotted the original S-shaped diffusion curve. Tardes' 1903 S-shaped curve is of current importance because "most innovations have an S-shaped rate of adoption" (Rogers, 1995). Core Assumptions and Statements
Core: Diffusion research centers on the conditions which increase or decrease the likelihood that a new idea, product, or practice will be adopted by members of a given culture. Diffusion of innovation theory predicts that media as well as interpersonal contacts provide information and influence opinion and judgment. Studying how innovation occurs, E.M. Rogers (1995) argued that it consists of four stages: invention, diffusion (or communication) through the social system, time and consequences. The information flows through networks. The nature of networks and the roles opinion leaders play in them determine the likelihood that the innovation will be adopted. Innovation diffusion research has attempted to explain the variables that influence how and why users adopt a new information medium, such as the Internet. Opinion leaders exert influence on audience behavior via their personal contact, but additional intermediaries called change agents and gatekeepers are also included in the process of diffusion. Five adopter categories are: (1) innovators, (2) early adopters, (3) early majority, (4) late majority, and (5) laggards. These categories follow a standard deviation-curve, very little innovators adopt the innovation in the beginning (2,5%), early adopters making up for 13,5% a short time later, the early majority 34%, the late majority 34% and after some time finally the laggards make up for 16%.
Statements: Diffusion is the “process by which an innovation is communicated through certain channels over a period of time among the members of a social system”. An innovation is “an idea, practice, or object that is perceived to be new by an individual or other unit of adoption”. “Communication is a process in which participants create and share information with one another to reach a mutual understanding” (Rogers, 1995).
Conceptual Model Diffusion of innovation model.
Source: Rogers (1995)
Favorite Methods
Some of the methods are network analysis, surveys, field experiments and ECCO analysis. ECCO, Episodic Communication Channels in Organization, analysis is a form of a data collection log-sheet. This method is specially designed to analyze and map communication networks and measure rates of flow, distortion of messages, and redundancy. The ECCO is used to monitor the progress of a specific piece of information through the organization. Scope and Application
Diffusion research has focused on five elements: (1) the characteristics of an innovation which may influence its adoption; (2) the decision-making process that occurs when individuals consider adopting a new idea, product or practice; (3) the characteristics of individuals that make them likely to adopt an innovation; (4) the consequences for individuals and society of adopting an innovation; and (5) communication channels used in the adoption process. Example
To be added.
References
Key publications
Rogers, E.M. (1976). New Product Adoption and Diffusion. Journal of Consumer Research, 2 (March), 290 -301.
Rogers, E.M. (1995). Diffusion of innovations (4th edition). The Free Press. New York.
Pijpers, R.E., Montfort, van, K. & Heemstra, F.J. (2002). Acceptatie van ICT: Theorie en een veldonderzoek onder topmanagers. Bedrijfskunde, 74,4.
See also: Two Step Flow Theory
See also Communication and Information Technology

Link for… inov difushn http://www.slideshare.net/jas.bhatia/the-diffusion-of-innovation for Nicosia http://www.authorstream.com/Presentation/anupamkr-677518-nicosia-model-of-consumer-behaviour/ for decision making http://www-rohan.sdsu.edu/~renglish/370/notes/chapt05/ Nicosia Model of Consumer Behaviour :
Nicosia Model of Consumer Behaviour Contact: Anupam Kumar Reader, SMS Varanasi Email: anupamkr@gmail.com

Nicosia Model :
Nicosia Model This Model concerns with the Inter-relationship between: The firms marketing communications The attributes of the consumer, The consumers decision process including Search and evaluation process Actual decision process The feedback of the consumers response to the firm This is a Dynamic Model. 25/10/2010 2 - Anupam Kumar

Nicosia Model :
Nicosia Model 25/10/2010 3 - Anupam Kumar

Nicosia Model – Field 1 :
Nicosia Model – Field 1 Represents the output of a commercial message from the firm in the form of advertising or other forms of promotion and its effect on consumer Sub Field 1 Product Attribute Company’s Communications to the Targeted Audience. Sub Field 2 Consumer Attribute What the consumer makes out of the Communications and other Inputs Field 1 Message Exposure Sub Field 1 Product Attribute Sub Field 2 Consumer Attribute 26/10/2010 4 - Anupam Kumar

Nicosia Model – Field 2 :
If the process results in motivation to buy, it becomes the input for Field 3 Nicosia Model – Field 2 Company’s Input (Field 1) creates certain Attitude Evaluation of the advertised product and other alternatives takes place Field 2 Search & Evaluation (of Means, Ends, Relations) {Pre- Action Field} 25/10/2010 5 - Anupam Kumar

Nicosia Model – Field 3 :
Nicosia Model – Field 3 Field 3 represents the act of purchase Transformation of the motivation into the act of buying Act of Purchase (or Non Purchase) leads to certain purchasing behaviour Evaluation of Options leading to Motivation would result in Action Field 3 Decision (Act of Purchase) {Action} 25/10/2010 6 - Anupam Kumar

Nicosia Model – Field 4 :
Use of Purchased Item including Use and Storage of the Product by the Consumer Act of Purchase Nicosia Model – Field 4 Retention of the experience by the consumer as an influence on future purchase Feedback of sales to firm Field 4 Feedback Consumption 25/10/2010 7 - Anupam Kumar

Nicosia Model :
Purchasing Behaviour Nicosia Model Field 2 Search & Evaluation (of Means, Ends, Relations) {Pre- Action Field} Field 3 Decision (Act of Purchase) {Action} Field 4 Feedback Consumption Attitude Motivation Experience Field 1 Message Exposure Sub Field 1 Product Attribute Sub Field 2 Consumer Attribute 25/10/2010 8 - Anupam Kumar

Arguments Against Nicosia Model :
Arguments Against Nicosia Model Incomplete in a number of aspects, including the influences and inter-relationships among the consumer attributes A number of assumptions have been made that question the validity of this model, for instance: What type of consumer are we talking about? The company and the consumer have an existing relationship? What type? Is this for a new product? Is this the first exchange the consumer has had with the producer?

The Diffusion Of Innovation - Document Transcript 1. The Diffusion of Innovation
The diffusion process is concerned with how innovations spread, that is, how they are assimilated with in the market. We have chosen the Tata sky bas our product because it was launched in 2004 and we want to see that customer adopted it or not.
*Diffusion is the Process by which the acceptance of an innovation (a new product, new service, new idea, or new practice) is spread by communication (mass media, Salespeople, or informal conversations) to members of social systems (a target market) over a period of time.
The four Basic Elements of the Diffusion process:

* The Innovation, * The channels of Communication, * The social system * Time
1) The Innovation: the Innovation is classified in four parts’

* Firm Oriented Definitions: In the case of Tata Sky it is firm oriented approach because the same Direct To Home facility is provided by the Dish T.V. and many other Direct to home service provider * Product-Oriented Definitions: the product oriented approach focuses on the features in herent in the product itself and on the effects these features are likely to have on consumers usage patterns. There are three types of product innovation: * *Consumer behavior by Schiffman and KanuckA continuous innovation for the Tata sky is that they have modified the product features rather than discovering them. The various features are 150 channels, providing live telecast of various holy places, on demand movies, etc. * A dynamic continuous innovation is more disruptive than continuous innovation but still does not alter established behavior patterns. If we take Tata Sky then there are continuous innovation i.e. paying the monthly bill through the credit card from Tata sky site, recording Live telecast for 48 hours and switch to other channels, activating different facilities like matrimony, games, sports, etc. * A discontinuous innovation requires consumers to adopt new behavior patterns. If we see Tata sky this is not the discontinuous innovation because before launching in India, these facilities are used in many European, American and Australian Countries.
Product Characteristics that influence Diffusion: Diffusion researchers have identified five product characteristics that seem to influence consumer acceptance of new products.
1). Relative Advantage
2). Compatibility
3). Complexity
4). Trialability and
5). Obserbality
Relative Advantage. The degree to which potential customers perceive the new product as superior to existing substitutes. In Relative Advantage if we see Tata sky, potential consumers see the difference between the Tata sky direct to home and Cable T.V. Tata sky’s pictures quality is very good if we compare it with cable T.V. Tata Sky has customer care department, but a local cable wala has not.
Compatibility: The degree to which potential consumers feels a new product is consistent with their present needs, values and practices .Yes it is a consistent product. Because this is a new product and it is a very consistent to present entertainment needs and desires.
Complexity: The degree to which a new product is easy to understand or use. Tata sky is very easy to understand. It has no complexities. Consumers just need to subscribe it and view the T.V. In this product consumer have to understand how to operate or change the channel.
Trialability: The degree to which a new product is capable of being tried on a limited basis. In the trialability the consumers have to visit the retailer for the demonstration.
Observability: The degree, to which a product’s benefits or attribute can be observed, imagined or described to potential customers. The observability is described through the advertisement. it is done through telling benefits of the TATA SKY.

Time is the backbone of the diffusion process. It is a time between awareness and purchasers. It pervades the study of diffusion in three distinct but interrelated ways:

* 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. This totally a consumer decision process * An Adopter category involves a classification scheme that indicates where a consumer stands in relation to other consumers in terms of time. The five adopter categories are: * Innovators: these people are high N.C., Highly verbalizes, highly inner directed and detached. Very eager to try new ideas. Not only Tata sky but also with any product these are the people who try the product and recommend. * Early Adopters: these people are also verbalize, other directed, high N.C., and according to CAD theory they are aggressive. Early adopters are integrated into local system (opinions are socially accepted). * Early majority adopt new idea just prior to the average time. These people do not take risks, visualize to high degree and low N.C. * Late Majority adopt new idea just after to the average time .These people are compliant as well as dogmatic. * Laggards are last people to adopt an innovation. These people are traditional and also have lack of exposure. These people are highly dogmatic.
Adoption Process
Five-stage mental process all prospective customers go through from learning of a new product to becoming loyal customers or rejecting it. These stages are (1) Awareness: prospects come to know about a product but lack sufficient information about it; (2) Interest: they try to get more information; (3) Evaluation: they consider whether the product is beneficial; (4) Trial: they make the first purchase to determine its worth or usefulness; (5) Adoption/Rejection: they decide to adopt it, or look for something else. Another explanation is that the customer moves from a cognitive state (being aware and informed) to the emotional state (liking and preference) and finally to the behavioral or cognitive state (deciding and purchasing). Also called adoption process. jas.bhatia + Follow
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Tags * understanding * behavior * consumer * diffusion * innovation * jasmeet
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