Chapter 10

Question 1

Diffusion of innovation Definition

Answer 1

Diffusion of innovation is defined as a process by which new products are communicated to members of a society through various channels over a certain time period.

Question 2

Let us now look at the four main elements of the definition:

Answer 2

• innovation
• communication channels
• time
• social system

Question 3

innovation

Answer 3

An innovation is a new idea introduced to society or individuals.

• for example the first microwave oven.

A new idea does not necessarily have to be new knowledge it may simply be an improvement on an existing idea

• the example of the microwave oven: the first microwave oven did not have up-to-date features such as a touch screen, whereas the new improved ones do.

Question 4

Communication channels

Answer 4

Communication channels are responsible for disseminating information on new ideas and products.

Example of channels that are used for this purpose are:

• print media (newspapers and magazines)
• broadcast media (radio and television)
• new media (internet).

Question 5

Time

Answer 5

Time refers to the amount of time it takes consumers to adopt (accept) a new idea or product.

• For example, consumers will become aware of a new Sony digital camera over a period of time through the marketing message communicated by the various media channels to which consumers have access. The media channel conveying the message to the consumer will depend on the consumer’s economic status. 

Question 6

Social system

Answer 6

Social system refers to members of the society, individuals and groups or organisations that engage in problem solving to achieve common goals.

Question 7

Five adopter categories and their characteristics:

Answer 7

1. • innovators.
2. • early adopters.
3. • early majority.
4. • late majority.
5. • late adopters, laggards or non-adopters.

Question 8

Innovaters

Answer 8

These people are the first group of consumers to adopt a new product and they are called the enthusiasts.

They are the type of consumers who want advanced technology and performance, are willing to take risks, and are enthusiastic about purchasing new products.

Innovators amount to 2,5% of the overall population.

Their demographic profile indicates that they are young, educated and have networking connections and, therefore, fit the characteristics of the South African generation Y.

They obtain information on products and services from impersonal and scientific sources, such as the internet and niche magazines.

• For example, if it concerns a health product, they will read magazines such as Shape (women) or Men’s Health (men).

Question 9

Early adopters.

Answer 9

These people are termed the visionaries.

They account for 13,5% of the overall target market and only adopt a product once the innovators have used it.

Early adopters form an influential consumer group and are the driving force behind the acceptability of new products.

They spread the message by word of mouth.

These consumers are the opinion-making leaders and an important group for marketers to take into account as they are held in high esteem by others who follow, accept and adopt their opinions and recommendations.

They also determine whether consumers will have a positive or negative attitude towards a product.

This consumer group is also well educated and has self-confidence as it consists of specialists in their respective fields.

They have contact with salespeople, read more magazines and use mass media as their source of information.

Question 10

Early majority.

Answer 10

Consumers in this category prefer products that have been tried and tested, since they avoid risks (psychological, financial and performance).

They are pragmatists who want solutions and convenience from the products they purchase.

Early majorities are middle-class consumers who have contact with opinion leaders, salespeople and the mass media.

This group relies on the recommendations of the early adopters and they comprise 34% of the target market.

Question 11

Late majority.

Answer 11

These are pessimistic consumers who do not seek anyone’s opinion and only use the product once they have been reassured of its benefits and values.

This may be due to the fact that they are less educated, older, financially more stable and conservative than the previously mentioned group.

They use fewer marketing communication sources to obtain information than the early majority; instead, they seek information from consumers within their own group.

The late majorities account for 34% of the population.

Question 12

Late adopters, laggards or non-adopters.

Answer 12

The laggards are termed the sceptics, since they do not believe in new ideas.

Instead, they are suspicious and prefer things to be done as in the past.

They react to the new product or service and its benefits at a slow rate and account for 16% of the target market.

They are older in terms of age and are in the lower socioeconomic class

They depend on consumers within the same categories, such as the late majorities, for advice and information on purchasing a product.

Question 13

Factors affecting the spread of innovation can also be termed attributes or characteristics of innovation or the spread of innovation.

10 known factors are:

Answer 13

1. Complexity
2. Compatibility.
3. Relative advantage.
4. Observation.
5. Trial.
6. Perceived risk.
7. Marketing effort.
8. Type of group.
9. Type of decision.
10. Fulfilment of perceived need.

Question 14

Complexity

Answer 14

This factor refers to the degree of difficulty in terms of the level of understanding and the use of the new product.

Products that are complex and difficult to use and understand tend to spread slower in the market.

• Let us take Moirs’s two custard products as an example. Moirs instant custard is easy to make and ready to eat within a minute, as consumers only need to add milk and stir. When using Moirs custard powder, on the other hand, consumers have to warm the milk first, measure and add the custard power carefully and add sugar while stirring to reach the right consistency. If done incorrectly the custard’s consistency may be too thin or too thick. Consumers will adopt the instant custard easily, since it is easy to prepare and does not require much effort.

Question 15

Compatibility.

Answer 15

This factor refers to whether the product is compatible with the consumers’ values, beliefs and objectives regarding its purchase and use.

• Let us take religion as an example. Muslims and members of the Zion Christian Church (ZCC) are not allowed to eat pork as it is against their beliefs. This means that new food products (eg Escort polony), which contains pork, will be adopted at a slow rate or may not even be adopted at all.

Question 16

Relative advantage.

Answer 16

This factor relates to consumer needs, which are met by innovation, such as reduced costs or new methods of doing things.

• For example, First National Bank (FNB) has introduced cellphone banking to perform transactions such as payments and purchases. This innovative service is cheaper than the traditional over-the-counter transactions and consumers do not have to physically go into the bank. They also have an in-contact service that informs consumers of account activity via SMS. Consumers will adopt this innovative banking service quickly, owing to its convenience and the difference in bank charges.

Question 17

Observation.

Answer 17

This factor deals with the extent to which the potential adopter has had the opportunity to monitor the positive effects of the product or service when accepting the innovation.

If the adopter has had an opportunity to see the use and benefits of the product, the possibility of a more rapid diffusion is feasible.

• For example, a consumer can see how a Phillips vacuum cleaner functions by observing an in-store demonstration by a salesperson. A Phillips washing machine, on the other hand, cannot be demonstrated in store and the salesperson can only explain the use and function of the machine. Consequently, consumers who buy the washing machine can only observe the use of the machine once they have purchased the product. Consumers will, therefore, adopt the vacuum cleaner quicker than the washing machine owing to the fact that they were able to see the benefits offered.

Question 18

Trial.

Answer 18

The easier it is to have a low-cost or low-risk trial of the innovation, the more rapid its diffusion.

• An example of this is the introduction of a new flavour of Jacobs Kronung coffee, where consumers are given sample sachets in order to try out the product. In trying out the product, consumers run no risk of losing money as the trial sachets are free. This increases the speed of diffusion as consumers can taste the new product and will purchase it if they are satisfied.

Question 19

Perceived risk.

Answer 19

Should the risk of trying out the innovative product or service be high, diffusion will be slow.

These risks can be psychological or financial.

Financial risk occurs when the product is expensive and consumers cannot be refunded.

• A product that involves high financial risks is, for example, the purchase of a luxury car (eg Mercedes-Benz). Once the consumer drives it out of the showroom it loses value and the money the consumer paid for it will not be refunded and it can only be resold or traded in at a lower value. The same applies when purchasing a less expensive car, such as a Toyota Corolla, where consumers are still faced with the financial risk, although this is less in comparison to a Mercedes-Benz, as the purchase price is lower. The speed with which the Toyota will be adopted will, therefore, be faster compared to the Mercedes-Benz.

Question 20

Marketing effort.

Answer 20

The marketing mix consists of 7 Ps, which are activities executed by the organisation to influence the rate of diffusion.

• Marketers are expected to communicate product attributes, such as features, quality and benefits to consumers, using, for example the 7 Ps: price, place (eg CNA), promotion (eg TV, magazines), product (eg Nintendo WII), people (eg teenagers, young adults and the internal staff), process and physical evidence (eg layout, displays in store) to communicate the Nintendo WII, for example, to the target market to increase the spread of innovation.

Question 21

Type of group.

Answer 21

The target market determines the rate at which innovation will be diffused, as some groups are more accepting than others.

• The young, affluent and highly educated market segments tend to accept change and new products eagerly and will, therefore, buy the Nintendo WII, unlike the older generation which may be sceptical about the new product.

Question 22

Type of decision.

Answer 22

Decisions are made collectively or individually.

Collective decisions are those made by more than one consumer

• for example, family members (mothers, fathers and children). Collective decisions may result in slow rates of diffusion, since family members may not have the same opinion about buying a new product, such as a Nintendo WII or a Sony play station.

Individual decisions are only made by the actual buyer, who does not have to deliberate with other consumers, such as family members or friends. The speed of diffusion in such a case is, therefore, more rapid because less decision-making consultation is required.

Question 23

Fulfilment of perceived need.

Answer 23

When the satisfaction that will be derived from the innovation is obvious in terms of meeting the need, the diffusion is more rapid.

• For example, the Nintendo WII offers features such as powerful new motion-sensing controllers and uses Bluetooth, as opposed to other game stations, such as the Sony playstation. Consumers will, therefore, perceive the Nintendo WII as more capable of satisfying their needs and it will be adopted quicker by the consumers.

Question 24

Consumer Adoption Process

Answer 24

The adoption process is defined as the development of consumers’ awareness of a product, which ranges from being aware of the existence of the product to the time they actually use the product regularly.

• Adoption refers to the level of awareness of the product
• Diffusion refers to the speed with which the innovation is spread through society.

Psychologically, individuals negotiate the various steps to adoption differently, since they do not all adopt a new product at the same rate or speed.

The consumers who adopt the innovative product first, that is, the innovators, take the steps quickly, while other adopters take longer as they deliberate on their purchases.

However, the innovation can be rejected at any stage of the adoption process.

Question 25

Steps in the Adoption Process

Answer 25

1. Awareness
2. Interest
3. Evaluation
4. Trial
5. Decision
6. Confirmation 

Question 26

1. Awareness 

Answer 26

The potential consumer has some knowledge of the product but does not have all the information.

At this stage, the consumer may not know how the product works or what it can do.

The consumer becomes aware of the product via communication channels, such as the broadcast media (radio and television) or print media (magazines and newspapers).

• Have you noticed that magazines and newspapers do not usually tell you how the product works? For example, beauty products, such as the new Lux Touch Me beauty soap, are advertised in magazines, but these advertisements generally give a visual image and some information on what the product does; they do not explain exactly how it works.

Question 27

2. Interest

Answer 27

The consumer knows about the product but still lacks information.

If consumers become interested they will try to obtain information on the product.

This information may be obtained from secondary sources, such as magazines and articles.

• For example, information on Lux beauty soap may be obtained from magazines such as You and Huisgenoot. Information may also be obtained in store by asking the assistants in shops such as Clicks.

Question 28

3. Evaluation

Answer 28

Consumers evaluate the product on the basis of their past experiences.

When using a product, consumers use their intellectual capital to evaluate it in terms of its benefits.

• For example, when using other beauty soaps, such as Lux Creamy Perfection or the Dove Cream Bar, the consumer compares them to other beauty soaps he or she has used in the past.

Question 29

4. Trial

Answer 29

At this stage, the consumer may buy the product to determine if it meets his or her needs, for example a smooth, clear skin.

It is important for marketers, especially those who market fast consumable products, such as food and skin care, to have samples available for consumers.

• An example of a sample would be a small 50 g bar of Lux beauty soap included in a magazine or handed out during an in-store promotional display which would encourage consumers to buy the product.

The new product could also be introduced to consumers as a promotional offering at a discount as part of a package deal with another company product.

• for example a deodorant. Consumers do not easily experiment with expensive products and marketers need to ensure that the products are available to encourage trial and adoption.

Question 30

5. Decision

Answer 30

Once the product has been tested, the consumer decides to adopt or reject the new product.

Consumers adopt a new product if they are satisfied with it and value its benefits and may, consequently, even become regular users.

• If consumers are satisfied that they are, for example, not allergic to Lux Rose Velvet beauty soap and that it has the silky effect they want from it, they may buy the 125 g or 200 g bars. Consumers may then even buy the soap on a regular basis.

Question 31

6. Confirmation

Answer 31

The consumer searches for more information pertaining to the product they have purchased.

This may be done by speaking to other consumers who use the soap, or by reading magazines and articles to get a clear understanding of the use and benefits of the product.

Subsequently, the consumer conducts a post-purchase evaluation to decide whether or not he or she will purchase the product again.