The Spread of New Products

The Diffusion of Innovation

The diffusion of innovation theory seeks to explain how, why, and at what rate new ideas and technology spread through cultures.

Learning Objectives

List the four main elements that influence the spread of new ideas and technologies

Key Takeaways

Key Points

  • Everett Rogers, a professor of rural sociology, popularized the theory in his 1962 book Diffusion of Innovations.
  • Four main elements that influence the spread of a new idea are the innovation, communication channels, time, and the social system.
  • Diffusion of innovations manifests itself in different ways in various cultures and fields and is highly subjective to the type of adopters and innovation decision process.
  • Marketers are particularly interested in the diffusion process as it determines the success and failure of any new product introduced in the market.

Key Terms

  • innovation: As used here, innovation describes an idea or product that is new to the company in question.

The Diffusion of Innovation

The diffusion of innovation is a theory that seeks to explain how, why, and at what rate new ideas and technology spread through cultures. The origins of the diffusion of innovation theory are varied and span multiple disciplines. Everett Rogers, a professor of rural sociology, popularized the theory in his 1962 book Diffusion of Innovations. He said diffusion is the process by which an innovation is communicated through certain channels over time among the members of a social system. Rogers synthesized research from over 508 diffusion studies and produced a theory for the adoption of innovations among individuals and organizations. Rogers (1962) espoused the theory that there are four main elements that influence the spread of a new idea:

  1. The innovation – According to Rogers, an innovation is “an idea, practice, or object that is perceived as new by an individual or other unit of adoption.”
  2. Communication channels – These are “the means by which messages get from one individual to another.”
  3. Time – Rogers wrote that “the innovation-decision period is the length of time required to pass through the innovation-decision process. The rate of adoption is the relative speed with which an innovation is adopted by members of a social system.”
  4. Social system – According to Rogers, a social system is “a set of interrelated units that are engaged in joint problem solving to accomplish a common goal.”

Diffusion of innovations manifest themselves in different ways in various cultures and fields and is highly subjective to the type of adopters and innovation decision process. Marketers are particularly interested in the diffusion process as it determines the success and failure of any new product introduced in the market. They usually look forward to procuring the largest amount of adoption within the shortest period of time. Thus, it is quite important for a marketer to understand the diffusion process so as to ensure proper management of the spread of the new product or service.

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Market Share: With successive groups of consumers adopting the new technology (shown in blue), its market share (yellow) will eventually reach the saturation level.

The Rate of Adoption

The rate of adoption is defined as the relative speed with which members of a social system adopt an innovation.

Learning Objectives

Discuss the factors leading to adoption of an innovation, and the strategies for making innovation sustainable

Key Takeaways

Key Points

  • Critical mass is the point within the adoption curve that enough individuals have adopted an innovation such that that the continued adoption of the innovation is self-sustaining.
  • The adoption process is an individual phenomenon the describes the series of stages an individual undergoes from first hearing about a product to finally adopting it.
  • The diffusion process essentially encompasses the adoption process of several individuals over time.

Key Terms

  • intrinsic: Innate, inherent, inseparable from the thing itself, essential.
  • critical mass: A quantity or amount required to trigger a phenomenon.

The Rate Of Adoption

The rate of adoption is defined as the relative speed with which members of a social system adopt an innovation. It is usually measured by the length of time required for a certain percentage of the members of a social system to adopt an innovation. Within the rate of adoption there is a point at which an innovation reaches critical mass. Critical mass is the time in the adoption curve when enough individuals have adopted an innovation so that the continued adoption of the innovation is self-sustaining. Everett Rogers outlines several strategies to help an innovation reach this stage:

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Diffusion of Innovation: This graph shows the innovation curve and the tipping point, or critical mass.

  1. Have an innovation adopted by a highly respected individual within a social network, creating an instinctive desire for a specific innovation.
  2. Inject an innovation into a group of individuals who would readily use an innovation.
  3. Provide positive reactions and benefits for early adopters of an innovation.

The adoption process is an individual phenomenon describing the series of stages an individual undergoes from first hearing about a product to finally adopting it. On the other hand, the diffusion process signifies a group of phenomena, which suggests how an innovation spreads among consumers. Overall, the diffusion process essentially encompasses the adoption process of several individuals over time.

Five Adoption Factors

Rogers defines several intrinsic characteristics of innovations that influence an individual’s decision to adopt or reject an innovation:

  1. Relative Advantage: How improved an innovation is over the previous generation.
  2. Compatibility: The level of compatibility that an innovation has to be assimilated into an individual’s life.
  3. Complexity or Simplicity: If the innovation is perceived as complicated or difficult to use, an individual is unlikely to adopt it.
  4. Trialability: How easily an innovation may be experimented. If a user is able to test an innovation, the individual will be more likely to adopt it.
  5. Observability: The extent that an innovation is visible to others. An innovation that is more visible will drive communication among the individual’s peers and personal networks, and will in turn, create more positive or negative reactions.

Stages of Adopters

The stages of adopters for the diffusion of innovation include knowledge, persuasion, decision, implementation, and confirmation.

Learning Objectives

Describe the five stages detailed in Everett Rogers’ adoption process

Key Takeaways

Key Points

  • Diffusion occurs through a series of communication channels over a period of time among the members of a similar social system.
  • An individual might reject an innovation at any time during or after the adoption process.
  • Previous terminology for the stages of adopters included awareness, interest, evaluation, trial, and adoption.

Key Terms

  • social system: The interaction of at least two personal systems or two persons acting in their own roles.
  • diffusion: The act of diffusing or dispersing something, or the property of being diffused or dispersed; dispersion.

Stages of Adopters

Diffusion of an innovation occurs through a five–step process. This process is a type of decision-making. It occurs through a series of communication channels over a period of time among the members of a similar social system. Everett Rogers categorizes the five stages (steps) of adopters as:

  1. Awareness
  2. Interest
  3. Evaluation
  4. Trial
  5. Adoption

An individual might reject an innovation at any time during or after the adoption process. In later editions of The Diffusion of Innovations, Rogers changes the terminology of the five stages to: knowledge, persuasion, decision, implementation, and confirmation. However the descriptions of the categories have remained similar throughout the editions. The five stages of the adoption process are:

  1. Knowledge: In this stage the individual is first exposed to an innovation but lacks information about that innovation. During this stage of the process the individual has not been inspired to find more information about the new idea.
  2. Persuasion: In this stage, the individual is interested in the innovation and actively seeks information and details about it.
  3. Decision: In this stage, the individual takes the concepts of change (switching cost), weighs the advantages and disadvantages of using the innovation, and decides whether to adopt or reject the innovation. Due to the individualistic nature of this stage, Rogers notes that it is the most difficult stage to acquire empirical evidence.
  4. Implementation: In this stage, the individual employs the innovation to a varying degree depending on the situation. During this stage the individual determines the usefulness of the innovation and may search for further information about it.
  5. Confirmation: Although the name of this stage may be misleading, in this stage, the individual finalizes his or her decision to continue using the innovation and may end up using it to its fullest potential.
A chart that shows the five stages of decision innovation process - knowledge, persuasion, decision (reject or accept), implementation, and confirmation.

Stages of Diffusion: There are five stages of the diffusion of innovation.

Applying the Diffusion of Innovation Theory

In applying the diffusion of innovation theory, it is important to understand potential adopters and their decision-making process.

Learning Objectives

Illustrate how the diffusion of innovation theory influences consumer adoption of products and services

Key Takeaways

Key Points

  • Important factors in decision making include whether the decision is made freely and implemented voluntarily, and who makes the decision.
  • Opinion leadership tends to be organized into a hierarchy within a society, with each level having the most influence over other members in the same level, and on those in the level below it.
  • Public consequences refer to the impact of an innovation on those other than the actor, while private consequences refer to the impact on the actor itself.
  • Direct costs of the diffusion of innovation are usually related to financial uncertainty and the economic state of the actor. Indirect costs may be social, such as social conflict caused by innovation.

Key Terms

  • horizontal conflict: channel conflict between intermediaries at the same level within a channel
  • hierarchy: Any group of objects ranked so that every one but the topmost is subordinate to a specified one above it.
  • vertical conflict: psychological tension or anxiety between two alternatives that are not simply different, but where one is genuinely higher than the other

Applying the Diffusion Of Innovation Theory

In applying the diffusion of innovation theory, it is important to understand potential adopters and their decision-making process. Important factors in decision making include who makes the decision, and whether the decision is made freely and implemented voluntarily. Based on these considerations, three types of innovation decisions have been identified:

  1. Optional innovation decision: This is made by an individual who is in some way distinguished from others in a social system.
  2. Collective innovation decision: This is made collectively by all individuals of a social system.
  3. Authority innovation decision: This is made for the entire social system by a few individuals in positions of influence or power.

There are categories of adopters that serve as a classification of individuals within a social system on the basis of innovativeness. According to Everett Rogers, these categories include:

A chart that shows that innovators are the first category of adopters.

Categories of Adopters: Categories of innovation adopters include innovators, early adopters, early majority, late majority, and laggards.

  1. Innovators: Innovators are the first individuals to adopt an innovation. Innovators are willing to take risks, youngest in age, have the highest social class, have great financial liquidity, are very social, and have the closest contact to scientific sources and interaction with other innovators. Risk tolerance has them adopting technologies which may ultimately fail, though their financial resources help them absorb these failures.
  2. Early adopters: This is the second fastest category of individuals who adopt an innovation. These individuals have the highest degree of opinion leadership among the other adopter categories. Early adopters are typically younger in age, have a higher social status, have more financial liquidity, possess an advanced education, and are more socially forward than late adopters. They are more discrete in adoption choices than innovators, as they realize that judicious choice of adoption will help them maintain a central communication position.
  3. Early majority: Individuals in this category adopt an innovation after a varying degree of time. This time of adoption is significantly longer than with the innovators and early adopters. The early majority tends to be slower in the adoption process, has above average social status, has contact with early adopters, and seldom holds positions of opinion leadership in a system.
  4. Late majority: Individuals in this category will adopt an innovation after the average member of the society does. These individuals approach an innovation with a high degree of skepticism. The late majority typically has below average social status, has very little financial liquidity, shares contact with others in the late majority and the early majority, and has very little opinion leadership.
  5. Laggards: Individuals in this category are the last to adopt an innovation. Unlike some of the previous categories, individuals in this category show little to no opinion leadership. Laggards typically tend to be focused on “traditions”, are likely to have the lowest social status, have the lowest financial liquidity, be the oldest of all other adopters, and are in contact with only family and close friends.

Research done in the early 1950s at the University of Chicago attempted to assess the cost-effectiveness of broadcast advertising on the diffusion of new products and services. The findings were that opinion leadership tended to be organized into a hierarchy within a society, with each level having most influence over other members in the same level, and on those in the next level below it. The lowest levels were generally larger in numbers, and tended to coincide with various demographic attributes that might be targeted by mass advertising. However, the study found that direct word of mouth were far more influential than broadcast messages, which were only effective if they reinforced the direct influences. This led to the conclusion that advertising was best targeted, if possible, on those next in line to adopt, and not on those not yet reached by the chain of influence.

Consequences Of Adoption

There are both positive and negative outcomes when an individual or organization chooses to adopt a particular innovation. In her article, “Integrating Models of Diffusion of Innovations,” Barbara Wejnert details two categories for consequences: public and private. Public consequences refer to the impact of an innovation on those other than the actor, while private consequences refer to the impact on the actor itself. Public consequences are usually concerned with issues of societal well-being, while private consequences are usually concerned with the improvement of quality of life or the reform of social structures.

Benefits Versus Costs

The benefits of an innovation obviously refer to the positive consequences, while the costs refer to the negative. Direct costs are usually related to financial uncertainty and the economic state of the actor. Indirect costs may be social, such as social conflict caused by innovation.