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Welcome to the Fascinating World of Consumers PART Diffusion of


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Innovation
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CONSUMER BEHAVIOR 2011

Introduction
Meaning & Definition

Diffusion Process
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Adoption Process

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Introduction
Is the Market today is consumer oriented?

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Yes: The market is often referred as consumer or buyers market.

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Definition & Meaning of Diffusion of Innovation It is the process by which acceptance of an innovation ( new product or services or new ideas) is spread by communication (mass media, sales persons) to members of the target market over a period of time.

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Basic elements Innovation Channel of communication Social System Time

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Does the innovation cater to the need of the target


customer?

Has the target customer understand how the innovation is relevant to their need? Is the new product available and demonstrated
widely?

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New product Eureka ForbesVacuum Cleaner Real Value- Fire Extinguisher Sintex- plastic Water Tank Vim Bar- HUL Good Knight Godrej Hicare Ltd. Benefits communicated Compact, easy to use, to keep home clean and tidy, home delivery Portable piece of safety equipment Low cost alternative to the traditional metal or concrete water tank. Premixed scouring solution in the form of bar. A mosquito repellent- which has no smoke, no fumes, no ash, no cream, ( safe , economic and effective)
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The Diffusion Process

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CONSUMER BEHAVIOR 2011

a) Innovation An Innovation can be a new concept (idea) or product or service which would appeal and is found to be attractive by the target market.
How fast the diffusion of innovation will take place and gain acceptance among the target customer?
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The Diffusion Process

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Innovation Ex. of new innovations having found acceptance among consumer. The Cellular Phone a compact, reasonably priced, wireless communication instrument, suitable for the lifestyle of different categories of customers.

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Innovation Ex. of new innovations having found acceptance among consumer. The DVD (digital video disk) player with its CD support format, PMPO Peak Music Power Output (PMPO) mega bass effect, Random play feature, FM tuning, compact, which is easy to use and economically priced too.

CONSUMER BEHAVIOR 2011

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The Diffusion Process

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Approaches to define a new Innovation

Firm oriented Product oriented Market oriented


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Approaches to define a new Innovation

Firm oriented
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looks into newness of the product from the prospective of the company producing and marketing it.
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Approaches to define a new Innovation

Product oriented
CONSUMER BEHAVIOR 2011

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Will focus on the features inherent in the product itself and the effect these features are likely to have on consumers established usages patterns.

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Approaches to define a new Innovation

Product oriented
CONSUMER BEHAVIOR 2011

A continuous innovation A dynamically continuous


innovation

A discontinuous innovation
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Approaches to define a new Innovation

Product oriented
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A continuous innovation Modified version of exiting product. ex. Microsoft latest version of operating system.

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Approaches to define a new Innovation

Product oriented
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A dynamically continuous innovation


Creation of new product or the modifica -tion of existing product. Ex. Mobile phones with video recording and fm tunings, erasable ink pens, sanitary napkins.

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Approaches to define a new Innovation

Product oriented
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A discontinuous innovation Requires consumers to adopt new behavior patterns. ex, movie screen theaters , home theaters , fax machine, internet etc

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Approaches to define a new Innovation

Market oriented
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The newness of the product or services in terms of how much exposure consumers have to the new product.

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b) Product characteristics influence diffusion.

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Some products may gain consumer acceptance quite fast such as cellular phones or ICICI prudential. Other may take long time or never seems to achieve wide consumer acceptance like Real value Vacuumised Containers.

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b) Product characteristics influence diffusion.

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Relative advantage Compatibility Complexity Trial ability Observbility

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b) Product characteristics influence diffusion.

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Relative advantage The extent or degree to which potential customers perceive a new product to be superior when compared to the existing substitute. Ex, email traditional letter writing.

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b) Product characteristics influence diffusion.

Hair removing lotion (Anne French) wax

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compatibility The extent or degree to which potential customers feel a new product is consistent with their present need , values and practices. Ex, disposable diaper cloth diaper.

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b) Product characteristics influence diffusion.

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complexity The extent or degree to which a new product is complex or difficult to understand. Ex, the mixer grinder traditional
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grinding machine.

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b) Product characteristics influence diffusion.

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Trial ability The extent or degree to which a new product is capable of being tried on a limited basis. Ex, tea, detergent power are available in
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the small sample package.

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b) Product characteristics influence diffusion.

fashion items get more easily diffused.

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Observbility Refers to the ease with which a products benefits or attributes can be observed, imagined or described to potential customers. Ex, designers wears, jewelers and other

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c) Channels of Communication

CONSUMER BEHAVIOR 2011

Determine how quickly an innovation spreads through the market. Communication Between marketers and consumers. Among consumers
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c) Channels of Communication Sources of Consumer Communication Personal- family, friends, neighbors, business associates. Commercial- sales personal, advertising, sales promotion tactics. Public- mass medias, consumer rating organizations. Experimental samples, free coupons, demonstration.

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c) Channels of Communication Off line activities :-

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Road shows, exhibitions, pop display and posters, direct marketing, direct mailers, tele marketing sms and online marketing- internet marketing , email, website.

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d) Social System Is a physical, social, or cultural environment to which customers belongs and within which they function. It has its own special values or norms, which is likely to influence the acceptance or rejection of new products or services.

CONSUMER BEHAVIOR 2011

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d) Social System kiran stores supermarket, specialty store malls. More purchasing power Change of their dressing style Take active participation in various fashion shows- miss famina, mega model, male model

CONSUMER BEHAVIOR 2011

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e) Time

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The purchase time Rate of adoption Adopter categories


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e) Time The purchase time

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The usual route taken for increasing consumer awareness of the new product is through coupons, banners, pamphlets etc
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e) Time Rate of adoption Determines how long it will take for a new innovation to be adopted by members of a social system.
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CONSUMER BEHAVIOR 2011

The rate of adoption is vary from product to product.

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e) Time Adopter Category The way people display their readiness to try out new products or innovations.
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e) Time
Late Majority Early Majority

CONSUMER BEHAVIOR 2011

Early adopters

34%

34%

Laggards

2.5%

13.5%

16%

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Innovators

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Adoption Process

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Innovators Early Adopters Early Majorities Late Majorities Laggards

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Adoption Process Innovators : when new product is launched 2.5% of customers try out the product. Referred as Innovators or pioneers. Easily acceptable to new product/ideas. No feedback is available. Described as outgoing, gregarious, educated . Willing to follow high social class status.

CONSUMER BEHAVIOR 2011

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Adoption Process Early Adopters: when new product is launched 13.5% of customers try out the product. Purchase or try quite early but after verifying and gathering more information. Recognized as opinion leaders. Carry out lots of weight in the community. They are educated, hold high social status

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Adoption Process Early Majorities : when new product is launched 34% of customers try out the product. More conservatives, thoughtful, shrewd and prefer to wait, watch and learn. Middle class, reasonable education, occupation and income.
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Adoption Process Late Majorities : when new product is launched 34% of customers try out the product. More conservatives, and do not immediately respond in favor of change. Depends on public opinion. Limited education, average social status, limited salary, limited purchasing power.

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Adoption Process Laggards : when new product is launched 16% of customers try out the product. Lagging behind the acceptance of an innovation. Traditional brand , lot of deliberation, caution and suspicion. Traditional outlook.

CONSUMER BEHAVIOR 2011