Reading: Diffusion of Innovation

Introduction

Just as the product life cycle has a typical bell-shaped pattern, there is a predictable—and similar-shaped—pattern of buying, or adoption, when it comes to new products. This customer adoption pattern is important because it can be used to inform marketing decisions.

Diffusion-of-Innovation Theory

Common sense suggests that not everyone will buy a new product at the same time. Some will rush out and buy first or try to get an early version of a product before it is widely available. Others will wait until many people have adopted a product before they reluctantly consider the purchase. As early as 1962, Everett Rogers recognized this phenomenon and described it as the "diffusion of innovation." He developed a theory to support it, explaining how, why, and at what an rate innovation will be adopted by participants in a social system. The theory divides adopters into different groups with shared characteristics, as shown in Figure 1, below:

Innovators make up 2.5% of the market, early adopters 13.5%, early majority 34%, late majority 34%, and laggards 16%. Cumulative market share rises as the early majority adopts, but as the last majority adopts and sales begin to taper off, cumulative market share continues to grow until 100% is reached at the end of the laggard stage. Figure 1. Diffusion of Ideas


The purple line on the graph indicates the percentage of the market that will buy a new product in each phase of product adoption. You can see from the graph that there is a small number of innovators, and a large number of early majority and late majority adopters. The yellow line on the graph shows the cumulative market share gained. In other words, the yellow line shows the total of the market share gained at the end of each phase, adding together the share from each prior phase.

Consumer Adoption Patterns

Innovators

Innovators are willing to take risks and are viewed by their peers as risk takers. Innovators' risk tolerance enables them to adopt technologies that may ultimately fail, and they often have to financial resources to absorb these failures.

Early Adopters

Early adopters have a high degree of opinion leadership among the adopter categories. They are more aggressive than later adopters, but are judicious about their adoption choices. Early adopters don't look to be first at any cost, so they actively consider risk as part of the decision-making process.

Early Majority

Early majority adopters span a longer period of time than the innovators and early adopters. Like the early adopters, the early majority's opinions and decisions carry weight across the adopter categories.

Late Majority

Late majority adopters arrive after the "average" participant have embraced an innovation. These individuals approach innovations reluctantly and with more skepticism than their predecessors.

Laggards

Laggards are the last to adopt an innovation. They typically have little or no opinion leadership and are averse to things they perceive as "agents of change." Laggards tend to be focused on traditions and are less socially connected than the other groups.

Marketing an Innovation

A flower begins to bloom amidst many flower buds. Figure 1, above, shows a tipping point between the early majority and the late majority adopters. A tipping point is the point at which small changes are enough to cause a larger, more substantial change. The challenge for the marketer is to encourage the adoption of a product by early adopters and the early majority in order to reach that tipping point. Once these groups are on board, their momentum helps drive the product from the introduction stage of the life cycle into the growth stage.

Often marketers are tempted to focus their marketing efforts on the innovators. Innovators are game to try the product, which makes them an easier target than risk-averse consumers. In all but the most unusual, extreme cases, though, this will be a flawed strategy. The early adopters are actually in a much better position to influence broad opinion of the product and to draw in the early majority. By the same token, aggressive marketing to laggards is unlikely to influence their pattern of adoption.

Understanding the patterns of adoption and adjusting the marketing strategy to address changes in adoption profiles is a challenge that marketers of new products need to understand and face.

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