Editing Consumer behaviour (section)

=== New product adoption and diffusion of innovations ===
{{See also|Diffusion of innovations|Bass diffusion model}}
[[File:Diffusionofideas.PNG|thumb|left|The diffusion of innovations according to Rogers. As successive groups of consumers adopt the innovation(shown in blue), its market share (yellow) will eventually reach saturation level.]]
Within consumer behaviour, a particular area of interest is the study of how innovative new products, services, ideas, or technologies spread through groups. Insights about how innovations are diffused (i.e., spread) through populations can assist marketers to speed up the new product adoption process and fine-tune the marketing program at different stages of the diffusion process. In addition, diffusion models provide benchmarks against which new product introductions can be tracked.

A sizeable body of literature has been devoted to the diffusion of innovation.<ref>[[Everett Rogers|Rogers, E.M.]], "New Product Adoption and Diffusion", ''Journal of Consumer Research'', Vol. 2, No. 4, 1976, pp. 290-301</ref> Research studies tend to fall into two broad categories: general diffusion research which is an approach that seeks to understand the general process of diffusion and applied diffusion research which consists of studies that describe the diffusion of specific products at particular moments in time or within given social communities.<ref>Mahajan, V. and Peterson, E.A, ''Models for Innovation Diffusion'', Volume 48, 1985.</ref> Collectively these studies suggest a certain regularity in the adoption process; initially few members adopt the innovation but over time successive, overlapping waves of people begin to adopt the innovation.<ref>Business Dictionary, http://www.businessdictionary.com/definition/diffusion-of-innovation.html {{Webarchive|url=https://web.archive.org/web/20161030142553/http://www.businessdictionary.com/definition/diffusion-of-innovation.html |date=2016-10-30 }}</ref> This pattern contributes to a generalised S-shaped curve, as shown in the figure at right. However, the exact shape and timing of curves varies in different product markets such that some innovations are diffused relatively quickly, while others can take many years to achieve broad market acceptance.

The diffusion model developed by [[Everett Rogers]] is widely used in consumer marketing because it segments consumers into five groups, based on their rate of new product adoption.<ref>Lowrey, T.M., "The Use of Diffusion Theory in Marketing: a Qualitative Approach to Innovative Consumer Behavior", in ''Advances in Consumer Research'', Vol. 18, eds. Rebecca H. Holman and Michael R. Solomon, Provo, UT : Association for Consumer Research, 1991, pp 644-650. Online: http://acrwebsite.org/volumes/7230/volumes/v18/NA-18.</ref>  Rogers defines the diffusion of innovation as the process by which that innovation is "communicated through certain channels over time among the members of a social system."<ref>Rogers, E.M., ''Diffusion of Innovations,'' New York, The Free Press, p. 5.</ref> Thus the diffusion process has a number of elements, the innovation, the communication channels, time and the social system. An innovation is any new idea, object or process that is perceived as new by members of the social system. Communication channels are the means by which information about the innovation is transmitted to members of the social system and may include mass media, digital media and personal communications between members of the social system.  Time refers to the rate at which the innovation is picked up by the members of the social system.

Table 1: Adopter Categories<ref>Based on Rogers, E.M., ''The Diffusion of Innovations'', 5th ed., N.Y., Free Press, 2003</ref>
{| class="wikitable"
|-
! Adopter Group
! Proportion of All Adopters
! Psycho-social and Demographic Characteristics
|-
| Innovators
| 2.5%
|
* adopt new products or concepts well ahead of the social community
* venturesome; like new ideas
* are willing to accept some uncertainty/risk in purchase decision-making
* are active information seekers
* cosmopolitan; move in broad social circles
* have access to financial resources (which helps absorb potential losses when innovations fail)
* tend to be heavy users or category enthusiasts (e.g. tech-heads are the first to adopt new communications technologies)
* tend to be younger, well-educated, and affluent
|-
| Early adopters
| 13.5%
|
* second group to adopt new products or concepts
* not too far ahead of the community in terms of innovativeness
* have the respect of their social communities
* potential adopters look to early adopters as role models
* are important opinion leaders
* higher social status and well-educated
|-
| Early majority
| 34%
|
* third group to adopt new products or concepts
* adopt innovations only marginally ahead of the community average
* tend to be more deliberate in purchase decision-making
* average social status and education levels
|-
| Late majority
| 34%
|
* adopt new products or concepts slightly later than average
* skeptical in purchase decision-making
* adoption is often a response to social community pressures
|-
| Laggards
| 16%
|
* last group to adopt new products or concepts
* highly cautious; need to be confident that an innovation will not fail before purchasing
* are the most risk-averse of all adopter segments; dislike change
* traditionalists; resistant to change; look to the past
* somewhat isolated within their social community
* often adopt innovations when they are becoming obsolete
* tend to be older, less well educated, and less affluent
|}

A number of factors contribute to the rate at which innovations are diffused through a social community.<ref>Rogers, E.M., ''Diffusion of Innovations,'' 5th ed., New York, The Free Press, 2003 pp 11-12.</ref>
[[File:Mito test drive.jpg|thumb|Facilitating a 'test-drive' can encourage consumers to speed up adoption rates.]]
* '''Relative advantage''': the degree to which an innovation is perceived to be superior to alternatives
* '''Compatibility''': the extent to which an innovation fits in with an individual's values, lifestyles and past experiences
* '''Complexity''': the degree to which an innovation is perceived to be easy or difficult to understand and use
* '''Trialability''': the extent to which an individual can experiment with the innovation on a limited scale prior to adoption
* '''Observability''': the degree to which the results of the innovation are visible to other members of the social community
Innovations with some or all of these factors are more likely to be adopted quickly. Accordingly, marketing communications may stress the innovation's relative benefits over other solutions to the consumer's problem. Marketing messages may also focus on compatibility and observability. Marketers can also facilitate adoption by offering limited scale trial (e.g. samples, test drives, sale on approval) enabling consumers to develop an understanding of the innovation and how it is used prior to purchase.

Studies have shown that the diffusion rate for many new technologies is speeding up.<ref>Desilver, D."The Ever Accelerating Rate of Technology Adoption, Pew Research, 14 March 2014, Online: http://www.pewresearch.org/fact-tank/2014/03/14/chart-of-the-week-the-ever-accelerating-rate-of-technology-adoption/</ref> The figure in the ''Household Penetration of Selected Communications Technologies'' report illustrates U.S. household penetration rates of selected communications technologies, measured as a percentage of all households.<ref>The figure is based on data supplied by Google, https://www.docs.google.com/spreadsheets/d/1uvn7o1X19Equ5EDvjXEMxpziAEAsXTJK9Xbf8NwYiAo/htmlview</ref> The slope of the curve becomes steeper with each successive innovation indicating a more rapid diffusion rate. For example, it took decades for the telephone to achieve 50 percent penetration rates beginning in around 1900, but it took less than five years for cellphones to achieve the same penetration rates. In order to explain the increasing pace of adoption, some have pointed to supply-side issues such as reduced barriers to entry and lower costs of innovation,<ref>Market Realist, http://marketrealist.com/2015/12/adoption-rates-dizzying-heights/</ref><ref>McGrath, R., "[https://hbr.org/2013/11/the-pace-of-technology-adoption-is-speeding-up The Pace of Technology Adoption is Speeding Up]", ''Harvard Business Review'', 25 November 2013</ref> while others have argued that consumers drive adoption rates because they place a high value on the convenience of new innovations.<ref>Forbes Technology Council, "How Consumers are Impacting the Adoption of New Technology, Forbes Blog, 21 June 2016, Online: https://www.forbes.com/sites/forbestechcouncil/2016/06/21/how-consumers-are-impacting-the-adoption-of-new-technology/#5a48cc917ba6</ref>