Diffusion of Innovation
The ability to develop successful new products is critical to a company’s sales, future growth, and long-term survival. Gabriella Stern has reported that 49 percent of the total revenue of some of the world’s leading companies has come from the new products that they have developed.
Innovations bring about changes in consumers’ consumption patterns. Some innovations influence how, when, where, why, or whether we acquire products. For example, a comparatively recent innovation is Internet shopping, which has altered the way we buy certain types of products.
The list of innovations keeps going on and on with the passage of time. Consumers’ thirst for better and more efficient products and services seems to be insatiable. Rapid strides in the fields of science and technology are responsible for developing and offering radically new and highly complex products that promise more convenience and comfort to consumers.
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The diffusion process is the manner in which innovations spread over time to other consumers through communication across a market. Diffusion research traces the penetration and acceptance of innovation across its life cycle.
A new product’s phases of life cycle start from the introduction and progress up to its decline in a typical case. With this progression, there are associated categories of adopters by the time of adoption.
The diffusion process identifies innovators in the introductory phase of the life cycle; there are early adopters during the growth period, the early majority and late majority adopt the product in its maturity period and laggards (late adopters) are the last to adopt the product.
These life cycle phases are important because they are linked to different marketing strategies during the product life cycle. During the introductory phase, the marketer’s objectives are related to establishing distribution, building brand awareness among members of the target market, and encouraging trials to begin the diffusion process.
As the product gains some acceptance, the marketer can define its early adopters. It now tries to strengthen its foothold in the market by shifting from the objective of creating brand awareness to one of broadening product appeals and increasing product availability by increasing its distribution.
As the brand matures, competition intensity gradually increases and sales begin to level off. The marketer starts emphasizing price appeals, starts sales promotions, and may consider modifying the product to gain a competitive advantage.
The majority of the adopters enter the market at this stage largely because of the influence of early adopters. The majority that has already gone through the process of product adoption does not rely much on mass media anymore for information.
When the brand is viewed to have entered in its decline phase, lower prices become more relevant and the marketer considers revitalizing the brand, or adopts the strategy of harvesting or divesting. It is during the decaying maturity and the decline phase of the product life cycle that laggards enter the market.
Culture and Diffusion of Innovation
Culture may have an important influence on the diffusion of innovation. Two concepts are worth considering in this regard: cultural context and cultural homogeneity.
Low-context cultures are those that rely primarily on verbal and written communication in transmitting meaning. They place more value on individual initiative and rely more on mass media for communication.
The concept of heterophilic groups can be applied to low-context cultures, which are more disparate with wider differences among groups. The United States and Western Europe would be described as low-context/heterophyllous cultures.
High-context cultures rely primarily on non-verbal communication, with little difference in norms, values, and socio-economic status among groups. The emphasis on non-verbal communication means that such cultures will place more value on interpersonal contacts and associations.
In high-context cultures, more value is placed on the group than on the individual and the emphasis is on subscribing to the norms and long-standing rituals of society. Most of the Far Eastern countries would qualify as high-context/homophilous cultures.
One would expect the rate of diffusion to be rapid in high-context/ homophilous cultures because of their uniformity, leading to the relative ease of transmitting information from one dissimilar group to another.
Another important aspect is that the credibility of information on new products, services, or ideas is higher because the source is more likely to be friends or relatives rather than commercial mass media.
Hirokazu Takada and Dipak Jain conducted a study to compare the rate of diffusion of calculators, washing machines, and air conditioners in Japan, South Korea, and Taiwan (considered high-context cultures) and the United States (considered low-context cultures).
They reported that in most cases the rate of adoption was faster in all three high-context cultures than it was in the United States.