Diffusion of Innovation

Diffusion of Innovations is a theory of

how, why, and at what rate new ideas and
technology spread through cultures. The
concept was first studied by the French
sociologist Gabriel Tarde (1890) and by
German and Austrian anthropologists such
as Friedrich Ratzel or Leo Frobenius .
The value chain
Contemporary firms are being attacked by
competitively on every dimension and
from every direction. The only way to
survive this onslaught is to create a value
chain to serve the customer, which will
serve to differentiate the successful firm
from its competitors and will provide
competitive superiority on the critical
attributes of importance to the consumer
What is an innovation?
It is any idea or product perceived by
the potential adopter to be new. New
products are ideas, behaviour or
things that are qualitatively different
from existing forms
Diffusion of innovation
A process through which a new product
moves from initial introduction to regular
purchase and use
A process by which an innovation (idea) is
communicated through certain channels
over time among the members of a social
system Everett Rogers
Diffusion variables
Innovation
Communication
Time
Social system
Types of Innovations
Continuous modification or improvement of an
existing product
Dynamically continuous may involve the
creation of either a new product or the alteration of an
existing one ,but does not generally alter established
patterns of customer buying and product use
Discontinuous production of an entirely new
product that causes customers to alter their behaviour
patterns significantly

Innovations include both a hardware
and a software component
The hardware are the physical and
tangible aspects of a product. The
software is the understanding
consumers values and lifestyles
Likelihood of innovation success
Relative advantage new products that are most likely to
succeed are those that appeal to strongly felt needs
Compatibility degree to which the product is consistent with
existing values and past experience of the adopters
Complexity degree to which an innovation is
perceived as difficult to understand and use
Trialability the ability to make trials easy for new
products without economic risk to the consumer
Observability reflects the degree to which results from
using a new product are visible to friends and neighbours
Types of Innovators
Cognitive problem solving, cerebral, new mental
experience
Sensory fantasy, day dreaming, hedonistic, thrill
seeking
Monomorphic - consumers who are innovators for one
type of product
Polymorphic consumers who are innovators for
more than one type of product
New products in the market
Every year around 5000 new products
appear in the market. However, most
fail and only a few remain ( around
20%). Products which are innovative.
Characteristics that encourage rejection
Value barrier
Usage barrier
Risk barrier
Communication of new products
Mass media
Homophily degree to which pairs of individuals
who interact are similar in beliefs, education and social
status
Heterophily inconsistent with own beliefs and views
Adopter classes
Innovators - 2.5%
Early adopters 13.5%
Early majority 34%
Late majority 34%
Laggards 16%

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 lucidity,
very social and have closest contact to
scientific sources and interaction with other
innovators .
Early Adopters
This is 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 lucidity, advanced
education, and are more socially forward
than late adopters
Early Majority

Individuals in this category adopt an
innovation after a varying degree of time.
This time of adoption is significantly longer
than the innovators and early adopters.
Early Majority tend to be slower in the
adoption process, have above average social
status, contact with early adopters, and
show some opinion leadership.
Late Majority
Individuals in this category will adopt an
innovation after the average member of the
society. These individuals approach an innovation
with a high degree of skepticism and after the
majority of society has adopted the innovation.
Late Majority are typically skeptical about an
innovation, have below average social status, very
little financial lucidity, in contact with others in
late majority and early majority, very little opinion
leadership.
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. These individuals
typically have an aversion to change-agents and
tend to be advanced in age. Laggards typically
tend to be focused on traditions, have lowest
social status, lowest financial fluidity, oldest of all
other adopters, in contact with only family and
close friends, very little to no opinion leadership .
Innovativeness
This is the degree to which an individual
adopts an innovation relatively earlier than
others
Based on time of adoption
Based on number of new product adoption
Parameters for innovativeness
Socio-economic variables
Personality and attitude
Communication variables
Socio economic variables
Education
Literacy
Higher social status
Upward social mobility
Larger-sized units
Commercial orientation
Favourable attitude towards credit
Specialized operations
Personality and attitude
Empathy
Ability to deal in
abstraction
Rationality
Intelligence
Favourable attitude
towards change

Ability to cope with
uncertainty
Favourable attitude
towards education
Favourable attitude
towards science
High aspirations

Communication variables
Social participation
Interconnectedness with
the social system
Cosmopoliteness
Change agent contact
Mass media exposure
Exposure to interpersonal
communication channels
Knowledge of innovations
Opinion leadership
Belonging to highly
interconnected systems
Polymorphism
The degree to which innovators and early
adopters for one product are likely to be
innovators for other products. Consumers
who are innovators for one product are
monomorphic. Consumers who are
innovators for more than one product are
polymorphic.
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