This article discusses the Diffusion of Innovation Theory to understand how a market responds to a new idea/product. The theory suggests five stages of public interest in adopting innovative products/services.
What is it?
The diffusion of innovations theory seeks to explain the speed with which the populace adopts new ideas. Its main idea affirms that people show different levels of interest and enthusiasm about trying out a new idea, process, or practice.
While the theory doesn't explain the factors that cause the difference in interest levels, it classifies the consumers into five categories (based on their adoption levels):
1. Innovators;
2. Early Adopters;
3. Early Majority;
4. Late Majority; and
5. Laggards.
Innovators
This category of people is enthusiastic about trying out something innovative. They are the first to embrace new ideas or technologies. About 2.5% of the general population falls under this category.
Early Adopters
These people show significant interest in a new idea but will not necessarily be the first to try it out. About 13.5% of the general population falls under this category.
Early Majority
These people are later motivated to try something new after seeing trusted reviews and hearing more influential opinions about it. About 34% of the general population falls under this category.
Late Majority
These people only adopt an innovation after being satisfactorily convinced of its essence and value. About 34% of the general population falls under this category.
Laggards
These people are overly averse to taking risks or adopting new technologies and will only do so after being pressured by their peers or the public. About 16% of the general population falls under this category.
As a consequence of this distribution, a new idea/product/technology will see a slow adoption in the beginning. But once the early adopters provide trusted reviews and positive opinions, the idea/product/technology will see a tipping point (i.e., adoption suddenly grows fast) – as the early majority starts to adopt it.
Depending on the marketing and its virality, some new ideas/products/technologies quickly move stages. In contrast, some ideas/products/technologies are stuck for a long time in the first stages. Unfortunately, many ideas/products/technologies never pass Stage 1 and are doomed to obscurity forever.
When do we use it?
We mostly use this theory to understand and anticipate the market's reaction to an innovation we are set to roll out. For example:
Designing our marketing campaign to reach and convert the Early Adopters faster. Using the theory can help us determine where to concentrate our efforts and where more coverage is needed. For example, when to find influencers to spread the word about our innovation and encourage increased interest in the invention.
When our innovation is recently launched, we seek to measure the adoption progress against the theoretical stages. So that we know if the progress meets our expectations or if we need to tailor the products to the needs/expectations of the intended audience.
What business questions is it helping us to answer?
The diffusion of innovation theory is designed to answer questions about the stages a new product/service takes to impact the market. These questions include:
For what segment of the population we develop the new products? The prototype may excite the Innovators, but the Early Adopters would want the minimum viable products. While the Early Majority wants tested and improved products.
Is the product making the desired impact in the market? Are people adopting my innovation, or are they less receptive to it? What kind of people is adopting it vs. the initial target segment?
How do people use the product or service? Do people find it hard to understand and use it?
Does my new product have a relative advantage over the ones previously available to the public? To what extent can my product or innovation meet the population's needs or deliver tangible results?
How do we use it?
The key to using this theory is to examine the innovation through the minds of the customer so that you can measure their anticipated response to it. This process should be thorough and consistent, starting with the innovation's conception until it hits the shelves. The steps to achieve this is as follows:
Step 1
Measure the extent to which the innovation can satisfy the need of the public or solve an existing problem in the market. This will help you determine its relative advantage over existing ones and what necessary changes it needs.
Step 2
Know your audience and what they react to. Understand the social demographics they belong to by observing their previous response to a similar innovation.
Step 3
Consider the popular variables and societal influences that affect people's adoption of innovation. Then, examine the educational, social, economic, and cultural impacts that define the demographics and their implications for the innovation.
Step 4
Once you have collected all the necessary data and obtained relevant feedback, you can create a marketing strategy around it. You can start by categorizing the market into various demographics and identify the innovation that'll appeal to each one. Next, design a marketing campaign to revolve around the various demographics and to connect them to the innovation.
Step 5
Focus on the early adopters and early majority, and the others will come around. Create specific packages for people who are most averse to change and embark on full-scale sensitization on the gains of the innovation.
Practical Example
A printer manufacturing company is about to introduce a novel printing technology to the public via its latest product rollout.
But first, it seeks to gauge the public awareness of the technology and the level of interest in it. It uses feedback from previous market entries and collects data from key industry practitioners to assess the potential acceptance level. It then examines the novel concept in relation to its cultural, social, and economic influence on society.
This leads it to identify the different consumer demographics and their anticipated reaction to the product. When it finds out that this technology will take some time to get used to, it takes its time before rolling them out. It decides to intensify its marketing campaign and structure it to the different social demographics, focusing on convincing the early adopters.
Advantages
It can be adopted by many businesses because of its flexibility.
It helps businesses identify important market variables that drive sales.
It relies heavily on feedback from the target consumers and, as such, can help to design compelling marketing campaigns.
It helps inform the choice of technologies, processes, strategies, and operations used to design and make new products.
It accounts for all the relevant social demographics a consumer may belong to, thus making it a comprehensive tool.
Disadvantages
The theory cannot predict how long each stage will last.
It cannot determine what innovation will be adopted by people. This means that the unpredictability of consumers' wants will remain a problem.
The quality of the analysis depends on familiarity with the market.
It is more suited to the adoption of behaviors than the determent of behavior.
It doesn't consider the capability factors, such as a lack of support and resources, behind a person's disinterest in adopting innovation.
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