Diffusion of Innovation

Knowing how your potential consumer groups react to innovation can go a long way in choosing your new products and services

Diffusion of innovation is a theory about understanding trends and different consumer groups. Being able to understand how consumers respond to innovation trends, plays a part in helping a business understand how to launch a product successfully.

What is Diffusion of Innovation?

Diffusion of innovation is a theory based on how each consumer responds to innovative products differently. When an innovative product is spread (or diffused) out into the marketplace, there are different waves of consumers who will try out the product: innovators, early adopters, early majority, late majority and the laggards.

In a business, the goal is to convince as many consumers as possible to embrace the new innovation, even if it goes against the individual’s better judgement. If the consumer buys into this way of thinking, they are more likely to engage with the product in the marketplace as it spreads through. The caveat is that some consumers will adopt the new product quicker than others.

The 5 Consumer Groups

The Innovators (2.5%): These are the individuals who are eager to try anything new and are an easy sell for companies.

The Early Adopters (13.5%): As their name suggests, these individuals are interested to adopt this new product but don’t want to be the first to try it. But if given a good reason to try it and if shown that this product works, then they are happy to use it.

The Early Majority (34%): These are the individuals who really need to be convinced via case studies, free samples or success stories that this new product works.

The Late Majority (34%): They do not like change and are only willing to try the product after the majority of consumers who have tried it, approve it.

The Laggards (16%): Last in line are the laggards who will only try the product after receiving ultimate proof that the product works. They are convinced via the form of user testimonials, hard statistics and peer pressure from the other four groups.

Diffusion of Innovation for Your Business

E.M. Rogers, a U.S. based sociologist, developed the “diffusion of innovation theory” in 1962. Using data from hundreds of studies, he identifies the five steps that help businesses convince different consumer groups to engage with the product.

Knowledge: The primary touchpoint where a consumer sees or hears about a new idea. Businesses need to continue sharing information about this idea so that the consumers are more likely to engage with it.

Persuasion: Once the consumer has learned of this product, the company’s next goal is to persuade them to buy it. The more benefits they share at this stage, the better the odds of a sale.

Decision: The consumer now has all the information needed to make a purchase decision. But since it’s hard to read the consumers’ intent, this stage is the most difficult for a company.

Implementation: Once the consumer has made the decision to buy the product, the company needs to ensure a solid post-sale environment. They do this by providing the consumer access to good product and data information so that the consumer knows how best to use the product instead of returning it.

Confirmation: If the consumer is happy with this product, they will share this information with friends, family and on internet product review sites. For a company, this is very useful to garner repeat customers.

The Limitations

As with any economic theory, there are a few potential downsides that are important to note:

An uphill climb: People are generally cautious to try new products. The diffusion of innovation theory should be seen as a roadmap rather than a solution that guarantees success.

Cultural limitations: When a company wants to introduce a new idea into the marketplace, they need to do their research to ensure that cultural norms don’t reject the innovation.

The numbers are against you: Based on the numbers above associated with each consumer group, it is clear that there are more early and late majorities over innovators and early adopters. This is just another factor companies must keep in mind.

The diffusion of innovation theory has been credited for many historic advancements such as on-ramping and commercial usage of the printing press, paper and other business innovations. The goal fora business is to use this roadmap to better understand how to influence its consumers to buy new innovations.

*Source: The Street

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