Innovation Diffusion Concepts

Study Notes

Innovation Diffusion

Innovation defined as a perceived new idea, practice, or product.
Three innovation categories: continuous, dynamically continuous, and discontinuous.
Continuous innovation involves minor behavioral changes.
Dynamically continuous innovation requires moderate changes in important behaviors or major changes in less important behaviors.
Discontinuous innovation demands substantial changes in highly important behaviors.

Diffusion Process

Describes how innovations spread through markets (any size, from schools to societies).
Typical diffusion pattern: slow, rapid, and then slow growth.
Rate of diffusion influenced by factors:
- Compatibility: Consistency with values/beliefs increases diffusion speed.
- Relative advantage: Perceived improvement over existing methods accelerates diffusion.
- Complexity: Easier to comprehend/use, faster diffusion.
- Observability: Easier to see positive effects, faster diffusion.
  - Trialability: Easy low-cost/low-risk trials speed diffusion.
- Perceived risk: Low perceived risk means faster diffusion (financial, physical, or social).
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-Risk factors: likelihood of not performing as expected; consequence of failure, ability/cost to reverse negative outcomes.
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Innovation Adopter Categories

Innovations don't reach all consumers at once, different adopter categories emerge over time.
Categories (in order): innovators, early adopters, early majority, late majority, laggards.
Innovation adopter category percentages change over time as shown in the figure.
- Innovators: Risk-takers, willing to bear monetary/social costs, and potential failures. Use external innovators as reference groups, and varied information sources. High education, high social mobility.
- Early adopters: Opinion leaders, collect information (advertising, professional/interpersonal sources). Provide word-of-mouth encouragement. Usually well-educated, socially mobile.
- Early majority: Cautious. Adopt after innovators and early adopters. Older, less educated, less socially mobile than previous groups. Information gathered mainly through interpersonal interactions.
- Late majority: Skeptical, adopt mostly due to social pressure, not positive attitude towards innovation. Older, lower social status, limited social mobility.
- Laggards: Reluctant to adopt, limited interactions and activities primarily within local communities.

Description

This quiz explores the key concepts of innovation diffusion, including the definitions and categories of innovation: continuous, dynamically continuous, and discontinuous. It also examines the factors that influence the rate of diffusion in markets, such as compatibility, relative advantage, complexity, and observability.