MARKETING

DIFFUSION of innovationandCONSUMER BEHAVIOR110/30/2012New Product InnovationEvery year over 5000 new products are introduced in the market.Most fail around 80% or more.Only a few succeed around 20% or less.Why?

Today well see how & why that happens.Successful New Product InnovationInvolves understanding two closely related processes:Diffusion: a macro process concerning the spread of information about the new innovation to the target segment.Adoption: the micro process concerning the stages through which a consumer goes through in deciding to accept or reject the new innovation.Products that succeed are InnovativeInformation about them is easily availableThey are adequately distributedConsumers easily find a connection with the innovationIn other words they become culturally anchored.

What is InnovationIt is any idea or product or service perceived by the potential adopter to be new.New products are ideas, behavior or things that are qualitatively different from existing formsInnovation: Different PerspectivesFirm-orientedProduct-orientedMarket-orientedConsumer-orientedDiffusion of InnovationA process by through which a new product moves from initial introduction to regular purchase and useA process by which an innovation (idea) is communicated through certain channels over time among the members of a social system Innovation processes followa normal distribution curve

INNOVATORSLAGGARDSMAJORITYCCONTINUOUS PROCESSCONTINUOUS PROCESS TIMEE-SSINNOVATORSLAGGARDSMAJORITY

Length of time for different Innovations

Opinion LeadershipThe process by which one person (the opinion leader) informally influences the consumption actions or attitudes of others who may be opinion seekers or passive opinion recipients.Opinion LeadershipOpinionLeadersOpinion ReceiversOpinion SeekersWhere does OL & WOM matter

Motivations Behind Opinion LeadershipThe Needs of Opinion LeadersTo reduce their own post-purchase dissonanceFor tangential personal benefitsHigh levels of product involvementHigh levels of message involvementMotivations Behind Opinion LeadershipMotivations of Opinion SeekersTo obtain new product or new usage informationTo reduce their risk by getting knowledge To reduce search timeTo receive the approval of the opinion leaderWhat Makes an Effective Opinion LeaderCredibility (Believable)TrustworthyHas rich experienceHas a huge bank of valuable InformationPositive and Negative Is ready and willing to offer AdviceInformation Flow with OL

Real World Examples of 2-step flowMedicinesDoctorsSurgerySpecialistsText BooksProfessorsMovies/Restaurants(Trusted) FriendsA Recent Study on Diffusion..\..\diffusion of 14 products.pdfDiscussionAn Ode to the Scooter When did the motorized scooter make its appearance in India?What kind of an innovation did it represent? How long did it take for people to accept it?Scooter comes to IndiaPiaggio first licensed the production of Vespa scooters in India toBajaj Autoin the 1960s. In 1971, Piaggio's license was not renewed as a part of Indira Gandhi's privatization programs. After the collaboration ended, Bajaj continued to produce scooters based on the Vespa design, namely theChetak.Another Vespa partner in India was that ofLML Motors. Beginning as a joint-venture with Piaggio in 1983, LML, in addition to being a large parts supplier for Piaggio, produced theP-Series scooters for the Indian market. In 1999, after protracted dispute with Piaggio, LML bought back Piaggio's stake in the company and the partnership ceased. LML continues to produce (and also exports) the P-Series variant known as theStellain the U.S. market and by other names in different markets.In the 2012 Auto Expo held in New Delhi, the iconic Vespa re-entered the Indian Market. Piaggio unveiled its range of scooters at the Expo. This became the first such venture of Piaggio in India without a local partner.T H A N X !

Project Assignment: Diffusion of InnovationThis is a group project. You are responsible for preparing a report (maximum 2 pages) on the diffusion process in India for any one of these durables:CamerasRadioCarRefrigeratorCeiling FanScooterLaptop ComputerTelevisionMicrowaveWashing Machine

Project Assignment: Written ReportYou must try to gather some or all of the following information:

When was the product introduced in India?How much time did it take to gain initial consumer acceptance?How much time did it take to have 10%, 25%, 50%, or 75% market penetration?How many brands/varieties were originally available?How many brands/varieties are available now?Do you think the product market is saturated and will have little or no growth in the next 5-10 years?

Project Assignment: Written ReportThis report must be printed and submitted on behalf of the entire group.The report must not exceed 2 pages of written matterPlease use 2.5 cm margin, 12-font, double-space in preparing your report.

Written report 5 marksDue on March 11, 2014