Chapter 15 Consumer Influence and the Diffusion of Innovations

Chapter 15

Consumer Influence and the Diffusion of Innovations

©2000 Prentice Hall

Opinion Opinion LeadershipLeadership

The process by which one person (the opinion leader) informally influences the consumption actions or

attitudes of others who may be opinion seekers or

opinion recipients.


What is Opinion Leadership?

Opinion Leader

Opinion Receiver

Opinion Seeker


Opinion Opinion LeaderLeader

A person who informally gives product information

and advice to others.


Opinion Opinion SeekerSeeker

An individual who either actively seeks product

information from others or receives unsolicited

information.


Opinion Opinion ReceiverReceiver

The person who receives an opinion offered by another

person.


Reasons for the Effectiveness of Opinion Leadership

• Credibility• Positive and Negative

Product Information• Information and Advice• Opinion Leadership Is

Category-Specific• Opinion Leadership Is a

Two-way Street


Motivations Behind Opinion Leadership

• The Needs of Opinion Leaders– Self involvement– Social involvement– Product involvement– Message involvement

• The Needs of Opinion Receivers– New-product or new usage information– Reduction of perceived risk– Reduction of search time– Receiving the approval of the opinion leader

• Purchase Pals• Surrogate Buyers Versus Opinion Leaders


Table 15.1 A Comparison of the Motivations of Opinion Leaders and Opinion Receivers

OPINION LEADERS OPINION RECEIVERS

SELF-IMPROVEMENT MOTIVATIONS• Reduce postpurchase uncertainty or

dissonance• Gain attention or status• Assert superiority and expertise• Feel like an adventurer• Experience the power of “converting” others

• Reduce the risk of making a purchase commitment

• Reduce search time

PRODUCT-INVOLVEMENT MOTIVATIONS

• Express satisfaction or dissatisfaction with a product or service

• Learn what products are new in the marketplace

• Learn how to use or consume a product


Table 15.1 continued

OPINION LEADERS OPINION RECEIVERS

SOCIAL-INVOLVEMENT MOTIVATIONS

• Express neighborliness and friendship by discussing products or services that may be useful to others

• Buy products that have the approval of others, thereby ensuring acceptance

MESSAGE-INVOLVEMENT MOTIVATIONS

• Express one’s reaction to a stimulating advertisement by telling others about it


Table 15.2 Key Differences Between Opinion Leaders and Surrogate Buyers

OPINION LEADER 1. Informal relationship with end-users 2. Information exchange occurs in the context of a casual

interaction 3. Homophilous (to a certain extent) to end-users 4. Does not get paid for advice 5. Usually socially more active than end-users 6. Accountability limited regarding the outcome of advice 7. As accountability limited, rigor in search ad screening o

alternatives low 8. Likely to have used the product personally 9. More than one can be consulted before making a final decision10. Same person can be an opinion leader for a variety of related

product categories


Table 15.2 Key Differences Between Opinion Leaders and Surrogate Buyers

SURROGATE BUYER 1. Formal relationship; occupation-related status 2. Information exchange in the form of formal

instructions/advice 3. Heterophilus to end users (that is, is the source of power) 4. Usually hired, therefore gets paid 5. Not necessarily socially more active than end-users 6. High level of accountability 7. Search and screening of alternatives more rigorous 8. May not have used the product for personal consumption 9. Second opinion taken on rare occasions10. Usually specializes for a specific product/service category


Measurement of Opinion Leadership

• Self-Designating Method• Sociometric Method• Key Informant Method• Objective Method


Figure 15.1 Self-Designating Questions for Measuring Opinion Leadership

SINGLE-QUESTION APPROACH:1. In the last 6 months have you been asked your advice or opinion about golf

equipment?Yes___ No___

MULTIPLE-QUESTION APPROACH:(Measured on a 5-point bipolar “Agree/Disagree” scale)

1. Friends and neighbors frequently ask my advice about golf equipment.2. I sometimes influence the types of golf equipment friends buy.3. My friends come to me more often than I go to them about golf equipment.4. I feel that I am generally regarded by my friends as a good source of advice

about golf equipment.5. I can think of at least three people whom I have spoken to about golf

equipment in the past six months.


Table 15.3 Methods of Measuring Opinion Leadership: Advantages and Limitations

SELF-DESIGNATING METHOD

“Do you influence other people in their selection of products?”

Each respondent is asked a series of questions to determine the degree to which he or she perceives himself or herself to be an opinion leader.

OPINION OPINION LEADERSHIP LEADERSHIP MEASUREMENT MEASUREMENT METHODMETHOD

SAMPLE SAMPLE QUESTIONS QUESTIONS

ASKEDASKED

DESCRIPTION DESCRIPTION OF METHODOF METHOD

Measures the individual’s own perceptions of his or her opinion leadership.

ADVANTAGESADVANTAGES

Depends on the objectivity with which respondents can identify and report their personal influence.

LIMITATIONSLIMITATIONS



SOCIOMETRIC METHOD

“Whom do you ask?”“Who asks you for information about that product category?”

Members of a social system are asked to identify to whom they give advice and to whom they go for advice and information about a product category.



ASKEDASKED


Sociometric questions have the greatest degree of validity and are easy to administer.


It is very costly and analysis often is very complex. Requires a large number of respondents. Not suitable for sample design where only a portion of the social system is interviewed.






ASKEDASKED


KEY INFORMANT METHOD

“Who are the most influential people in the group?”

Carefully selected key informants in a social system are asked to designate opinion leaders.


Relatively inexpensive and less time consuming than the sociometric method.


Informants who are not thoroughly familiar with the social system are likely to provide invalid information.





ASKEDASKED


OBJECTIVE METHOD

“Have you tried the product?

Artificially places individuals in a position to act as opinion leaders and measures results of their efforts.


Measures individual’s ability to influence others under controlled circumstances.


Requires the establishment of an experimental design and the tracking of the resulting impact on the participants.


Table 15.4 Profile of Opinion Leaders

GENERALIZED ATTRIBTES ACROSS PRODUCT CATEGORIES

CATEGORY-SPECIFIC ATTRIUTES

InnovativenessWillingness to talkSelf-confidenceGregariousnessCognitive differentiation

InterestKnowledgeSpecial-interest media exposureSame ageSame social statusSocial exposure outside group


Table 15.5 Car and Driver Research Supporting Subscribers Are Opinion Leaders

Gave advice in past year

69%

Passenger car 7.853%

AREA OF OPINION LEADERSHIP

AVERAGE NO. OF PEOPLE ADVISED*

GIVEN ADVICE PAST 12 MONTHS

Pickups, SUVs, Vans

4.531%

Automotive parts

20.524%

2.7

AVERAGE NO. WHO FOLLOWED SUBSCRIBERS’ ADVICE

1.2

17.2

3.2

AVERAGE NO. WHO SUBSEQUENTLY BOUGHT*

1.5

18.3



Maintenance/appearance products

18.228%

Tires 8.332%

AREA OF OPINION LEADERSHIP

AVERAGE NO. OF PEOPLE ADVISED*

GIVEN ADVICE PAST 12 MONTHS

Auto sound equipment

8.217%

Other electronic accessories

6.224%

14.8

6.7

AVERAGE NO. WHO FOLLOWED SUBSCRIBERS’ ADVICE

3.7

3.1

15.8

70

AVERAGE NO. WHO SUBSEQUENTLY BOUGHT*

4.0

3.4

*Among those who gave advice (i.e., 69%). Base: Total subscribers (multiple responses).


Market Market MavenMaven

Individuals whose influence stems from a general knowledge or market

expertise that leads to an early awareness of new products and services.


The Interpersonal Flow of Communication

• Two-Step Flow– Views opinion leader as a middleman between

the impersonal mass media and the majority of society

• Multistep Flow– Takes into account the fact that information and

influence often are two-way processes


Two-Step Two-Step Flow of Flow of

Communication Communication TheoryTheory

A communication model that portrays opinion leaders as

direct receivers of information from mass

media sources who, in turn, interpret and transmit this

information.


Figure 15.2 Two-Step Flow of Communication Theory

Mass MediaMass Media Opinion Leaders

Opinion Leaders

Opinion Receivers

(the masses)

Opinion Receivers

(the masses)

Step 1 Step 2


Multistep Multistep Flow of Flow of

Communication Communication TheoryTheory

A revision of the traditional two-step theory that shows multiple communication

flows: from the mass media simultaneously to opinion leaders, opinion receivers, and information receivers;

from opinion leaders to opinion receivers; and from opinion receivers to opinion

leaders.


Figure 15.3 Multistep Flow of Communication Theory

Mass MediaMass Media

Information Receivers

Information Receivers

Opinion Receiver/ Seekers

Opinion Receiver/ Seekers

Opinion Leaders

Opinion Leaders

Step 1a

Step 1b

Step 2

Step 3


Issues In Opinion Leadership and Marketing Strategy

• Programs Designed to Stimulate Opinion Leadership

• Advertisements Simulating Opinion Leadership

• Word of Mouth May Be Uncontrollable

• Creation of Opinion Leaders


Diffusion Diffusion ProcessProcess

The process by which the acceptance of an innovation is spread by communication to members of social system

over a period of time.


Adoption Adoption ProcessProcess

The stages through which an individual consumer passes in arriving at a decision to

try (or not to try), to continue using (or

discontinue using) a new product. The five stags of the traditional adoption process are awareness,

interest, evaluation, trial, and adoption.


Elements of the Diffusion Process

• The Innovation• The Channels of Communication• The Social System• Time


Defining Innovations

• Firm-oriented definitions• Product-oriented definitions• Market-oriented definitions• Consumer-oriented definitions


Product-Oriented Definitions

Continuous Innovation

Dynamically Continuous Innovation

Discontinuous Innovation


Continuous Continuous InnovationInnovation

A new product entry that is an improved or modified

version of an existing product rather than a totally new product. A continuous

innovation has the least disruptive influence on

established consumption patterns.


Dynamically Dynamically Continuous Continuous InnovationInnovation

A new product entry that is sufficiently innovative to

have some disruptive effects on established consumption

practices.


Discontinuous Discontinuous InnovationInnovation

A dramatically new product entry that requires the establishment of new

consumption practices.


Figure 15.5 The Telephone Has Led to Related Innovations

Telephone

Pager

Fax Machine

Telephone answering machinesCall forwardingCall waitingCaller IDBanking by telephoneCall-prompting systems

Hold buttonLine-in-use indicatorRedial buttonAuto dialing featureTouch-tone service800 Numbers900 Numbers

Nationwide paging serviceStock market quotation devicesSports scores deliveryTwo-way pagingPager watch

Silent alertMessage displaysBuild-in alarm clockInterchangeable fashion

color cases

Fax modemMobile fax machinesHome office systems

(combined fax, copier, computer printer)

Plain paper faxSpeed dial buttonsDelayed sendCopy functionPaper cutter

Discontinuous Innovations

Dynamically ContinuousInnovations

ContinuousInnovations


Product Characteristics That Influence Diffusion

• Relative Advantage• Compatibility• Complexity• Trialability• Observability


Table 15.6 Product Characteristics That Influence Diffusion

CHARACTERISTICSCHARACTERISTICS EXAMPLESEXAMPLESDEFINITIONDEFINITION

Relative Advantage

Air travel over train travel, cordless phones over corded telephones

The degree to which potential consumers perceive a new product as superior to existing substitutes

Compatibility

Gillette MACH3 over disposable razors, digital telephone answering machines over machines using tape to make recordings

The degree to which potential consumers feel a new product is consistent with their present needs, values, and practices

Complexity

Products low in complexity include frozen TV dinners, electric shavers, instant puddings

The degree to which a new product is difficult to understand or use



CHARACTERISTICSCHARACTERISTICS EXAMPLESEXAMPLESDEFINITIONDEFINITION

Trialability

Trial size jars and bottles of new products, free trials of software, free samples, cents-off coupons

The degree to which a new product is capable of being tried on a limited basis

Observability

Clothing, such as a new Tommy Hilfiger jacket, a car, wristwatches, eyeglasses

The degree to which a product’s benefits or attributes can be observed, imagined, or described to potential customers


Table 15.7 Barriers to Diffusion of an Innovation--On-Line Banking

FUNCTIONAL BARRIERS

Usage • Initial use requires a great deal of consumer learning• Continuing use requires total commitment of system• Partial or inconsistent use results in incorrect account balances

Value barriers • Requires purchase of software and supplies• Generally has additional monthly fee

TYPES OF BARRIERSTYPES OF BARRIERS DEFINTIONS AND EXAMPLESDEFINTIONS AND EXAMPLES

Risk barriers • Performance risk is high• Economic risk is moderate• Social risk is low

PSYCHOLOGICAL BARRIERS

Traditional barriers • Not the way the consumer is accustomed to paying bills, etc.

Image barriers • Negative (“hard to use”) image of personal computers in general and on-line banking in particular


Time and Diffusion

• Purchase Time• Adopter Categories• Rate of Adoption


Table 15.8 Time Line for Selecting a New Large-Screen TV Set

WEEK PRECIPITATING SITUATIONS/FACTORS

0 Current family room 19-inch TV set works fine but is 10 years old and cannot access a number of the cable channels. The wife has recently purchased a new sofa and new carpeting for the family room, and she and her husband have spoken about possibly having a cabinet built for the wall opposite the sofa that would contain the TV, stereo, tape deck, CD player, and VCR. Several friends have purchased large-screen TVs and have turned their family rooms into home entertainment centers. Couple decides, therefore, to also look at projection TVs.

1-4 Consumer senses a need to learn more about the features and availability of large-screen TVs, both those with conventional tubes and projection TVs.

DECISION PROCESS BEGINS



WEEK THE TV IS OUT OF MIND

5-8 The transmission in the older of the couple’s two cars, a 1987 Honda, begins to shift erratically. Because of the expense of this repair (the transmission had to be replaced), the hunt for a new TV is put on the back burner.

9 The wife reads a article in one of the magazines hat she periodically buys at the supermarket about a family that purchased a Zenith 52-inch projection TV for their family room and created a home entertainment center. She shows the article to her husband.

INTEREST IS RETRIGGERED

CONSUMER ACQUIRES A MENTOR (OPINION LEADER)

The husband asks a neighbor to serve as a mentor (opinion leader) with regard to home entertainment centers. He agrees.



WEEK FEATURES AND BRAND OPTIONS ARE REVIEWED

10 With the advice of the mentor, the decision is made to use a projection TV in the 46- to 50-inch range as the nucleus of the home entertainment center. The couple visits several department store and appliance store TV departments and narrows down the choices to projection units from Pioneer, Sony, and Zenith.

11-12 The toll-free 800 numbers of the three TV manufacturers (which were featured in ads) are called to request additional detailed information (brochures and booklets).

OBTAINING MORE FOCUSED INFO ABOUT OPTIONS


Table 15.8 continuedWEEK PERIOD OF SELF-STUDY

13-14 After reading the brochures and discussing the pros and cons of the alternatives with their mentor (comparing models with regard to features such as picture-in-picture and surround sound capability), a decision is made.The 46-inch Sony is selected because of a magazine review that give it very high marks in terms of its screen brightness and sharpness, and because it offered colored picture-in-picture.

Sunday’s newspaper contains an advertisement from a local appliance store chain stating that any projection TV purchased within the next week can be paid for with 6 monthly payments, at no interest charge--the first payment beginning 6 months after the TV is installed. The couple decides to drive to the store and talk to a salesperson about the deal. When the salesperson agrees to lower the price of the Sony 46-inch set to match the lowest price the couple had been quoted, they decide to make the purchase. The TV arrives in the appliance dealer’s truck and is installed in the couple’s family room.

ORDERING THE TV


Adopter Adopter CategoriesCategories

A sequence of categories that describes how early (or late) a consumer adopts a new product in relation to other adopters. The five

typical adopter categories are innovators, early

adopters, early majority, late majority, and laggards.


Figure 15.10 Adopter Categories

Innovators2.5%

EarlyAdopters

13.5%

Laggards

16%

Percentage of Adopters by Category Sequence

EarlyMajority

34%

LateMajority

34%


Innovators: Description

• 2.5% of population• Venturesome• Very eager to try new ideas• Acceptable if risk is daring• More cosmopolite social relationships• Communicates with other innovators


Early Adopters: Description

• 13.5% of population• Respected• More integrated into the local social system• The persons to check with before adopting a

new idea• Category contains greatest number of

opinion leaders• Are role models


Early Majority: Description

• 34.0% of population• Deliberate• Adopt new ideas just prior to the average

time• Seldom hold leadership positions• Deliberate for some time before adopting


Late Majority: Description

• 34% of population• Skeptical• Adopt new ideas just after the average

time• Adopting may be both an economic

necessity and a reaction to peer pressures• Innovations approached cautiously


Laggards: Description

• 16% of population• Traditional• The last people to adopt an innovation• Most “localite” in outlook• Oriented to the past• Suspicious of the new


Table 15.10 The Importance of Time in the Diffusion Process

TYPE OF TIME

MEANING EXAMPLES

Purchase time

Time between awareness and purchase

I you look at your car’s gas gauge and it reads “empty,” you stop at the next gas station you come to. If you’re shopping or an additional VCR for your home, you may take quite a while to make a purchase, as long as your present VCR is working properly.

Adopter categories

A classification scheme that indicates where a consumer stands, in relation to others, when adopting a new product.

Innovators are the first to adopt a new product, and laggards are the last.



TYPE OF TIME

MEANING EXAMPLES

Rate of adoption

How long it takes a new product or service to be adopted by members of a social system

Black-and-white TVs were adopted by consumers much more quickly than their manufacturers had envisioned; in contrast, trash compactors have never been widely adopted


Table 15.11 The Stages in the Adoption Process

NAME OF STAGE

WHAT HAPPENS DURING THIS

STAGEEXAMPLE

AwarenessConsumer is first exposed to the product innovation.

David sees an ad for a new digital camera in the newspaper.

Interest

Consumer is interested in the product and searches for additional information.

David reads about the camera on the manufacturer’s Web site, ad then goes to a camera store near his office and has a salesman show him the camera.

Evaluation

Consumer decides whether or not to believe that this product or service will satisfy the need--a kind of “mental trial.”

After talking with a knowledgeable friend, David decides that his camera should be able to provide him with the photos he needs to use in PowerPoint presentations. He also likes the fact that it uses “standard” floppy disks for storage.


Table 15.11 The Stages in the Adoption Process

Trial

Consumer uses the product on a limited basis

Since camera cannot be “tried” like a small bottle of a new shampoo, David buys the camera from a dealer offering a 14-day full refund policy.

Adoption (Rejection)

If trial is favorable, consumer decides to use the product on a full, rather than a limited basis--if unfavorable, the consumer decides o reject it.

David finds that the camera is easy to use and the results are excellent; consequently, he keeps the digital camera.

NAME OF STAGE

WHAT HAPPENS DURING THIS

STAGEEXAMPLE


Figure 15.11 An Enhanced Adoption Process Model

Pre-existing problem or

NeedAwareness Interest Evaluation Trial

Adoption or

Rejection

Postadoption or Postpurchase

Evaluation

Evaluation

Adoption or Rejection

Discontinuation

Discontinuation or Rejection

Rejection


Figure 15.12 The Relative Importance of Different Types of Information Sources in the

Adoption Process

Importance

High

Low

Aw

aren

ess

Ad

opti

on

Tri

al

Eva

luat

ion

Inte

rest

Personal and interpersonal sources

Impersonal mass-media sources


Issues in Profiling Consumer Innovators

• Defining the Consumer Innovator• Interest in the Product Category• The Innovator Is an Opinion Leader• Personality Traits• Media Habits• Social Characteristics• Demographic Characteristics• Are There Generalized Consumer Innovators?


EMBRACING INNOVATIONSChasing the AdvancesInnovation Fascination

Figure 15.13 The Innovator Buying Cycle

INNOVATION SATIATIONProduct Accumulation in the Closet

Cumulative Innovation DisappointmentPace of Innovation Slows Down

INNOVATOR NO MOREWhat I’ve Got is Good Enough Now

Innovator Becomes Extremely Cautious, Careful BuyerMoving On


Table 15.12 Comparative Profiles of the Consumer Innovator and the Noninnovator or

Later Adopter

Product interest More Less

Opinion Leadership More Less

Personality

Dogmatism Open-minded Closed-minded

Need for uniqueness Higher Lower

Social character Inner-directed Other-directed

Optimum stimulation level Higher Lower

Variety seeking Higher Lower

Perceived risk Less More

Venturesomeness More Less

CHARACTERISTIC INNOVATORNONINNOVATOR

(OR LATE ADOPTER)




(OR LATE ADOPTER)

Purchase & Consumption Traits

Brand Loyalty Less More

Deal proneness More Less

Usage More Less

Media Habits

Total magazine exposure More Less

Special-interest magazines More Less

Television Less More



Social Characteristics

Social integration More Less

Social striving More Less

Group Memberships More Less

Demographic Characteristics

Age Younger Older

Income Higher Lower

Education More Less

Occupational status Higher Lower


(OR LATE ADOPTER)

Documents

Chapter 15 Consumer Influence and the Diffusion of Innovations