Consumer Influence and the Diffusion of Innovations

1
Chapter 15

• Consumer Influence and the Diffusion of
  Innovations

2
Opinion Leadership
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.
3
What is Opinion Leadership?
Opinion Leader
Opinion Receiver
Opinion Seeker
4
Opinion Leader
A person who informally gives product information
and advice to others.
5
Opinion Seeker
An individual who either actively seeks product
information from others or receives unsolicited
information.
6
Opinion Receiver
The person who receives an opinion offered by
another person.
7
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

8
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

9
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

10
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 ones reaction to a stimulating
  advertisement by telling others about it

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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
decision 10. Same person can be an opinion leader
for a variety of related product categories
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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 occasions 10. Usually
specializes for a specific product/service
category
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Measurement of Opinion Leadership

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

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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.
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Table 15.3 Methods of Measuring Opinion
Leadership Advantages and Limitations
OPINION LEADERSHIP MEASUREMENT METHOD
SAMPLE QUESTIONS ASKED
DESCRIPTION OF METHOD
ADVANTAGES
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.
Measures the individuals own perceptions of his
or her opinion leadership.
Depends on the objectivity with which respondents
can identify and report their personal influence.
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Table 15.3 continued
OPINION LEADERSHIP MEASUREMENT METHOD
SAMPLE QUESTIONS ASKED
DESCRIPTION OF METHOD
ADVANTAGES
LIMITATIONS
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.
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.
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Table 15.3 continued
OPINION LEADERSHIP MEASUREMENT METHOD
SAMPLE QUESTIONS ASKED
DESCRIPTION OF METHOD
ADVANTAGES
LIMITATIONS
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.
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Table 15.3 continued
OPINION LEADERSHIP MEASUREMENT METHOD
SAMPLE QUESTIONS ASKED
DESCRIPTION OF METHOD
ADVANTAGES
LIMITATIONS
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 individuals ability to influence others
under controlled circumstances.
Requires the establishment of an experimental
design and the tracking of the resulting impact
on the participants.
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Table 15.4 Profile of Opinion Leaders
GENERALIZED ATTRIBTES ACROSS PRODUCT CATEGORIES
CATEGORY-SPECIFIC ATTRIUTES
Innovativeness Willingness to talk Self-confidence
Gregariousness Cognitive differentiation
Interest Knowledge Special-interest media
exposure Same age Same social status Social
exposure outside group
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Table 15.5 Car and Driver Research Supporting
Subscribers Are Opinion Leaders
AREA OF OPINION LEADERSHIP
AVERAGE NO. OF PEOPLE ADVISED
GIVEN ADVICE PAST 12 MONTHS
AVERAGE NO. WHO FOLLOWED SUBSCRIBERS ADVICE
AVERAGE NO. WHO SUBSEQUENTLY BOUGHT
Gave advice in past year
69
Passenger car
7.8
53
2.7
3.2
Pickups, SUVs, Vans
4.5
31
1.2
1.5
Automotive parts
20.5
24
17.2
18.3
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Table 15.5 continued
AREA OF OPINION LEADERSHIP
AVERAGE NO. OF PEOPLE ADVISED
GIVEN ADVICE PAST 12 MONTHS
AVERAGE NO. WHO FOLLOWED SUBSCRIBERS ADVICE
AVERAGE NO. WHO SUBSEQUENTLY BOUGHT
Maintenance/appearance products
18.2
28
14.8
15.8
Tires
8.3
32
6.7
70
Auto sound equipment
8.2
17
3.7
4.0
Other electronic accessories
6.2
24
3.1
3.4
Among those who gave advice (i.e., 69). Base
Total subscribers (multiple responses).
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Market Maven
Individuals whose influence stems from a general
knowledge or market expertise that leads to an
early awareness of new products and services.
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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

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Two-Step Flow of Communication Theory
A communication model that portrays opinion
leaders as direct receivers of information from
mass media sources who, in turn, interpret and
transmit this information.
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Figure 15.2 Two-Step Flow of Communication Theory
Mass Media
Opinion Leaders
Opinion Receivers (the masses)
Step 1
Step 2
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Multistep Flow of Communication Theory
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.
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Figure 15.3 Multistep Flow of Communication
Theory
Step 2
Mass Media
Opinion Receiver/ Seekers
Opinion Leaders
Step 1a
Step 3
Step 1b
Information Receivers
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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

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Diffusion Process
The process by which the acceptance of an
innovation is spread by communication to members
of social system over a period of time.
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Adoption Process
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.
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Elements of the Diffusion Process

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

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Defining Innovations

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

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Product-Oriented Definitions
Continuous Innovation
Dynamically Continuous Innovation
Discontinuous Innovation
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Continuous Innovation
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.
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Dynamically Continuous Innovation
A new product entry that is sufficiently
innovative to have some disruptive effects on
established consumption practices.
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Discontinuous Innovation
A dramatically new product entry that requires
the establishment of new consumption practices.
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Figure 15.5 The Telephone Has Led to Related
Innovations
Discontinuous Innovations
Dynamically Continuous Innovations
Continuous Innovations
Telephone answering machines Call forwarding Call
waiting Caller ID Banking by telephone Call-prompt
ing systems
Hold button Line-in-use indicator Redial
button Auto dialing feature Touch-tone
service 800 Numbers 900 Numbers
Telephone
Nationwide paging service Stock market quotation
devices Sports scores delivery Two-way
paging Pager watch
Silent alert Message displays Build-in alarm
clock Interchangeable fashion color cases
Pager
Fax modem Mobile fax machines Home office systems
(combined fax, copier, computer printer)
Plain paper fax Speed dial buttons Delayed
send Copy function Paper cutter
Fax Machine
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Product Characteristics That Influence Diffusion

• Relative Advantage
• Compatibility
• Complexity
• Trialability
• Observability

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Table 15.6 Product Characteristics That
Influence Diffusion
CHARACTERISTICS
EXAMPLES
DEFINITION
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
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Table 15.6 continued
CHARACTERISTICS
EXAMPLES
DEFINITION
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 products benefits or
attributes can be observed, imagined, or
described to potential customers
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Table 15.7 Barriers to Diffusion of an
Innovation--On-Line Banking
TYPES OF BARRIERS
DEFINTIONS AND EXAMPLES
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

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

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Time and Diffusion

• Purchase Time
• Adopter Categories
• Rate of Adoption

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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.
DECISION PROCESS BEGINS
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.
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Table 15.8 continued
WEEK
THE TV IS OUT OF MIND
5-8
The transmission in the older of the couples 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.
INTEREST IS RETRIGGERED
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.
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.
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Table 15.8 continued
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.
OBTAINING MORE FOCUSED INFO ABOUT OPTIONS
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).
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Table 15.8 continued
WEEK
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.
ORDERING THE TV
Sundays 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 dealers truck and is
installed in the couples family room.
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Adopter Categories
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.
48
Figure 15.10 Adopter Categories
Laggards 16
Early Adopters 13.5
Late Majority 34
Early Majority 34
Innovators 2.5
Percentage of Adopters by Category Sequence
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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

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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

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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

52
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

53
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

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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 cars gas gauge and it reads
empty, you stop at the next gas station you
come to. If youre 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.
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Table 15.10 continued
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
56
Table 15.11 The Stages in the Adoption Process
NAME OF STAGE
WHAT HAPPENS DURING THIS STAGE
EXAMPLE
Awareness
Consumer 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
manufacturers 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.
57
Table 15.11 The Stages in the Adoption Process
NAME OF STAGE
WHAT HAPPENS DURING THIS STAGE
EXAMPLE
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.
58
Figure 15.11 An Enhanced Adoption Process Model
Discontinuation or Rejection
Rejection
Evaluation
Pre-existing problem or Need
Adoption or Rejection
Awareness
Interest
Evaluation
Trial
Adoption or Rejection
Postadoption or Postpurchase Evaluation
Discontinuation
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Figure 15.12 The Relative Importance of
Different Types of Information Sources in the
Adoption Process
High
Personal and interpersonal sources
Importance
Impersonal mass-media sources
Low
Trial
Interest
Adoption
Awareness
Evaluation
60
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?

61
Figure 15.13 The Innovator Buying Cycle

EMBRACING INNOVATIONS Chasing the
Advances Innovation Fascination
INNOVATION SATIATION Product Accumulation in the
Closet Cumulative Innovation Disappointment Pace
of Innovation Slows Down
INNOVATOR NO MORE What Ive Got is Good Enough
Now Innovator Becomes Extremely Cautious, Careful
Buyer Moving On
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Table 15.12 Comparative Profiles of the Consumer
Innovator and the Noninnovator or Later Adopter
CHARACTERISTIC
INNOVATOR
NONINNOVATOR (OR LATE 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
63
Table 15.12 continued
CHARACTERISTIC
INNOVATOR
NONINNOVATOR (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
64
Table 15.12 continued
CHARACTERISTIC
INNOVATOR
NONINNOVATOR (OR LATE ADOPTER)
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