Sunday, June 2, 2013

Why You Should Care About the Diffusion of Innovation Theory

Have you ever wondered how you always get suckered into buying new gadgets? Well there is actually a theory behind it all that makes you purchase the latest trend. The theory is called the Diffusion of Innovation. It is when companies reinvent their products to meet the needs of the population. The product goes down the chain of consumers from early adopters to the last group called laggards. I will explain each group throughout the rest of my blog. Let me explain the chain of consumers, for example, the cellphone industry is one of today’s most rapidly evolving consumer markets. Cellphone companies will add and change things to reinvent the new and improved cellphone. The early adopters latch on to the new innovations. They are the first consumers to go out and purchase the new items once the items hit the stores. They might even purchase the items online before they even hit the store shelves. The early majority wait a bit until they have proof and are convinced that the product is worth spending their hard earned money. Once the early majority has adopted the new innovation, the late majority is shortly to follow them in fear of what the early adopters and the early majority will think of them. They are forced to give into peer pressure. The last group is the laggards. The laggards do not care about the peer pressure and probably feel a sense of accomplishment by not giving in and will most likely try to argue against the innovation. They will wait until the product has basically lost its appeal before they give in and buy the product. By the time the laggards actually do buy, another “new and improved” version is already finding its way to the market. The key to getting each group to buy the new innovation is to know and understand each group you are communicating to in order to appeal to their needs and interests.  This will help determine what it is that the consumers of that group are wanting in the product or innovation. (Robinson, 2009) Cellphone companies have gotten very good at appealing to all the groups and their personalities. In an effort to sell products to all consumer groups the cellphone companies still keep a limited selection of the basic phones on the markets and in the stores for the laggards. They also offer the more technologically advanced cellphones for the middle groups until they are ready to adopt the new smartphones. Then of course the early adopters will go ahead and buy the newest products. Greg Orr calls this concept the “tipping point” concept. He states, “the idea suggest that for good or bad, change can be promoted rather easily in a social system through a domino effect (2003).” His statement suggests that is exactly what happens during these groups. Once the early adopters start to buy the products, the rest follow after creating a domino effect leaving the laggards at the very end. What is the best way for people to get this information about a new innovation you might ask? A lot of what we learn about new products trickles down to us through friends and family. Sometimes it is through a social networking site such as Facebook or Twitter. For example, my sister-in-law is a technology guru. She must learn about and have the latest gadgets. You could say she is an early adopter when it comes to technology. So when she told me that I should buy a touchscreen Android phone, I was reluctant. I was not sure about the touchscreen phone for a while, but I started to play with hers and fell in love with it. Thanks to her, I went out and bought the device. I could not imagine my life without my new phone. What makes the Diffusion of Innovation work so well? Les Robinson suggests that it is because of the following five qualities: relative advantage, compatibility with existing values, simple and easy to use, trialability factor, and observable results. Relative advantage is meeting the needs of the consumer. Keeping the product compatible to existing products will be adopted more rapidly than those products that are not compatible. Sony had a bit of compatibility issue with its play station 3, some PS2 games could be played on the new system but some could not, this most likely caused some consumers to purchase a different game system. Consumers want simple and easy to use products. The harder the product is to use, the less likely it will sell. If consumers can test the product on a trial basis, then the product is more likely to sell. Also, the trial basis allows the company to hear feedback on the product so they can make the necessary changes to meet the needs of the population. Of course the social factor plays a key role to move the innovation through the groups that were discussed previously. If a friend sees another friend using a product or innovation then odds are that friend will adopt the product or innovation too. (2009) Greg Orr suggests that people are highly influenced by opinion leaders. For example, you could say since I decided to trust my sister-in-law’s opinion on a touchscreen Android phone, that she is my opinion leader. The opinion leader does not necessary have to be someone famous or on the television or of high authority. It is most likely someone in your social group that you trust. It could be your best friend or a family member. Social networking sites help spread the word of new innovations as well. If you post about a new product such as the new version of Kindle on your Facebook page and state how much you love it, all of your friends will see your post. Then if another friend comments or repost it to their page, all of their friends will see it as well. Therefore, before you know it, the new product is all over the internet. So the next time you find yourself buying a new cellphone when there was nothing wrong with the one you had, you can thank the process of Diffusion of Innovation.         

Diffusion of Innovations (1995)
http://www.stanford.edu/class/symbsys205/Diffusion%20of%20Innovations.htm

A Summary of Diffusion of Innovations
http://www.enablingchange.com.au/Summary_Diffusion_Theory.pdf