Marketing Communications and New Product Adoption 6

Case 1: New Product Adoption The Internet 2001: 63% U.S. HH own computer 57% HH connected to Internet How long will it take for Internet to reach 100% penetration? 1

Case 2: New Product Adoption Television : Took 8 years to reach 63% penetration Took another 30 years to reach current penetration of 98% Would you expect Internet to reach same 98% level? How long would it take? Faster or slower than for TV? What are some considerations that shed light on these questions? 2

New Product Adoption: The Internet vs. TV 3

New Product Adoption: The Internet vs. TV 4

New Products & Innovation New flavors, sizes, packages Annual new models in cars; New fashions First introduction of compact cars; Color television Invention of computer; Jet aircraft 5

Adoption Process Innovation Related Characteristics Relative Advantage Compatibility Complexity Trialability Observability 6

Relative Advantage A product innovation is perceived as better than existing alternatives Positively correlated with an innovation’s adoption rate 7

Relative Advantage An illustration of relative advantage

Relative Advantage Another illustration of relative advantage

Compatibility An innovation is perceived to fit into a person’s way of doing things The greater compatibility, the more rapid a product’s rate of adoption Overcome perception of incompatibility through: 8

Compatibility A compatibility problem

Complexity An innovation’s degree of perceived difficulty The more difficult, the slower the rate of adoption Examples? 9

Complexity Offsetting perceived product complexity

Trialability An innovation can be used on a limited basis prior to making a full blown commitment The trial experience serves to reduce the risk of a consumer’s being dissatisfied with a product after having permanently committed to it through outright purchase 10

Adoption Process An effort to promote vicarious trial

Observability The product user or other people can observe the positive effects of new product usage Higher the visibility, more rapid the adoption rate 11

Adoption Process Amazon Kindle 2.0? Relative Advantage Compatibility Complexity Trialability Observability 6

Case 3: New Product Adoption Go-Gurt How to get kids & teens to eat yogurt? 6

Stimulating Word of Mouth Influence Impersonal sourcesImpersonal sources: Personal sourcesPersonal sources: 9

Stimulating Word of Mouth Influence Positive word-of-mouth communication is critical in the success of a new product or service Unfavorable WOM have devastating effects because consumers seem to place more weight on negative information in making evaluations 10

Opinion Leader A person who frequently influences other individuals’ attitudes or overt behavior An informer, persuader, and confirmer Influence is typically limited to one or several consumption topics Influence moves horizontally through a social class (not across) 11

Opinion Leaders Characteristics 12

Opinion Leaders Market Mavens 13

Tactics: “Seeding the Market” Supplying advance samples in key markets to people who are likely to be influential. Finding cheerleaders who will get the talk started. 14

Creating “BUZZ” Law of the Few Stickiness Factor Power of Context

Igniting Explosive Demand 1.Design the product to be unique, visible 2.Select and seed the vanguard 3.Ration supply 4.Use celebrity icons 5.Tap the power of lists 6. Nurture the grass roots