Marketing Communications and New Product Adoption 7

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 Owning/operating a TV is simple; Internet requires owning/operating a computer plus subscribing to ISP and learning to work it. Increasing costs of Internet access (AOL’s 30 million subscribers had 9% rate increase recently) Many have Internet access at work (don’t need it at home too) 3

New Product Adoption: The Internet vs. TV ‘Net has grown faster than many other technologies Availability of high-speed access will further accelerate growth Will compete with traditional broadcast media as delivery vehicle for movies, music, and other entertainment Major entertainment companies partnering to deliver content via streaming video, etc. 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 Exist when a new product offers: »Better performance, increased comfort, saving in time and effort, or immediacy of reward 7

Relative Advantage An illustration of relative advantage

Relative Advantage Another illustration of relative advantage

Relative Advantage Relative advantage of the U.S. mail service

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 heavy advertising to persuade consumers 8

Compatibility A compatibility problem

Compatibility An effort to regain compatibility

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

Case 3: New Product Adoption Go-Gurt How to get kids & teens to eat yogurt? Spoon is a bother, so traditional packaging restricted sales General Mills’s Yoplait division: Yogurt in a tube (Yogurt for kids on the Go) Flavors: Strawberry splash, Berry blue blast, Watermelon meltdown Instantaneous hit: 1 st year sales $100 mill. Nearly doubled proportion of yogurt users < age 19 (to 1 in 6) 12

Case 3: New Product Adoption Go-Gurt How to get kids & teens to eat Go-Gurt? Brand name facilitated adoption (communicated the positioning statement) Portability the key positioning Saatchi & Saatchi Kid Connection: Yoplait’s ad agency “Lose the Spoon” Skateboarder whizzing by bored teen eating yogurt from traditional container 13

Case 3: New Product Adoption Go-Gurt How to get kids & teens to eat Go-Gurt? Extensive sampling in major U.S. markets Fleets of teens on skateboards, scooters, equipped with shoulder packs full of samples Refrigerated trucks nearby for reloading >1 mill samples distributed Sales accelerated rapidly 14

Stimulating Word of Mouth Influence Impersonal sourcesImpersonal sources: information received from television, magazines, the Internet, and other mass-media sources Personal sourcesPersonal sources: word-of-mouth influence from friends, acquaintances, and from business associates 15

Stimulating Word of Mouth Influence Positive word-of-mouth communication is critical in the success of a new product of service Unfavorable WOM have devastating effects because consumers seem to place more weight on negative information in making evaluations 16

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) 17

Opinion Leaders Characteristics More cosmopolitan More gregarious Slightly higher socioeconomics status (but exist at each SES level) Generally more innovative Willing to act differently 18

Opinion Leaders Market Mavens Individuals who have information about many kinds of products, places to shop, and other facets of markets, and initiate discussions with consumers and respond to requests from customers for market information 19

Tactics: “Seeding the Market” Supplying advance samples in key markets to people who are likely to be influential. Finding cheerleeders who will get the talk started. 20