1. Chapter Six MarCom’s Role in Facilitating Product Adoption

2. Chapter Six Objectives Appreciate the role of marketing communications in facilitating the introduction of new products Explain the innovation-related characteristics that influence consumers’ adoption of new products Describe the diffusion process and the various groups of adopters

3. Chapter Six Objectives Understand efforts employed by marketing communicators to manage the diffusion process Appreciate the role of word-of-mouth communications in facilitating new product adoption Use “buzz” to heighten the rate of product adoption

4. New Products and Marketing Communication Introducing new products is essential for most companies’ success and long- term growth Product failure-rate estimated 35-45% Marketing communications facilitate successful new product introductions and reduce the product failure rate

5. New-Product Adoption Process Model Free Samples Coupons Distribution Product Satisfaction Awareness Class Trier Class Repeater Class PriceAdvertising

6. New-Product Adoption Process Model Three stages of adopting a new product Awareness Class Trier Class Repeater Class

7. Introduction of Sony’s New Camera New Sony camera and the adoption process

8. New-Product Adoption Process Model Variables: free samples, coupons, advertising, and distribution Successful introduction of new products requires an effective advertising campaign, widespread product distribution, and extensive couponing and sampling Awareness Class Distribution AdvertisingCoupons Free Samples

9. New-Product Adoption Process Model Variables: coupons, distribution, and price Once the consumers becomes aware of a new product, there is an increased probability that they will actually try the new offering Trier Class PriceDistributionCoupons

10. New-Product Adoption Process Model Variables: advertising, price, distribution and product satisfaction Consumers repeat the purchase if advertising reminds them about the brand, if the price is reasonable, if the brand is accessible in retail outlets, and if product quality is satisfactory Repeater Class Product Satisfaction DistributionPriceAdvertising

11. Adoption Process Innovation Related Characteristics Relative Advantage Compatibility Complexity Trialability Observability

12. 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

13. Relative Advantage An illustration of relative advantage

14. Relative Advantage An illustration of relative advantage

15. Relative Advantage Another illustration of relative advantage

16. Relative Advantage Advertising a competitors’ relative disadvantages

17. Relative Advantage An illustration of relative advantage

18. Relative Advantage Another illustration of relative advantage

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

20. 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

21. Compatibility Compatibility

22. Compatibility A compatibility problem

23. Compatibility An effort to regain compatibility

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

25. Complexity Offsetting perceived product complexity

26. 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

27. Adoption Process Trialability

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

29. Observability High Visibility

30. Innovators (2.5%) Early Adopters (13.5%) Early Majority (34%) Late Majority (34%) Laggards (16%) Mean Time of Adoption Diffusion Process Concerned with the broader issue of how an innovation is communicated and adopted throughout the marketplace The process of spreading out Adopter categories »Five different type of consumers »Normal distribution

31. The Diffusion Process Innovators (2.5%) Early Adopters (13.5%) Early Majority (34%) Late Majority (34%) Laggards (16%) Mean Time of Adoption

32. Diffusion Process Innovators 2-3%, the first to accept a new idea or product Venturesome and willing to take risks Cosmopolites: willing to seek social relationships outside of their local peer group Rely heavily on impersonal information sources

33. Diffusion Process Early Adopters 13%, the second to adopt an innovation Localites: well integrated within the community and respected by friends Often sought for advice and information about new products from peers Opinion leaders primarily come from the early adopter group

34. Diffusion Process Early Majority 34%, adopt the product prior to the mean time of adoption Deliberate and cautious Spend more time in the innovation decision process Slightly above average in education and social status

35. Diffusion Process Late Majority 34%, just following the average adoption time Skepticism Peers are the primary source of new ideas Make little use of mass media Below average in education, income and social status

36. Diffusion Process Laggards 16%, the final to adopt an innovation Bound in tradition “It it was good enough for my parents, it’s good enough for me.” Closely tied to local community and have limited contact with the mass media

37. Objectives Managing the Diffusion Process 1. Secure sales quickly - rapid takeoff 2. Achieve rapid acceleration - rapid acceleration 4. Maintain sales as long as possible - long-run franchise 3. Secure maximum sales potential - maximum penetration

38. Desired and Typical Diffusion Patterns Time of Adoption Potential Adopters 100 90 80 70 60 50 40 30 20 10 0 “Desired” Pattern Introduction “Typical” Pattern

39. Managing the Diffusion Process Advertisement of Clomicalm

40. Managing the Diffusion Process Rapid takeoff can be facilitated by: Aggressive sales force to secure trade support for new products Intensive advertising to create awareness Sufficient sales promotion activity to generate trial-purchase behavior

41. Managing the Diffusion Process Rapid acceleration accomplished by: Ensuring quality product that will promote positive word-of-mouth Continuing to advertise heavily to reach later adopter groups Sales force provides reseller support Using sales promotion creatively to encourage repeat-purchase behavior

42. Managing the Diffusion Process Maximum penetration approached by: Continuing the same strategies that stimulated rapid acceleration Revise the product and advertising strategies to appeal to the needs of later adopters

43. Managing the Diffusion Process Long-run franchise maintained by: Old product continues to meet the market’s needs Distribution suitable to reach the market Advertising continued to remind the market about the product

44. 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

45. 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

46. Opinion Leaders Characteristics More cosmopolitan More gregarious Slightly higher socioeconomics status Generally more innovative Willing to act differently

47. 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 from market information

48. 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

49. Creating “Buzz” Creating and epidemic Igniting explosive self-generated demand