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How a consumer becomes a customer<br />Presenting By:<br /> Manish Sharma<br />Vivek Singh<br />Customer Adoption ProcessDiffusion of Innovation &Situational Influences<br />

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Diffusion<br />2<br /><ul><li>Diffusion is the process by which an innovation is communicated through certain channels over time among the members of a social system.

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An innovation?

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is “an idea perceived as new by the individual.”</li></li></ul><li>The four main elements in the diffusion of new ideas are<br />3<br />(1) The innovation<br />(2) Communication channels<br />(3) Time<br />(4) The social system<br />

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The innovation<br />4<br /><ul><li>Why do certain innovations spread more quickly than others?

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The innovation, to spread and be adopted should show: The characteristics which determine an innovation's rate of adoption.

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For example, consider the characteristics of HDTV (High-definition television) in relation to the rate of adoption.

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Relative advantage (superior to existing products)

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Compatibility (fits the values and experiences of potential customers)

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Complexity (difficult to understand or use)

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Divisibility (tried on a limited basis but still very expensive)

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Communicability (results of using can be observed or described to others)</li></li></ul><li><ul><li>Relative advantage – new products that are most likely to succeed are those that appeal to strongly felt needs

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Compatibility – degree to which the product is consistent with existing values and past experience of the adopters

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Complexity – degree to which an innovation is perceived as difficult to understand and use

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Trialability – the ability to make trials easy for new products without economic risk to the consumer

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Observability– reflects the degree to which results from using a new product are visible to friends and neighbours</li></li></ul><li>Types of Innovations<br /><ul><li>Continuous – modification or improvement of an existing product

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Dynamically continuous – may involve the creation of either a new product or the alteration of an existing one ,but does not generally alter established patterns of customer buying and product use

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Discontinuous – production of an entirely new product that causes customers to alter their behaviour patterns significantly</li></li></ul><li>Communication channel<br />7<br /><ul><li>Process by which participants create and share

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Mass media channels - effective in creating knowledge of innovations

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Interpersonal channels - effective in forming and changing attitudes toward a new idea

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Influences the decision to adopt or reject a new idea.

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Most individuals evaluate an innovation, not on the basis of scientific research by experts,

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but through the subjective evaluations of near-peers who have adopted the innovation.</li></li></ul><li>New Product Adoption Theory<br />8<br />ADOPTION PROCESS<br />The consumer decision stages that lead to innovation acceptance/rejection<br />A micro process that focuses on internal forces of the consumer<br /> * Intra Personal (Psych) Influences<br /> * Inter Personal (Social) Influences<br /> * Product Selection Criteria<br />

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New Product Diffusion Theory<br />9<br /><ul><li>DIFFUSION PROCESS

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The spread of an innovation from its source to the ultimate consumer.

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A macro process that focuses on external forces on the consumer (change agents, channels of information, types of information).

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Occurs in a social system (a target audience, community, etc.)</li></li></ul><li>Introduction<br />10<br /><ul><li>The Adoption Process (also known as the Diffusion of Innovation) is more than forty years old.

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It was first described by Bourne (1959), so it has stood the test of time and remained an important marketing tool ever since.

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It describes the behavior of consumers as they purchase new products and services.</li></li></ul><li>Adoption process<br />11<br />Awareness<br />Interest<br />Evaluation<br />Trial<br />Decision<br />Confirmation<br />OK, we will<br />buy X.<br />If I have to buy it I will.<br />No way! <br />

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Categories<br />12<br />

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Adopter classes<br /><ul><li>Innovators - 2.5%

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Early adopters – 13%

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Early majority – 34%

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Late majority – 34%

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Laggards – 16%</li></li></ul><li>Innovators<br />14<br /><ul><li>First to adopt & display that they likely to want to be ahead

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To be the first to own new products, well before the average consumer.

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They are often not taken seriously by their peers.

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They often buy products that do not make it through the early stages of the Product Life Cycle (PLC).</li></li></ul><li>Early adopters<br />15<br /><ul><li>Are also quick to buy new products and services,

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So are key opinion leaders (KOLs) with their neighbors and friends as they tend to be amongst the first to get hold of items or services.</li></li></ul><li>Early Majority<br />16<br /><ul><li>Look to the innovators and early majority to see if a new product or idea works and begins to stand the test of time.

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They stand back and watch the experiences of others.

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Then there is a surge of mass purchases.</li></li></ul><li>Late Majority<br />17<br /><ul><li>Tends to purchase the product later than the average person.

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They are slower to catch on to the popularity of new products, services, ideas, or solutions.

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There is still mass consumption, but it begins to end.</li></li></ul><li>Laggards<br />18<br /><ul><li>These tend to very late to take on board new products and include those that never actually adopt at all.

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Here there is little to be made from these consumers.</li></li></ul><li>Situational Influences<br /><ul><li>It includes all those factors particular to a time and place that do not follow from a knowledge of the stable attributes of the consumer and the stimulus and that have an effect on current behavior.

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Consumers often behave very differently depending on situation. </li></li></ul><li>4 Types of Situational Influence <br /><ul><li>Communication situation

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Purchase situation

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Usage situation

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Disposal situation</li></li></ul><li>Communication Situation <br /><ul><li>It is the situation in which consumers receive information has an impact on their behavior.

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Whether one is alone or in a group, in a good mood or bad, in a hurry or not influences the degree in which one sees and listens to market communications.</li></li></ul><li>Cont..<br /><ul><li>Consider the marketing difficulty for these situations:

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Your favorite team just lost the most important game of the year

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Your roommates watch only comedy programs

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You have the flu

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You are driving home on a cold night without a working heater </li></li></ul><li>Purchase Situation <br /><ul><li>It is the situation in which a purchase is made can influence consumer behavior.

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Marketers must understand the purchase situations in order to develop market strategies to enhance purchases of their product.

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A mother shopping with her child can be more influenced by her child’s product preferences. </li></li></ul><li>Cont.. <br /><ul><li>How would you alter your purchase decision for a beverage in the following situations?

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You are in a very bad mood

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A good friend says “That stuff is bad for you”

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The store you are in does no carry your brand

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There is a long line at the checkout stand when you enter the store

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You are with someone you want to impress</li></li></ul><li>Usage Situation <br /><ul><li>It is the knowledge of the situation in which products are, or may become, appropriate.

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Using this knowledge, marketers can communicate how their products can create consumer satisfaction in each relevant usage situation.

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Going further: expanded usage situation strategies can produce major sales gains for established products. </li></li></ul><li>Cont..<br /><ul><li>What beverage would you want to consume in the following usage situations?

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Friday afternoon after your last final exam

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With your parents for lunch

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After dinner on a cold snowy evening

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At dinner with a friend you have not seen in several years

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When you are feeling sad or homesick</li></li></ul><li> Disposition Situation<br /><ul><li>Consumers most frequently dispose of products or product packages before or after product use.

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The disposition situation can create significant social problems as well as opportunities for marketers

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Marketers need to understand how situational influences affect disposition decisions to help them provide more effective and ethical products and marketing programs. </li></li></ul><li>Cont.. <br /><ul><li>How would your disposition decision differ in these situations?

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You have finished a drink at a mall and there is a trash can nearby but no recycle. What do you do?

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You and your friends have just finished drinks. Your friends toss them into the recycle. What do you do?</li></li></ul><li>Four dimensions of situational influence<br /> Physical surroundings<br /> Social surroundings<br /> Temporal perspectives<br /> Task definition<br />

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Physical surroundings<br /><ul><li>Atmospherics is the sum of all the physical features of a retail environment.

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Atmospherics influences consumer judgments of the quality of the store and the store’s image.

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Atmosphere is referred to as service when describing a service business such as a hospital, bank or restaurant.</li></li></ul><li>Examples of physical surrounds<br /><ul><li> Store location

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Interior decor

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Music

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Smell/aromas

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Temperature (air-conditioning or heating)

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Choice provided (by product category or across the categories)</li></li></ul><li><ul><li>Colors

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Certain colors and color characteristics create feelings of excitement and arousal which are related to attention.

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Brighter colors are more arousing than dull ones.

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Warm colors such as reds and</li></ul> yellows are more arousing than<br /> cool colors such as blues and <br /> grays.<br />

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<ul><li>Music

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Music influences consumers moods and in turn, influences a variety of consumption behaviors.

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Firms exist to develop music programs to meet the unique needs of specific retailers.

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An emerging trend is having music more in the foreground so it becomes part of the shopping experience and drives store image.</li></li></ul><li><ul><li>Crowding

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Most consumers find feelings of crowding to be unpleasant resulting in:

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Less time in the store and less buying

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Faster decisions and less use of information

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Crowding can lead to less satisfactory purchases, unpleasant shopping, and reduced likelihood of returning to the store.

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Marketers need to design outlets to reduce crowding perceptions.</li></li></ul><li>Social Surroundings<br /><ul><li>Social surroundings are the other individuals present in the particular situation.

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Social influence is a significant force.

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Individuals tend to comply with group expectations, particularly when the behavior is visible.

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Shopping is a highly visible activity.

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The use of many publicly consumed brands are subject to social influences.</li></li></ul><li>Cont..<br /><ul><li>Embarrassment is a negative emotion influenced both by the product and the situation.

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Certain products are more embarrassing than others, and

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Embarrassment is driven by the presence of others.

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For extremely sensitive products,</li></ul> strategies include home delivery<br /> options.<br />

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Examples of social surroundings<br /><ul><li>Types of customers in the store.

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Queues and crowding.

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Whether the consumer is likely to be known by others/ recognized.

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Whether there are high-profile people/celebrities shopping at that store.

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Whether the product will be consumed privately or in the presence of others.</li></li></ul><li>Temporal Perspectives<br /><ul><li>Temporal perspectives deal with the effect of time on consumer behavior.

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Limited purchase time often limits search

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Internet shopping is growing</li></ul> rapidly as a result of the time<br /> pressures felt by consumers.<br />

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Examples of temporal influences<br /><ul><li>Whether the product is seasonal

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Whether the product is urgently required (snack between lectures)

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Time available for shopping limited/excess (the product may be an excuse for shopping)

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How long the previous product lasted or was expected to last.</li></li></ul><li>Task Definition<br /><ul><li>Task definition is the reason the consumption activity is occurring.

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Major distinction between purchases for self versus gift.

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Consumers give gifts for many reasons:

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Social expectations

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To elicit return favors</li></li></ul><li>Examples of task influences<br /><ul><li>Is the product utilitarian or used as a status symbol?

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Is it a gift or for oneself?

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Must the product be long-lasting/tough? (e.g. an everyday watch) </li></ul> or decorative?<br /> (e.g. a dress watch)<br /><ul><li>Is the product intended for several uses? (e.g. a family computer for study and internet access)</li></li></ul><li><ul><li>Moods

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Moods tend to be less intense than emotions and may operate without the individual’s awareness.

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Although moods may affect all aspects of a person’s behavior, they generally do not completely interrupt ongoing behavior as an emotion might.

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Consumers actively manager their mood states, often seeking situations, activities, or objects that will alleviate negative moods or enhance positive ones</li></li></ul><li><ul><li>Momentary Conditions

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As with moods, individuals attempt to manage their momentary conditions, often through the purchase or consumption of products and services.

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Thus, a great deal of marketing</li></ul> activity is directed toward<br /> momentary conditions<br />

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Examples of antecedent states<br /><ul><li>Moods

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Feeling sad triggers buying sweets or seeing a funny movie

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Feeling rejected triggers buying games software

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Momentary conditions

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Can’t eat ice cream because teeth hurt

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Can’t buy a book because the credit card was left at home

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Buy more groceries because hungry before shopping</li></li></ul><li>THANK YOU<br />