Diffusion of Innovation: Meaning, Stages, Elements

Diffusion of innovation is the process by which the adoption of an innovation spreads over a period of time to other consumers through communication.

The study of diffusion of innovation explains how new ideas, practices, products, and services spread within and between communities and the social system through interpersonal communication.

Diffusion of Innovation (DOI) Theory, developed by E.M. Rogers in 1962, is one of the oldest social science theories. It originated in communication to explain how, over time, an idea or product gains momentum and diffuses (or spreads) through a specific population or social system. The end result of this diffusion is that people, as part of a social system, adopt a new idea, behavior, or product. Adoption means that a person does something differently than what they had previously (i.e., purchase or use a new product, acquire and perform a new behavior, etc.). The key to adoption is that the person must perceive the idea, behavior, or product as new or innovative. It is through this that diffusion is possible.  

What does diffusion of innovation mean?

Diffusion of innovation is the process by which the adoption of an innovation spreads over a period of time to other consumers through communication.

The process of Diffusion of Innovation will occur for new products as informational influence and is likely to affect the adoption of new products across groups. Consumer researchers trying to explore the area of consumer acceptance of new products are primarily interested in understanding two closely related processes.

1. The diffusion process.

2. The adoption process.

What are the stages of Diffusion of Innovation?

When marketers introduce a new product or a new innovation to its target market, a lot of planning goes into managing the resistance to adopt the new innovation. This is because it involves bringing about a change in buyer’s attitude and perception. Generally it is assumed that the consumer goes through five stages in the process of adopting new products.

1. Awareness Stage:

In this stage an individual comes to know about a new innovation or new idea or new product/service. He becomes aware of the innovation from any source of information such as from friends, neighbour, co-workers, commercial sources etc.

The individual only learns about the new innovation from either of the sources of information mentioned above. This means his knowledge about the new innovation is only limited to the extent of the information generated by the source of information from where he first learns about the new innovation.

2. Interest Stage:

After being aware of the new product or innovation, in this stage, the consumer gets stimulated and interested in the innovation. He goes about seeking more information about the new product. He is interested in gathering more detailed information related to the innovation in terms of its utility aspects, performance, durability and so on.

3. Evaluation Stage:

The consumer ‘interested’ in the innovation will seek more information on it from all the sources he finds reliable. After collecting all the information on the innovation, the consumer will mentally try to evaluate the worthiness of the innovation. He will assign weights to the product attributes and work out to what extent the new product will be useful to him and then decide on whether or not to buy the new product.

4. Trial Stage:

After evaluating the worthiness of the new product, the consumer may decide to try out the innovation on a small scale basis initially and make an actual assessment of the value of the new product. This stage also indicates that now the consumer is mentally prepared to try out the innovation, though initially on a small scale.

He/she wants to experiment with the innovation and depending on how comfortable they are with the product, they will decide whether or not new product or innovation, it looks more logical and practical to go for a sample trial before opting for full time usage.

5. Adoption Stage:

On being satisfied with the use of the new product, purchased by him on a trial basis, the consumer now decides to make full and regular use of the innovation. This is the last stage in the adoption process. The consumer takes the decision to go for a full-fledged and continuous use of the new product or innovation.

Although the above mentioned traditional adoption process model is very simple to understand, it has got certain limitations.

1. This process has not taken into consideration the fact that there is a need or problem recognition stage confronting a consumer before he becomes aware of the various options or solutions.

2. The model does not consider that there is a possibility of the consumer rejecting the product after trial or that he may not use the product on a continuous basis.

3. Another fact which is not adequately recognised is that usually the evaluation takes place through-out the decision making process and not necessarily at the evaluation stage only.

4. The model does not include the post purchase evaluation behaviour, which may either lead to a firm commitment or a decision to discontinue usage of the product.

Examples of adopting innovations which were directly visible in the changes in behavioural pattern and lifestyle of consumers are automobiles, air conditioners, microwave oven and PC (Personal computer).

Diffusion of Innovation: Meaning, Stages, Elements
Diffusion of Innovation: Meaning, Stages, Elements

Multiplicative Innovation Adoption (MIA) Model (With Evaluation)

Rosemary Phipps and Craig Simmons had proposed a model of diffusion of innovation adoption process, which is based on the Roger Shoemaker Criteria. Their idea was to understand what makes an innovative product, service or idea successful.

To assess an innovation using the MIA model, it will be necessary to rate the innovation (product, service or idea) on the Rogers and Shoemaker criteria.

This is done by using the following scheme:

1. Relative advantage- The rating under this is referred to as RA. If the relative advantage is high, the innovation is rated 3, if it is medium, it is rated ‘2’ and if it is low then ‘1’.

2. Compatibility- This is referred to as ‘CT’ rating. If the compatibility is high, a rating of ‘3’ is given, if it is medium, a rating of ‘2’ is given and ‘1’ if it is low.

3. Complex- This is referred to as ‘CL’ rating. The rate of innovation is ‘3’ if it is simple, ‘2’ if it is medium (complexity) and ‘1’ if it is judged to be highly complex.

4. Facilitates Trial- This rating is referred to as TR. If the opportunity to offer trial is high the rate of innovation is ‘3’, ‘2’ if it is judged to be medium and ‘ 1’ if it is low.

5. Observability- This rating is called ‘OB’. If the observability is high, the innovation is rated ‘3’ if it is judged to be medium it is ‘2’ and ‘ 1’ if it is low.

Under the MIA model, it is assumed that each of the criterion makes an equal contribution to the success or otherwise, of the innovation. Another assumption is that they combine in such a way that if there were positive ratings on more than one criterion this will have a multiplicative effect on the success of the innovations. In the following Table 11.3 a hypothetical rating of several innovations on the above mentioned criteria is given.

Diffusion of Innovation: Meaning, Stages, Elements
Diffusion of Innovation: Meaning, Stages, Elements

Now, according to the MIA model, the ratings of each innovation will be multiplied together to obtain an overall prediction of the speed and extent (SE) to which the innovation will be adopted-

Speed and extent (SE) rating = RA × CT × CL × TR × OB

If one were to use the above table for MIA rating scheme, the resultant SE ratings will be as under-

Diffusion of Innovation: Meaning, Stages, Elements
Diffusion of Innovation: Meaning, Stages, Elements

The higher the SE rating, the higher or more the predicted success of the innovation. Based on the above example of ratings provided it is predicted that the most successful innovation is likely to be MP3 while the least will be of CD (Compact disc).

Evaluation of the MIA Model:

The researchers made the following observations while evaluating the MIA model:

1. The term success is a difficult term to define and is open to criticism on the basis that what they attempt to describe is itself vague. For the term ‘success” will mean differently to various individuals – for one it may mean high sales figures, to another higher profit margins and so on. For instance, a manufacturer of premium jewellery may not sell in high volumes but may earn the reputation as an exclusive jewellery maker.

There may be another jeweller who is well known for selling all types of jewellery purchased by many customers. In a sense then, both these jewellers are successful. Then we will have to redefine ‘success’ so it is best to accept a general definition based on cultural expectations.

2. The MIA model is purely theoretical. Tools do not yet exist to measure the five criteria and hence have to be constructed.

3. The criteria and model are based on perceived characteristics and hence are useful. This means different individuals could rate the same innovation in different ways. This would help in the application of this model for target marketing.

What are the four elements of diffusion of innovation?

The definition comprises four basic elements of the Diffusion of Innovation process:

1. Innovation:

The term ‘innovation’ refers to the newness of the good or service offering. Rogers has defined an innovation as ‘an idea, practice, or object that is perceived as new by an individual or other unit of adoption’.

2. Channels of Communication:

Channels of communication refer to means that helps transmit information about an innovation from the marketers to the people in the social system as well as from one individual to another. They include both marketing communication and interpersonal communication through word of mouth (WOM). Marketing communication takes place between the marketer and the potential market, or the target segment(s).

It could be personal (e.g., between the salesperson and the consumer) or impersonal (via print or audio-visual media). Interpersonal communication takes place between the consumers or between the members of the target segment(s). It could be WOM communication between consumers or through an opinion leader. The quicker people come to know about an innovation through the mass media, Internet, and WOM, both online and offline, the faster it would get diffused.

Mass media channels are regarded as cosmopolites while interpersonal channels in the form of WOM communication are more localite. Diffusion of innovation depends a great deal on communication between the marketer and the prospect, as well as communication amongst prospects or between prospects and consumers. With advancement in technology and the Internet, people are exposed to newer goods and services not only within their own country but also across the globe. Consumers are more aware and informed today, and diffusion of innovation is faster.

3. Social System:

The social system refers to the social setting in which the diffusion of innovation takes place. Diffusion always takes place within a social system, similar to what happened with the farmer community in case of the famous hybrid corn study. The social structure, prevalent values, and norms, as well as the opinion leaders, influence the acceptance or rejection of innovation and affect the speed with which the diffusion will take place.

For majority of the members of a social system (target market), the decision to adopt an innovation depends on other members of the social system. In a way, it reflects the target market(s) for which the good and service is designed, and within what segment(s) it would be diffused. For example, for a new herbal anti-wrinkle cream, the social system would be confined to ladies who are in their mid-40s and above.

Social influence is a significant factor that influences people’s decisions to accept or reject new ideas, products, and services. Within a social system, people may possess positive or negative feelings towards an innovation and may decide to entirely accept or reject it. The social structure can be assessed in terms of homophile and heterophile. The more homophilous people in a group are, the stronger will be the ties, the more will be the likelihood of transfer of ideas and information between them, and the stronger will be the influence.

Further, when social systems are modern and people are up to date, diffusion is much faster compared to a situation where social systems are traditional and conservative. Modern social systems are those where people are aware and educated, and are open to change. In addition, adoption of an innovation can happen anywhere on the social scale, and may manifest as a trickle- down effect, and trickle-up and trickle-across innovations.

Opinion leaders are important when it comes to diffusion of innovation. The importance of opinion leaders was proposed by Paul Lazarsfeld and his team in the 1940s and later by Katz and Lazarsfeld in the 1950s. They proposed the concept of opinion leaders and opinion followers and how the media influenced both the leaders and the followers. Rogers (1983) defines opinion leaders as ‘those from whom others seek advice and information’.

He defines opinion leadership as the ‘degree to which an individual is able to influence other individuals’ attitudes or overt behaviour informally in a desired way with relative frequency’. Rogers proposed that diffusion of innovation would be much faster if opinion leaders accepted it, and shared information and advice about it.

With the advancement of technology, there has been a growth in electronic social networks. Today, reviews, chats, and blogs also play an important role in the diffusion of innovation. Marketers resort to E-WOM and encourage communication with and between current and prospective customers via social media, often motivating their customers to spread the word. The company’s online social network page is also used as a platform.

4. Time:

Time is an important factor in the diffusion of innovation, as it determines the pace of adoption and the resultant assimilation of the innovative offering. It specifies how long it would take for people to adopt a new good or service. Researchers have studied the impact of time in three ways, namely amount of purchase time, rate of adoption, and identification of adopter categories.

The amount of purchase time refers to the average time that a consumer takes to adopt a new good and service offering. This would include the total time between the consumers’ initial awareness and the final acceptance/ rejection of the new product or service. When the average purchase time is less, it can be assumed that the rate of diffusion will be faster.

The rate of adoption is a measure of how long it takes a new product or service offering to be adopted by the members of the target market. Rogers (2003) defines the rate of adoption as the relative speed with which an innovation is adopted by members of a social system’. The rate of adoption is ‘relative’ in the sense that people differ in the speed with which they adopt an innovation, and one adopter category is quicker than another.

The rate of adoption depends on the traits and characteristics of people, in terms of their receptivity to new things, as well as characteristics of the innovation itself, which draw people towards it or against it. Some product categories get adopted instantly while some take a longer period of time. In any case, initially, the rate of adoption of innovations is slow and gradual. With greater awareness about the good and service category, through marketing communication and interpersonal communication, the rate of adoption increases.

People differ with respect to their readiness to try and adopt new goods and service offerings. Based on the length of time required for a certain percentage of the people in the target market, the adopters are classified into adopter categories. Ryan and Gross (1943) were the first to propose the adopter categories, which were later elaborated upon by Everett Rogers.

People in a population while adopting an innovation are normally distributed over time, as a bell-shaped curve. The curve represents the frequency of consumers adopting a product over a period of time. Initially, innovations are slowly adopted, then they experience a period of rapid adoption, and thereafter they gradually level off. Further, the cumulative number of adopters in a population when plotted on a curve, results in an S-shaped curve (i.e., adoptions across customer segments).

First, the S-shaped curve rises slowly as the adopters in a time period are few, and then it accelerates to the maximum as about half of the people in the social system have adopted the innovation, and then it continues to increase but at a slower rate, as the few remaining people finally adopt the new product or service. While both curves, i.e., the bell-shaped curve and the S-shaped curve, illustrate the adoption of an innovation over time, the bell-shaped curve illustrates the number of people adopting an innovation each year, whereas the S-shaped curve illustrates the adoption on a cumulative basis (see Fig. 16.2).

Diffusion of Innovation: Meaning, Stages, Elements
Diffusion of Innovation: Meaning, Stages, Elements

Categories of Adopters in the Diffusion Process of Innovations Identified by Everett Rogers

People in a social system differ with respect to innovativeness and the manner in which they respond to an innovation.

According to Rogers, the adoption diffusion of an innovation follows a normal, bell-shaped distribution curve. Based on the mean time of adoption (t) and its standard deviation (σ), the non-cumulative rate of adoption and adopter distribution can be plotted as normal adopter distribution to form of a bell-shaped curve. The adopters are classified into five adopter categories based on the mean and standard deviation.

These five adopter categories are:

i. Innovators,

ii. Early adopters,

iii. Early majority,

iv. Late majority, and

v. Laggards.

i. Innovators (Venturesome):

Innovators are those consumers who are the first to go and purchase a new good or service offering, and they comprise 2.5 per cent of the target market(s) adopters. They are the first ones to buy, not because they possess a need or want, but because they desire new ideas and concepts, and so seek product and service innovations.

All They are eager and enthusiastic by nature, and continually willing to try new things, irrespective of price. They buy innovative products because these products are new and different. As the term implies, innovators have the greatest degree of innovativeness and are the first to own and adopt new products.

Innovators are younger by age, sound on financial resources, and higher in social status. They are generally high on awareness, knowledge, and literacy levels. They are well informed, have access to credible sources of information about innovative offerings, and are quick to purchase them; there are two reasons for their purchase – one, because they have the interest and inclination to buy the ‘new’, and two, because they have the purchasing power and the access.

Innovators are cosmopolitan, social, and gregarious by nature. They are extroverts and share information with social networks that stretch beyond geographic boundaries.

Innovators are venturesome and adventurous, open minded, and less dogmatic. They are novelty seekers and desire new ideas and concepts; hence, they seek product and service innovations. They are high on need for uniqueness and desire higher OSLs. Further, they are low on brand loyalty and are always on the lookout for new products. Because they are financially well off, they have high tolerance for risk and ambiguity and are ready to take risks with respect to buying out the ‘new’.

Innovators are also high on self-confidence, and are always eager to try out new goods and services. They are inner directed and rely on their own values and judgement. They seek information from a variety of mass media sources. Their media habits include reading special-interest magazines, watching special-interest programmes on TV, and accessing specific websites related to the product category, and they are variety novelty seekers.

It is important to mention here that innovators are not ‘generic’. They are in most cases ‘specific’ to a good and service type, and are heavy users of the good and service category in which they innovate.

Innovators buy things because they are new and they want to be amongst the first to try new things irrespective of the uncertainty and the consequences. Further, while they are the first to buy and try new things, innovators are not as influential as the next adopter category, that is, the early adopters, who are second amongst the category of adopters.

Early adopters contribute a lot to WOM communication and are better skilled to convince others to try and buy new things. Nonetheless, innovators play an important role as they introduce into the social system anew idea, product, or practice. In this way, they play the role of gate keepers and help new ideas and products flow into a social system.

ii. Early Adopters (Respectable):

The next 13.5 per cent of the target market(s) adopters are called early adopters. Early adopters are also enthusiastic about trying and using new goods and services, but they are pragmatic and rational. They look at pros and cons, and then rationalize their decision-making. Buy the ‘new’ because they feel that it is better and offers more value. They are more confident about their purchases. Early adopters adopt the innovation just before the average member of a social system.

Early adopters buy the ‘new’ good and service offering not because they are fascinated by the ‘new’, but because they possess a need and want. They are quick to understand the value of innovation, in terms of the need benefits, and are concerned with both the usability and sociability.

Like innovators, early adopters are younger by age, with high social status, high knowledge, and literacy levels. They are less prosperous than innovators, but more than the early majority. Early adopters are more socially directed and rely on group’s values and norms. They are well integrated and enjoy an important position in their social contagion.

All They are social and gregarious, popular amongst their social circle, and act as community leaders. They are more localite, but cosmopolite as well, in contrast to innovators who are cosmopolitan. They are also trendsetters and like to share their experiences with the early majority.

Early adopters are enthusiastic about an innovation but are more cautious about their decisions. They generally tend to have some idea about the good/service category, and after gathering some more information about the product and or brand, they go in for purchase. They are information gatherers, seek novelty even if it means (taking risk), and have a desire for social prestige and status. Early adopters also have their own media preferences, that is, print or broadcast. Like innovators they are heavy users of product category.

Known as the lighthouse customers, early adopters play an active role in WOM and influence other potential consumers. They occupy the position of centrality in the social network. They have the highest degree of opinion leadership amongst all adopter categories. People approach them for advice, and the very fact that they have adopted the innovation reduces the feeling of uncertainty and risk in others. They provide information and convince others to buy.

Early adopters are also more careful in their choice of adoption, so that they retain the trust of others and remain well respected. They believe that by being rational and buying the right product, they would be able to enhance their social standing and maintain and/r enhance their position in the social communication network. Because early adopters act as opinion leaders, they are often targeted by marketers.

iii. Early Majority (Deliberate):

The next in line to adopt a diffusion of innovation (after innovators and early adopters) are the early majority. The early majority makes up the next 34 per cent of the adopters, and adds towards bringing profits to the company. The early majority are similar to the early adopters in the sense that they buy the good or service offering because they possess a need and want and desire to satisfy it. They look for benefits in an innovation and want to see how a new product can help them, and so they are highly pragmatic. However, they are not as fast as the early adopters, and take longer to enter into purchase.

This is because unlike the earlier two categories, the early majority does not have much interest in the product category. In addition, they perceive some risk with the ‘new’, and it is only after some people have bought and used the new product and they have heard reviews or watched experiences of the innovators and early majority that they decide to buy. They adopt a new product only when they are confident that it would be useful to them, and help them satisfy a need and want. The early majority buy an innovative good or service just when an average person in the social system buys.

Consumers who fall into this category are above average in age and education and with medium socio-economic status. They are careful and cautious about their purchases, and buy a new product after careful investigation. They are conservative by nature and careful about accepting any kind of change.

The early majority seeks information from their neighbours and people within their social network and deliberates a lot before adopting a new good or service. They rely on information on advertisements and sales people but do not get swayed away by the marketer’s claims. In other words, while they are open to change, they rely on suggestions, recommendations, and approval of others, who have already bought and used the new product.

They wait for reviews of product experiences of others, and will buy a new product only after receiving opinions and feedback from others, particularly early adopters. Because they collect information, evaluate it, deliberate carefully, and then take a decision, the adoption process takes longer. Early majority adopt the innovative good or service just before the average time.

Early majority are highly local, who integrate with people in their own community, and the opinions of others matter to them. However, while they interact with others, they do not hold opinion leadership position.

iv. Late Majority (Sceptical):

The next in line to adopt an innovation (after innovators, early adopters, and late adopters) are the late majority. The late majority constitute the next 34 per cent of the adopters. They are referred to as ‘late’ because of two reasons; first, members of their peer group, social class, and reference group have already made the purchase, and the social influence is strong; second, they themselves have evaluated the new good and/or service and are ready to buy it.

The late majority take time to think and evaluate the new product, and it is much later that they decide to buy. They buy a new good and service just after an average person in the social system has done it.

The late majority are older in age, less educated, and lower in socio-economic status than the first three adopter categories. They generally belong to the middle class and have a limited disposable income. All They are price sensitive and wait for prices to fall, so that they can afford it. They also like to bargain and negotiate.

The late majority are traditional and conservative, very cautious, and risk-averse by nature. They are sceptical of new goods and services, and look for strong customer support. Even if they know that the innovation is useful, they would not buy it, and postpone the purchase to as late as possible.

However, when they buy, it is because of both social and peer pressure (to conform and comply), as well as the necessity (due to decreased or non-availability of previously used goods and services). This is mostly after most people in the social system have done so. The late majority adopts the new good or service category after the average time, and after the majority of people have bought and used it.

Because late majority are risk-averse and cautious by nature, they depend on strong interpersonal networks of family, peers, and colleagues for information and guidance, as it helps them reduce their level of uncertainty. The late majority buyers buy once they have received positive reviews and heard positive experiences of others.

The late majority makes little use of mass media, and they believe more in WOM communication. This is because they are well connected within their interpersonal networks, and trust their friends, peers, neighbours, and relatives more than advertisements and other forms of marketing communication. Interpersonal communication has a major role to play in their adoption of the ‘new’.

The late majority is as large a group as the early majority, and brings huge profits for the company. However, they adopt a wait-and-watch approach before trying and/or buying a new good or service. Because they buy the new product during later stages of the product’s life cycle, and because they are a huge segment, they are important in extending the product lifecycle. So they constitute an important segment for the marketer.

v. Laggards (Traditional):

The laggards are the last to adopt a new good or service offering, and make up the last 16 per cent of the target market. Laggards are slow and take more time than what is actually necessary, and by the time laggards actually buy and use a new good or service, it is already on its way towards obsolescence. In fact, it no longer remains ‘new’, and is in a new version altogether. In other words, laggards buy the new product, X, when innovators and early adopters are in the stage of buying the improvised or more advanced version of X, or a completely changed product as Y.

Laggards are older in age, less educated, and have a low socio-economic status. They do not have much of exposure, and prefer to be in social contact with only their family members, relatives, and close friends, who share similar traditional values. They rely on friends, peers, and neighbours as information sources.

Informal interpersonal WOM communication is essential in influencing the rate of adoption amongst laggards. Because they are low on financial resources, they are price conscious and wait for prices to fall. When they buy, they look for low prices, ease of use, and easy availability. In many cases, they buy because of non-­availability of traditional alternatives.

Laggards are conservative, and lay a lot of emphasis on ‘traditions’. They are sceptical, afraid, and suspicious of anything ‘new’, and do not like to take risks. In other words, they are high-risk perceivers. They are dogmatic, and dislike and resist change. Until the perceived trusted sources adopt the product, laggards will not be convinced enough to buy something new.

Laggards take the longest time to adopt an innovation, and the innovation-decision process is the lengthiest.

They are slow in buying the innovative offering because of several reasons:

a. One, they are uninvolved with the good and service;

b. Two, they do not possess much information;

c. Three, they are tradition bound, and oriented to the past;

d. Four, they remain uninfluenced by social pressure, and social ties are not very strong; and

e. Five, they believe in making routine purchases and prefer to buy the ‘familiar’ rather than the ‘unfamiliar’.

Marketers generally try to ignore this category of adopters. This is because they cannot be convinced to buy and use something that is new, and will buy much later when it is in the mainstream.

While laggards are often neglected by marketers, they often exhibit what is known as the ‘leapfrog effect’. Jacob Goldenberg and Shaul Oreg (2007) introduced the concept of leapfrogging, and explained it as a phenomenon wherein some laggards end up being innovators, or the earliest of the early adopters of an entirely new product, by skipping various modifications and/or generations of the once considered ‘new’ product. In this way, they leave out several product generations and finally adopt the most recent technology. This would mean high profits for the company.

For example, many people moved straight away from the personal computer (desktop) to the tablet (they skipped the laptop). Another example is where people moved from the cassette player to the mp3 shuffle (they skipped the Walkman or the CD Walkman). According to Jacob Goldenberg and Shaul Oreg, laggards also upgrade to new products.

However, the difference between innovators and laggards is that while the former upgrade frequently and immediately, the latter upgrade very infrequently. Because laggards are a big segment, they should not be ignored. The job of the marketer is not to sell to laggards, but to persuade them to upgrade sooner rather than later.

Rogers’ classification includes only the adopters. However, there also exist in the market a group of people who do not venture into seeking a particular good or service, as it may not conform to their socio-economic class or to their culture, or they may not have the need for such a good or service. Such people fall into a class referred to as the non- adopters, which is a category that never adopts the new good or service, and generally comprises a very small portion of the entire population.

Non-adopters may be classified into five categories, namely the unaware group, symbolic rejectors, symbolic adopters, trial adopters, and trial rejectors. The inclusion and study of the non-adopter category is crucial as it is reflective of reality, that not all consumers adopt all new good and service offerings.

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