EGCC Innovations as A Factor

How to Write an Essay on Consumer Behavior: Outline

Reading Material below 

Lesson 9

Diffusion of Innovation

Products tend to go through a life cycle. Initially, a product is introduced. Since the product is not well known and is usually expensive (e.g., as microwave ovens were in the late 1970s), sales are usually limited. Eventually, however, many products reach a growth phase—sales increase dramatically. More firms enter with their models of the product. Frequently, unfortunately, the product will reach a maturity stage where little growth will be seen. For example, in the United States, almost every household has at least one color TV set. Some products may also reach a decline stage, usually because the product category is being replaced by something better. For example, typewriters experienced declining sales as more consumers switched to computers or other word processing equipment. The product life cycle is tied to the phenomenon of diffusion of innovation. When a new product comes out, it is likely to first be adopted by consumers who are more innovative than others—they are willing to pay a premium price for the new product and take a risk on unproven technology. It is important to be on the good side of innovators since many other later adopters will tend to rely for advice on the innovators who are thought to be more knowledgeable about new products for advice.

At later phases of the PLC, the firm may need to modify its market strategy. For example, facing a saturated market for baking soda in its traditional use, Arm ü Hammer launched a major campaign to get consumers to use the product to deodorize refrigerators. Deodorizing powders to be used before vacuuming were also created.
It is sometimes useful to think of products as being either new or existing.

Many firms today rely increasingly on new products for a large part of their sales. New products can be new in several ways. They can be new to the market—noone else ever made a product like this before. For example, Chrysler invented the minivan. Products can also be new to the firm—another firm invented the product, but the firm is now making its own version. For example, IBM did not invent the personal computer, but entered after other firms showed the market to have a high potential. Products can be new to the segment—e.g., cellular phones and pagers were first aimed at physicians and other price-insensitive segments. Later, firms decided to target the more price-sensitive mass market. A product can be new for legal purposes. Because consumers tend to be attracted to “new and improved” products, the Federal Trade Commission (FTC) only allows firms to put that label on reformulated products for six months after a significant change has been made.

The diffusion of innovation refers to the tendency of new products, practices, or ideas to spread among people.  Usually, when new products or ideas come about, they are only adopted by a small group of people initially; later, many innovations spread to other people. 

The bell shaped curve frequently illustrates the rate of adoption of a new product.  Cumulative adoptions are reflected by the S-shaped curve.  The saturation point is the maximum proportion of consumers likely to adopt a product.

In the case of refrigerators in the U.S., the saturation level is nearly one hundred percent of households; it well below that for video games that, even when spread out to a large part of the population, will be of interest to far from everyone.

Several specific product categories have case histories that illustrate important issues in adoption.  Until some time in the 1800s, few physicians bothered to scrub prior to surgery, even though new scientific theories predicted that small microbes not visible to the naked eye could cause infection.  Younger and more progressive physicians began scrubbing early on, but they lacked the stature to make their older colleagues follow.

ATM cards spread relatively quickly.  Since the cards were used in public, others who did not yet hold the cards could see how convenient they were.  Although some people were concerned about security, the convenience factors seemed to be a decisive factor in the “tug-of-war” for and against adoption.

The case of credit cards was a bit more complicated and involved a “chicken-and-egg” paradox.  Accepting credit cards was not a particularly attractive option for retailers until they were carried by a large enough number of consumers.  Consumers, in contrast, were not particularly interested in cards that were not accepted by a large number of retailers.  Thus, it was necessary to “jump start” the process, signing up large corporate accounts, under favorable terms, early in the cycle, after which the cards became worthwhile for retailers to accept.

Rap music initially spread quickly among urban youths in large part because of the low costs of recording.  Later, rap music became popular among a very different segment, suburban youths, because of its apparently authentic depiction of an exotic urban lifestyle.

Hybrid corn was adopted only slowly among many farmers.  Although hybrid corn provided yields of about 20% more than traditional corn, many farmers had difficulty believing that this smaller seed could provide a superior harvest. They were usually reluctant to try it because a failed harvest could have serious economic consequences, including a possible loss of the farm.  Agricultural extension agents then sought out the most progressive farmers to try hybrid corn, also aiming for farmers who were most respected and most likely to be imitated by others.  Few farmers switched to hybrid corn outright from year to year.  Instead, many started out with a fraction of their land, and gradually switched to 100% hybrid corn when this innovation had proven itself useful.

Several forces often work against innovation.  One is risk, which can be either social or financial.  For example, early buyers of the CD player risked that few CDs would be recorded before the CD player went the way of the 8 track player. Another risk is being perceived by others as being weird for trying a “fringe” product or idea.  For example, Barbara Mandrell sings the song “I Was Country When Country Wasn’t Cool.”  Other sources of resistance include the initial effort needed to learn to use new products (e.g., it takes time to learn to meditate or to learn how to use a computer) and concerns about compatibility with the existing culture or technology.  For example, birth control is incompatible with strong religious influences in countries heavily influenced by Islam or Catholicism, and a computer database is incompatible with a large, established card file.

Innovations come in different degrees.  A continuous innovation includes slight improvements over time.  Very little usually changes from year to year in automobiles, and even automobiles of the 1990s are driven much the same way that automobiles of the 1950 were driven.  A dynamically continuous innovation involves some change in technology, although the product is used much the same way that its predecessors were used—e.g., jet vs. propeller aircraft.  A discontinous innovation involves a product that fundamentally changes the way that things are done—e.g., the fax and photocopiers.  In general, discontinuous innovations are more difficult to market since greater changes are required in the way things are done, but the rewards are also often significant.

Several factors influence the speed with which an innovation spreads.  One issue is relative advantage (i.e., the ratio of risk or cost to benefits).  Some products, such as cellular phones, fax machines, and ATM cards, have a strong relative advantage.  Other products, such as automobile satellite navigation systems, entail some advantages, but the cost ratio is high.  Lower priced products often spread more quickly, and the extent to which the product is trialable (farmers did not have to plant all their land with hybrid corn at once, while one usually has to buy a cellular phone to try it out) influence the speed of diffusion.  Finally, the extent of switching difficulties influences speed—many offices were slow to adopt computers because users had to learn how to use them.

Some cultures tend to adopt new products more quickly than others, based on several factors: 

  • Modernity:  The extent to which the culture is receptive to new things. In some countries, such as Britain and Saudi Arabia, tradition is greatly valued—thus, new products often don’t fare too well.  The United States, in contrast, tends to value progress.
  • Homophily:  The more similar to each other that members of a culture are, the more likely an innovation is to spread—people are more likely to imitate similar than different models.  The two most rapidly adopting countries in the World are the U.S. and Japan.  While the U.S. interestingly scores very low, Japan scores high.
  • Physical distance:  The greater the distance between people, the less likely innovation is to spread. 
  • Opinion leadership:  The more opinion leaders are valued and respected, the more likely an innovation is to spread.  The style of opinion leaders moderates this influence, however.  In less innovative countries, opinion leaders tend to be more conservative, i.e., to reflect the local norms of resistance.

It should be noted that innovation is not always an unqualified good thing.  Some innovations, such as infant formula adopted in developing countries, may do more harm than good.  Individuals may also become dependent on the innovations.  For example, travel agents who get used to booking online may be unable to process manual reservations.

Sometimes innovations are dis-adopted.  For example, many individuals dis-adopt cellular phones if they find out that they don’t end up using them much.

http://www.consumerpsychologist.com (Links to an external site.)

Rare. (2015, April 2). Diffusion of Innovation Theory: The Adoption Curve [Video]. YouTube. 

Reading: Lesson 10

The Family Life Cycle. Individuals and families tend to go through a “life cycle:” The simple life cycle goes from

For purposes of this discussion, a “couple” may either be married or merely involve living together. The breakup of a non-marital relationship involving cohabitation is similarly considered equivalent to a divorce.

In real life, this situation is, of course, a bit more complicated. For example, many couples undergo divorce. Then we have one of the scenarios:

Single parenthood can result either from divorce or from the death of one parent. Divorce usually entails a significant change in the relative wealth of spouses. In some cases, the non-custodial parent (usually the father) will not pay the required child support, and even if he or she does, that still may not leave the custodial parent and children as well off as they were during the marriage. On the other hand, in some cases, some non-custodial parents will be called on to pay a large part of their income in child support. This is particularly a problem when the non-custodial parent remarries and has additional children in the second (or subsequent marriages). In any event, divorce often results in a large demand for:

  • Low cost furniture and household items
  • Time-saving goods and services

Divorced parents frequently remarry, or become involved in other non-marital relationships; thus, we may see

Another variation involves

Here, the single parent who assumes responsibility for one or more children may not form a relationship with the other parent of the child.

Integrating all the possibilities discussed, we get the following depiction of the Family Life Cycle:

Generally, there are two main themes in the Family Life Cycle, subject to significant exceptions:

  • As a person gets older, he or she tends to advance in his or her career and tends to get greater income (exceptions: maternity leave, divorce, retirement).
  • Unfortunately, obligations also tend to increase with time (at least until one’s mortgage has been paid off). Children and paying for one’s house are two of the greatest expenses.

Note that although a single person may have a lower income than a married couple, the single may be able to buy more discretionary items.

Family Decision Making. Individual members of families often serve different roles in decisions that ultimately draw on shared family resources. Some individuals are information gatherers/holders, who seek out information about products of relevance. These individuals often have a great deal of power because they may selectively pass on information that favors their chosen alternatives. Influencers do not ultimately have the power decide between alternatives, but they may make their wishes known by asking for specific products or causing embarrassing situations if their demands are not met. The decision maker(s) have the power to determine issues such as:

  • Whether to buy;
  • Which product to buy (pick-up or passenger car?);
  • Which brand to buy;
  • Where to buy it; and
  • When to buy.

Note, however, that the role of the decision maker is separate from that of the purchaser. From the point of view of the marketer, this introduces some problems since the purchaser can be targeted by point-of-purchase (POP) marketing efforts that cannot be aimed at the decision maker. Also note that the distinction between the purchaser and decision maker may be somewhat blurred:

  • The decision maker may specify what kind of product to buy, but not which brand;
  • The purchaser may have to make a substitution if the desired brand is not in stock;
  • The purchaser may disregard instructions (by error or deliberately).

It should be noted that family decisions are often subject to a great deal of conflict. The reality is that few families are wealthy enough to avoid a strong tension between demands on the family’s resources. Conflicting pressures are especially likely in families with children and/or when only one spouse works outside the home. Note that many decisions inherently come down to values, and that there is frequently no “objective” way to arbitrate differences. One spouse may believe that it is important to save for the children’s future; the other may value spending now (on private schools and computer equipment) to help prepare the children for the future. Who is right? There is no clear answer here. The situation becomes even more complex when more parties—such as children or other relatives—are involved.

Some family members may resort to various strategies to get their way. One is bargaining—one member will give up something in return for someone else. For example, the wife says that her husband can take an expensive course in gourmet cooking if she can buy a new pickup truck. Alternatively, a child may promise to walk it every day if he or she can have a hippopotamus. Another strategy is reasoning—trying to get the other person(s) to accept one’s view through logical argumentation. Note that even when this is done with a sincere intent, its potential is limited by legitimate differences in values illustrated above. Also note that individuals may simply try to “wear down” the other party by endless talking in the guise of reasoning (this is a case of negative reinforcement as we will see subsequently). Various manipulative strategies may also be used. One is impression management, where one tries to make one’s side look good (e.g., argue that a new TV will help the children see educational TV when it is really mostly wanted to see sports programming, or argue that all “decent families make a contribution to the church”). Authority involves asserting one’s “right” to make a decision (as the “man of the house,” the mother of the children, or the one who makes the most money). Emotion involves making an emotional display to get one’s way (e.g., a man cries if his wife will not let him buy a new rap album).

http://www.consumerpsychologist.com (Links to an external site.)

Rajesh Dorbala. (2017, December 7). Family Decision Making [Video]. YouTube. 

Fatin Syakilla. (2015, May 24). family decision making [Video]. YouTube. 

Marketing Fundamentals for Professionals. (2017, March 30). Topic 2.3 Factors that influence buying – Family, culture [Video]. YouTube. 


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