344b33. Diffusion 1-20

8/3/2019 344b33. Diffusion 1-20

1/20

Amity Business School

3-1

Technology Adoption and Diffusion

8/3/2019 344b33. Diffusion 1-20

2/20


3-2

Distribution of Adopters

Normal distribution is the most common

pattern of adoption of new products and

services

8/3/2019 344b33. Diffusion 1-20

3/20


3-3

The Normal Distribution of Adopters

8/3/2019 344b33. Diffusion 1-20

4/20


3-4

Groups of AdoptersInnovators: adopt new technology immediately

Early adopters: follow the innovators

Early majority: adopt new technology just before theaverage for the market

Late majority: adopt after other customers haveadopted the technology successfully

Laggards: prefer to avoid adoption as long as possible

8/3/2019 344b33. Diffusion 1-20

5/20


3-5

S-Curves of Adoption The S-shaped pattern indicates that there is an

acceleration point at which a market takes offby:

Pointing out that different groups of customers adoptnew products at different points in time for differentreasons

Providing information about the right promotionalstrategy

Indicating appropriate pricing strategy Providing estimated demand growth over time

Providing information about the financialattractiveness of a market at different points in time

8/3/2019 344b33. Diffusion 1-20

6/20


3-6

The Adoption S-Curve

8/3/2019 344b33. Diffusion 1-20

7/20


3-7

Crossing the Chasm The need to sell to the mass market to

achieve an adequate return on investment

For companies to segment the earlymajority of the market and focus on the

portion of the majority that is underserved

by existing products

8/3/2019 344b33. Diffusion 1-20

8/20


3-8

Crossing the Chasm

8/3/2019 344b33. Diffusion 1-20

9/20


3-9

Identifying the Take-off Stage If there is an accelerated rate change in

demand

When the customer base begins to shiftaway from the innovators and early

adopters

8/3/2019 344b33. Diffusion 1-20

10/20


3-10

How to Cross the Chasm Need to show how it provides value to

customers

Need to develop a complete solution tocustomers problems

Need to pursue a vertical marketing

strategy rather than a horizontal marketingstrategy

8/3/2019 344b33. Diffusion 1-20

11/20


3-11

Choosing the Customer Concentrate on a single vertical market

Target the one that has the greatest need for

the new product by estimating the productsvalue to different markets

Estimate the time it takes to payback the cost

of the product

8/3/2019 344b33. Diffusion 1-20

12/20


3-12

Beachhead Strategy Segment the early majority of the market

and focus on the portion of the majority

that is underserved by existing products

8/3/2019 344b33. Diffusion 1-20

13/20


3-13

Demand Forecasts1. Determine how much to produce

2. Projects future costs in businesses

based on economies of scale

3. Determines the payback on your

investment in product development

4. Makes pricing and advertising decisions5. Determines the competitiveness of the

market

8/3/2019 344b33. Diffusion 1-20

14/20


3-14

Forecasting Demand Cant estimate future demand solely on

the basis of the current market size

Depends on the timing of customeradoption

Depends on the accuracy of information

about the factors that influence diffusionpatterns

8/3/2019 344b33. Diffusion 1-20

15/20


3-15

Information Diffusion Models The functional form of diffusion is primarily

a function of the distribution of innovators

and imitators When there are few innovators and many

imitators, diffusion follows an S-shaped

pattern

8/3/2019 344b33. Diffusion 1-20

16/20


3-16

How Not To Do It The number representing a similar market

should not be used as the estimated size

of the target market: May be a substitute for more than one

existing product

May be a complement for one or more

products

8/3/2019 344b33. Diffusion 1-20

17/20


3-17

The Bass Model A quantitative tool for forecasting the diffusion of

new technology products that many companiesuse

Based on the size of the market, the rate ofadoption by innovators and imitators, and theproportion of adopters in the previous timeperiod

Can be modified to include a variety of factors

that affect the diffusion of new technologyproducts

Most accurate at predicting the diffusion ofconsumer durables

8/3/2019 344b33. Diffusion 1-20

18/20


3-18

Bass Model Limitations Cannot use to estimate diffusion in the first year

of a products life

Accuracy of predictions depends on the

accuracy of assessments of size of the potentialmarket

Assumes that the diffusion of a technologyproduct depends only demand-side factors

Accuracy is much lower when competingtechnologies are being introduced

Further away in time from the initial adoptionpoint the accuracy declines

8/3/2019 344b33. Diffusion 1-20

19/20


3-19

The Delphi Technique An important tool to use to identify potential

technological trends that might impact thedevelopment of new products and services Experts are selected and asked anonymously for their

estimates of the likelihood of particular outcomesoccurring

Participants return their estimates to a coordinator,who compiles them

Summary data outlining the mean and range ofviewpoints is then returned to the respondents whoare asked again for new estimates in light of theinformation presented by the other experts

8/3/2019 344b33. Diffusion 1-20

20/20


3-20

The Delphi Technique Major Weaknesses

1.Sensitive to the precision of the questions

asked

2.Sensitive to variance in the expertise ofthe respondents

3.Validity of the technique is limited by the

intervention of unexpected events that theexperts do not incorporate into their

analyses

344b33. Diffusion 1-20

Documents