Exercise 36:
Categories of Innovations and Product Characteristics that Influence Adoption
and Diffusion
Objectives
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Background
Product
innovation is the driving force of business, the economy, and of societal
progress, with consumer advertising helping propel new products into the
marketplace. New products have been dubbed the “lifeblood of business” since
most companies depend on them for a significant share of their sales, market
share, profits, and growth.
Categories of
Innovations Based on Newness to the Company and the Market, and on Behavioral
Change
The most
important product factor determining whether a product will be perceived by buyers as new is the extent
to which the innovation alters consumer behavior. New products can accordingly
be classified into three categories of
innovation based on degree of behavioral change. They can also be classified
by newness from the firm’s perspective
as well as the consumer’s perspective.
In this
discussion, we will integrate two categorization schemes for new products: Robertson’s threefold classification of innovations based on degree of behavioral
change and Booz, Allen, Hamilton,
Inc’s six types of new products from the form’s and consumer’s perspective.
Both of these categorization methods range from least to most innovative, i.e.,
from least to most disruptive of consumer behavior.
Booz,
Allen, Hamilton, Inc. (BAH) New Brands Classification: Newness to Firms and
Consumers
<<FIGURE 36-1 NEAR HERE>>
Figure 36-1 shows
six categories of new products according to Booz,
Allen, Hamilton, Inc., (BAH), who classified innovations according newness to the company and newness to the market.
Newness to the company concerns whether the business organization has ever
produced and marketed the product, regardless of other companies having already
done so. For example, although bottled water has been popular since Perrier
debuted in the 1970s, it wasn’t until 1999 that Coca-Cola Corp. launched Dasani
bottled water. Such a company has a learning process to go through regarding new technology and/or a new marketplace (consumers, competitors, and
channels of distribution.
Newness to the market concerns whether the target market believes that the
product is new and will entail some behavioral change on their part. Perceived
newness determines the extent of consumer learning and possible innovation resistance—preference for
existing, familiar products and behaviors over less familiar ones.
The percentages
next to each category label in Figure 36-1 show the proportion of new consumer
products in each group. The more innovative products appear in the upper
right-hand corner of the figure, and the less innovative ones are found in the
lower left-hand portion.
Robertson’s
Classification of Innovations Based on Behavioral Change: Continuous,
Dynamically Continuous, and Discontinuous
Thomas
Robertson’s taxonomy is based on the consumer’s perceived degree of product novelty and the extent to which the
product changes individual consumer behavior as well as the degree to which it
affects behavior in the social structure. Robertson presents three discrete new
product categories arranged from incremental
new products to radical innovation.
1. Continuous Innovations. Least likely
to encounter consumer resistance are continuous
innovations—new products perceived as having the least disrupting influence
on established patterns of consumer behavior. These are used in basically the
same way as their predecessor products. For example, herb-enhanced beverages
don’t change the way people consume drinks.
Booz, Allen, & Hamilton, Inc. (BAH) continuous innovations. Continuous innovations include the
following categories of new product types according to the BAH new product
classification scheme, arrayed from least to most “new.”
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(1) Cost reductions. These new products’ primary benefit is that they
are lower-priced than most (or all) competitors, due to lower manufacturing
and/or marketing costs.
(2) Repositionings.
Psychological positioning entails
differentiating a brand from competitive offerings in the buyer’s mind by
locating the brand in that customer’s memory relative to a) alternative product
uses (e.g., cola as a rust remover), b)
target market users or user imagery (Mountain Dew for young
hipsters instead of old hillbillies), or c) competitive
products and brands (raisins as “nature’s answer to candy”). Repositioning (relaunching, restaging, remarketing) means staking out a new
position for the brand due to marketplace changes such as values and norms,
demographics, competitive positioning, and technology.
(3)
“New-and-improved” products (next-generation products). These
modifications of existing products result in replacing a previous version of the product. This can be done by a
quality improvement, design change,
an improved formula, or a revisions or upgrade.
(4) Additions to existing product lines.
These supplement or round out a
current product line rather than replace
it, as do new-and-improved products. Additions to existing product lines are
derivatives of or variations on a firm’s existing product, usually the core (anchor, flagship) product—a
firm’s mainstream product, such as Coca-Cola launching Cherry Coke or Tide
detergent introducing Tide Free.
(5) New product lines (new category entries). Such products are already established in the
marketplace but are new to the firm launching them. Because consumers don’t
associate the particular product with the individual company, they might view
the products as “new.” Examples: Microsoft’s Xbox videogame console; Tom’s of
Maine herbal remedies; and energy drinks from major soft drink companies competing
with Red Bull.
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2. Dynamically
Continuous Innovations. Second among Robertson’s three innovation types are
dynamically continuous innovations.
Consumers view such products as somewhat new since they have more disrupting
effects on consumers’ lives than continuous innovations, although the degree of
change in customer buying and product use is modest. This was so for FluMist
nasal flu vaccine, for the needle-shy who dread the traditional flu shot. Likewise
for the TV remote control, which meant that couch potatoes could remain plopped
on the sofa without needing to get up to change the channel.
BAH dynamically continuous innovations. Dynamically continuous innovations
generally are of the following two types in the Booz, Allen, & Hamilton,
Inc. classification taxonomy.
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(6) Major additions to existing product lines and
significant new product lines are
both key modifications of existing product classes. Examples of major changes to existing product lines
include instant pudding, electric carving knives and toothbrushes, disposable
extended contact lenses, instant cameras, registerless supermarket checkouts,
and on-line banking.
(7) New-to-the-world
products (new product categories).
These either revolutionize existing
product categories (electric cars) or define wholly new categories (air conditioning, frozen vegetables, pre-moistened
towelettes, and satellite TV and radio). Dynamically continuous new-to
the-world products, while very new in form and perhaps technology, nonetheless only
somewhat alter consumer behavior.
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3.
Discontinuous Innovations.
Discontinuous innovations are new
products perceived by customers to be radically new, causing buyers to
significantly alter their behavioral patterns, and also usually entailing
extensive technological breakthrough.
Digital movie downloads are purchased and consumed
much differently than DVDs that are bought or rented. Electric cars, requiring
recharging the battery, are discontinuous innovations, while hybrid autos,
whose batteries recharge while the vehicle is being driven, are dynamically
continuous.
BAH. discontinuous innovations. In the Booz, Allen, and Hamilton, Inc.
scheme, discontinuous innovations include new-to-the-world
products (new product categories). Unlike dynamically continuous
new-to-the-world products, these have a major impact on consumer behavior and
lifestyles. Examples of such revolutionary, life-altering products include
wheels, tools, and weapons in prehistoric times; the steam engine, electricity,
and spinning jenny during the Industrial Revolution; and automobiles,
telephones, radio and TV, xerography, personal computers, fax machines, e-mail,
and online services in the twentieth century.
Innovation Attributes:
Product Characteristics Influencing Likelihood of Adoption and Diffusion
The probability
of individuals’ adoption and subsequent diffusion of an innovation throughout a
social system depend not only on perceived newness and the degree of behavioral
change required, but also on certain innovation
attributes (product characteristics) influencing adoption. If a marketer is
aware of which innovation characteristics are likely to either help or hinder
adoption, s/he can plan appropriate marketing strategies to overcome resistance
barriers.
The following are
the five key product factors that affect the rate of new product adoption and
diffusion as well as the likelihood of marketplace success vs. failure, along
with strategy recommendations for each..
Relative Advantage
Relative advantage
is the degree to which consumers perceive the innovation as superior to
existing products in satisfying their needs and solving their problems. E-mail
is much more convenient and less expensive than fax machines which, when
launched, had time and money advantages over snail mail.
Compatibility
The extent to
which consumers believe that a new product is consistent with their current
ways of thinking and behaving is known as compatibility.
Continuous innovations in Robertson’s
classification are high in compatibility and therefore meet little innovation
resistance, while discontinuous
innovations are low in compatibility and do meet consumer resistance. The
first automobiles met fierce resistance—car drivers were exhorted to “hire a
horse!” So, marketers positioned the first cars as a “horseless carriage” in an
attempt to minimize the psychological newness.
Sellers should
work to minimize attitudinal and behavioral changes required by their new
products. Additionally, consumer education might be required to change
misperceptions of compatibility, as the first refrigerator manufacturers had to
do for people who thought the only way to keep lettuce fresh is to keep it on
ice.
Complexity
Complexity concern the innovation’s perceived usability (ease of use). Personal video
recorders by TiVo and ReplayTV took time to catch on because they were
difficult to deploy. On the other hand, television was a rapid hit in part
because the first TVs were easy to use (unlike today’s sophisticated sets with
remote controls having more buttons than there are channels!). Products should
be designed to be “user friendly.”
Trialability
Trialability (divisibility) entails the extent to which the new
product can be sampled or evaluated on a limited basis or small scale prior to
adoption. For nondurables, trial can be accelerated via sales promotions like samples and coupons or through offering small
“trial” sizes. For durable goods, a surrogate
trial experience without commitment can be provided, such as showroom
demonstrations, trial runs (e.g., an automobile test drive), or even loaning or
leasing the product.
Communicability
Communicability (observability) concerns how readily visible the product
and its benefits are to potential adopters, as well as how easy it is for users
and marketers alike to explain the nature and relative advantages of the
product to prospects. Products high in visibility, such as new model cars,
hairstyles, and clothing styles, are more communicable than private items like
a new medicated shampoo, garbage disposal system, or icemaker
Marketers should
find ways to make a new product more visible, such as by pushing for adoption
in public places (service establishments, social organizations, etc. as with
TVs), and second, raise consumer interest via publicity and massive doses of
advertising so that users are willing to discuss the product with others.
In-Class
Applications
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a. Develop three ideas for new products
that could be branded with this name (they need not all be technologically
feasible). You should have one new product for each of Robertson’s three innovation types. Briefly describe each product
in terms of features and benefits as well as reasons why using the existing
brand name would be a good idea.
Also,
classify each of these new product concepts according to the BAH taxonomy.
b. Describe how each of these innovations
will affect the behavior and lifestyles of existing users of that brand.
Which
of these products will attract a new target market? Describe that market and
identify the innovation attributes that attract them to each of these products.
• General Mill’s Milk ‘n Cereal Bars:
convenient breakfast bars made with real milk and cereal.
• StarKist Premium Tuna in a Pouch:
fresh, easy-open packaged tuna with no liquid.
• Saran QuickCover Food Storage Lids:
varied size elastic lids that ensure a snug fit and freshness.
•
Crest Whitestrips Dental Whitening System: innovative plastic strips
that guarantee whiter teeth in less than two weeks.
For the year 2001, the Top
Innovations included:
• P.J. Squares Peanut Butter and Jelly
Slices: combined peanut butter and jelly slices packaged like American cheese
slices.
•
• Parkay Fun Squeeze Colored Margarine:
doodle-friendly margarine to make any meal fun for kids.
• American Woman Tri-Color 3-in-1 Nail
Color: nail polish that changes color with the user’s mood swings and sunlight
exposure.
a. Have you purchased or used this
product since its release? If so, describe your level of satisfaction or dissatisfaction
and why. If not, how do you think you would like this product?
b. Which innovation attributes of this product have probably influenced the
success or failure of its adoption and diffusion? Have any of those
characteristics possibly hindered its success or failure?
c. Considering these innovation
attributes, what suggestions for marketing strategy can you offer for causing a
quicker adoption of this innovation?
4. The following ads feature
new product innovations. Briefly explain which of Robertson’s degrees of
innovativeness each product displays and why. Also,
classify each new product according to the BAH scheme.
Written
Applications
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