Diffusion of innovation theory, and it's impact on ecommerce

Diffusion of innovation theory, and it’s impact on ecommerce

The diffusion of Innovation (DOI) theory, a highly acclaimed and much quoted academic one, was 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, in our case ecommerce marketing practitioners.

The end result of this diffusion is how people, adopt a new idea, behaviour, or product – specifically new technology to use. Adoption means that a company does something differently than what they had previously (i.e., adoption of a new SaaS, to complement an existing stack, and thereby enjoy new new and supplementary benefits – profits, previously not experienced). The key to adoption is that the CMO must perceive the idea, behaviour, or product as new or innovative. It is through this that diffusion is possible.

Einstein’s Parable of Quantum Insanity: “Insanity is doing the same thing
over and over and expecting different results.”

Adoption of new technology, behaviour, or product (i.e., “innovation”) does not happen simultaneously in marketing hierarchy; rather it is a process whereby some people are more apt to adopt the innovation than others.  Researchers have found that those who adopt an innovation early have different characteristics than people who adopt an innovation later.

When promoting an innovation to a target population, it is important to understand the characteristics of the target population that will help or hinder adoption of the innovation. There are five established adopter categories, and while the majority of the typical mêlée tends to fall in the middle categories, it is still necessary to understand the characteristics of the whole spectrum of potential users. When promoting an innovation, there are different strategies used to appeal to the different adopter categories.

  1. Innovators – These are people who want to be the first to try the innovation. They are venturesome and interested in new ideas. These people are very willing to take risks, and are often the first to develop new ideas. Very little, if anything, needs to be done to appeal to this sector.

  2. Early Adopters – These are people who represent opinion leaders. They enjoy leadership roles, and embrace change opportunities. They are already aware of the need to change and so are very comfortable adopting new ideas. Strategies to appeal to this population include how-to manuals and information sheets on implementation. They do not need information to convince them to change.

  3. Early Majority – These people are rarely leaders, but they do adopt new ideas before the average company. That said, they typically need to see evidence that the innovation works before they are willing to adopt it. Strategies to appeal to this population include success stories and evidence of the innovation’s effectiveness.

  4. Late Majority – These people are skeptical of change, and will only adopt an innovation after it has been tried by the majority. Strategies to appeal to this population include information on how many other people have tried the innovation and have adopted it successfully. Those in this sector like to believe what they already have something that does the same thing, their reticence is apparant in lower growth rate and diminutive profit results.

  5. Laggards – These people are bound by tradition and are very conservative. They are very skeptical of change and are the hardest group to bring on board. Strategies to appeal to this population include statistics, fear appeals, and pressure from people in the other adopter groups. Naturally these tend to include those that, but for better advice, have financial problems and suffer poor result after poor result. While this is a reflection on the company, it should be noted that inclusion in this group could equally be caused by an misplaced reliance on recalcitrants – that can’t see an opportunity if it is staring them in the face, often not appreciated by the ecommerce retailer until it’s too late.

The stages by which an ecommerce retailer adopts an innovation, and whereby diffusion is accomplished, include awareness of the need for an innovation, decision to adopt (or reject) the innovation, initial use of the innovation to test it, and continued use of the innovation. There are five main factors that influence adoption of an innovation, and each of these factors is at play to a different extent in the five adopter categories.

  1. Relative Advantage – The degree to which an innovation is seen as better than the idea, program, or product it replaces.
  2. Compatibility – How consistent the innovation is with the values, experiences, and needs of the potential adopters.
  3. Complexity – How difficult the innovation is to understand and/or use.
  4. Triability – The extent to which the innovation can be tested or experimented with before a commitment to adopt is made.
  5. Observability – The extent to which the innovation provides tangible results.

Limitations of Diffusion of Innovation Theory

There are several limitations of Diffusion of Innovation Theory, which include the following:

  • Much of the evidence for this theory, including the adopter categories, did not originate when ecommerce existed and it was not developed to explicitly apply to adoption of new technology innovations.
  • It does not foster a participatory approach to adoption of ecommerce programs specifically.
  • uIt works better with adoption of behaviours rather than cessation or prevention of behaviour.
  • It doesn’t take into account an individual’s resources or available support to adopt the new technology.

This theory has been used successfully in many fields including communication, ecommerce. The latest technology to fall into this predicament is predictive personalisation software PPS. This personalises what products are selected to present to each consumer at the perfect time, based on the impressions and buying history, and personal customer journey of that individual, before competitor sites are even aware of this opportunity.

There are two contributing factors in this, which are: i. are an established dominant plethora of old tech providers all of whom don’t want to lose custom, and are vehemently trying to persuade the market that what they have already, does the same thing. ii. The other group is dominated by consultants and developers who are focused on new clients gains and servicing existing requirements, they prefer to wait to see established company adoption, rater then feel it their responsibility to bring it to their clients attention urgently.

For more on diffusion of innovation theory see “On the Diffusion of Innovations: How New Ideas Spread” by Leif Singer.

Article Classification:

Academic article, good ecommerce marketing experience preferable.

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