Definition of Opinion Leadership and Diffusion of Innovations

Introduction

An issue of considerable importance to consumers and marketers alike- the informal influence that others have on consumers’ behavior and the dynamic processes that impact consumers’ behavior, is the nature and dynamics of the influence that friends, neighbors,­ and the acquaintances have on our-consumer related decisions. This influence is often called word-of-mouth communications­ or the opinion leadership process. We also consider the personality and motivations of those who influence, i.e., opinion leaders and those who are influenced, i.e., opinion receivers.

What is Opinion Leadership?

Opinion Leadership is the process by which one person (opinion leader) informally influences the actions or attitudes of others, who may be opinion seekers or merely opinion recipients. The definition of opinion leadership emphasizes on informal influence. This informal flow of opinion related influence between two or more people is referred to as word-of-mouth communication.

The person is the opinion leader and may become an opinion receiver. Individuals who actively seek information and advice about products are often called opinion seekers.

These opinion leaders are very often a part of the social groups and also have social communication network. The biggest advantage of the informal word-of-mouth communication is that it is informal and interpersonal in nature and this takes place between people who are not directly associated with the commercial selling source or the firm. Very often, we can see that the formal word-of-mouth communication is more influential than mass advertising in determining which product or brand is bought.

                                                                                                    Motivations of Opinion Leaders and Opinion Receivers

Characteristics of Opinion Leaders

Let us now take a look at the main characteristics of opinion leaders. Some of the main features that all opinion leaders have are: Characteristics of Opinion Leaders

Opinion leaders are more knowledgeable, and have a keen level of interest.

More involved in the product category

Have local friendship and social interaction

Can disseminate information

Have high credibility

Have more self-confidence, are more sociable and cosmopolitan, can take risks.

Opinion leaders are activated greatly to reduce distance process for the products they have bought; may want to influence neighbors and friends. They involve themselves, to confirm their own judgment.

They are younger, have more education, have a higher income, and higher occupational status.

They are exposed to media. See more movies and television. Also read information magazines and technical publication devoted to the product category. Having greater knowledge about the product, they can disseminate more and true information about the products and their usage.

Opinion leaders are therefore a case of study to marketers and their strategies are evaluated and formed, keeping the opinion leaders and their roles in mind.

Opinion leaders are perceived to be highly credible sources of product related information. Opinion leaders are persons who are considered to be knowledgeable. They often voice their opinion based on first hand information.

Opinion leaders are gregarious people and also have a lot of experience: Their experience as a shopper and user sets them apart from other people. Since most of their advice is based on firsthand experience, opinion receivers have a lot of confidence in their advice. Besides, because of their gregarious nature, people enjoy interacting with them.

Opinion leaders usually provide unbiased information, i.e., they provide both favorable and unfavorable information to the opinion seekers: This adds credibility to them and opinion seekers have faith that they are receiving correct information.

Opinion leaders are both sources of information and advice

Opinion leaders have got greater exposure to the media, especially in their area of leadership

Opinion leaders tend to be consumer innovators

Opinion leaders have got some personal product specific characteristics like personality traits, social status and demographic characteristics

A Profile of Opinion Leaders

Now we need to study a profile of opinion leader so that we can identify them. It would be a very difficult job to exactly identify the profile of opinion leader, but we have a generalized profile as shown in table

                                                                                                                       Profile of Opinion Leaders

Frequency and Overlap of Opinion

Often we can see that more than half of the people studied in any consumer research project are classified as opinion leaders with respect to some self-selected product category. The frequency of consumer opinion leadership suggests that people are sufficiently interested in at least one product or product category to talk about it and give advice concerning it to others.

Market research suggests the existence of a special category of opinion leaders, the market maven. These are the consumers­ who possess a wide range of information about many different types of products, retail outlets, and other dimensions of markets.

Some important characteristics associated with market maven are:

They both initiate discussions with other consumers and respond to requests for market information.

Although they appear to fit the profile of opinion leaders in that they have high levels of brand awareness and tend to try more brands, unlike opinion leaders their influence extends beyond the realm of high-involvement products.

Market mavens are also distinguishable from other opinion leaders because their influence stems not so much from product experience but from a more general knowledge or market expertise that leads them to an early awareness of a wide array of new products and services.

Information Flow

The figure shows that the opinion leaders seek relevant information from the mass media and other sources, and transmit the same to members of the group. The dashed line shows the feedback from the group to the opinion leaders.

Interpersonal Flow of Communication

You might have observed that ideas often flow from radio and print media to opinion leaders and from them to the general public. This is the concept behind the two-step flow of communication­ This so-called two-step flow of communication theory portrays opinion leaders as direct receivers of information from impersonal mass-media sources, which in turn transmit (and interpret) this information to the masses. This theory views the opinion leader as a middleman between the impersonal mass media and the majority of society.

A more comprehensive model of the interpersonal flow of communication depicts the transmission of information from the media as a Multi-step flow. The revised model takes into account the fact that information and influence often are two-way processes in which opinion leaders both influence and are influenced by opinion receivers.

Opinion Leadership and the Firm’s Marketing Strategy

Marketers have long been aware of the power that opinion leadership exerts on consumers’ preferences and actual purchase behavior. Many marketers look for an opportunity to encourage word-of-mouth communications and other favorable informal conversations. New product designers take advantage of the effectiveness of word-of-mouth communication by deliberately designing products to have word-of-mouth potential. A new product should give customers something to talk about.

Proof of the power of word-of-mouth is the cases in which critics hate a movie and the viewing public like it and tell their friends. In instances where informal word of mouth does not spontaneously­ emerge from the uniqueness of the product or its marketing strategy, some marketers have deliberately attempted to stimulate or to simulate opinion leadership.

There are different opinion leaders for different products. The marketer must determine through research, experience or logic, the role an opinion leader plays in the existing situation for a product or service. Consumers talk to each other about their experiences and performance of the product. If their experiences do not meet expectations then there is cause for concern, and the marketer must take relevant steps to redress their complaints.

This can be reduced by utilizing the knowledge of opinion leaders, which are rather difficult to identify. Opinion leaders are gregarious and tend to belong to clubs and associations. Some product categories have professional opinion leaders who are also very influential.

Hairstylists serve as, opinion leaders for hair-care products. For healthcare products-pharmacists are important opinion leaders. Computer professionals can give an opinion about the purchase of personal computers. The idea is to identify the opinion leaders, and then undertake a marketing research on them and formulate a marketing strategy.

The marketing research conducted on opinion leaders gives ideas of the likes and dislikes of the product users and their categories. Various tests should include the product use test, the pre-testing of the advertising copy, the media preferred for customers to respond favorably to the firm’s marketing mix. The sampling should be done from amongst the opinion leaders. In retailing and personnel selling various techniques can be adopted to attract customers like, one meal extra for every three meals or, pay for two and take three or, a “fashion advisory board” can be constituted in clothing stores.

In advertising, people of prominence and, owners can be used and their experiences and satisfaction received can be projected through conversation and, by giving their impression to the general public and non-owners of the product. Opinion leaders can be used effectively in commercials to promote the product to the masses.

Diffusion of Innovations

We as consumers always find a new innovation-idea or product or even new service attractive. However, for the firm which is trying its hand at the new innovation, there is always a question hanging around ‘How fast will the diffusion of the innovation take place?” This is to say that any innovation has got an element of risk involved. The firm will introduce a new concept or a new product after an intensive research is carried out by it. Thus we see that the process of diffusion of innovation is very critical to a firm.

Diffusion

Diffusion is a macro process concerned with the spread of a new product is an innovation from its source to the consumers. Adoption is a micro process that focuses on the stages through which an individual consumer passes when deciding to accept or reject a new product.

Diffusion of innovations is the process by which acceptance of an innovation (new products or new service or new idea) is spread by communication (mass media, sales people, informal conversation) to members of the target market over a period of time.

Some new product innovation, which were easily accepted by customers

                                                                                                   Examples of new products/services easily accepted by consumers

The Diffusion Process

The diffusion process follows a similar pattern over time, irrespective of the social group or innovation. The typical diffusion process shows a slow growth or adoption. It later rises rapidly, and then a period of slow growth is noticed. In fast diffusion process, the product clicks immediately. The spread of innovation is very quick. People patronize the product immediately, and later on there is again slow diffusion. In slow diffusion process, the product takes a lot of time to diffuse or spread, and the consumer follows a pattern of adoption slowly by getting acquainted with the product.

Diffusion is the process by which the acceptance of an innovation­ (a new product, a new service, new idea or new practice) is spread by communication (mass media, salespeople, or informal conversations) to members of a social system (a target market) over a period of time. The four basic elements of this process are:

The Innovation

The channels of Communication

The Social System

Time

                                                                                                                                                 Diffusion Process

These studies show that the products take a certain amount of time, from when it gets introduced to its saturation. The marketer therefore has to understand what determines the spread of innovation in a given market segment, and how do the early buying consumers differ from those of late purchasers.

The Innovation

Various approaches which have been taken to define a new product or a new service include

Firm-oriented definitions: A firm oriented approach treats the newness of a product from the perspective of the company producing or marketing it. When the product is “new” to the firm it is considered to be new.

Product oriented definitions: Product-oriented approach focuses on the features inherent in the product itself and on the effects these features are likely to have on consumers’ established usage patterns. Three types of product innovations could be: Continuous innovation having the least disruptive influence on established patterns involving the introduction of a modified product, rather than a totally new product. E.g., latest version of Microsoft Office; dynamically continuous innovation which may involve the creation of a new product or the modification of an existing product e.g., disposable diapers, CD players; discontinuous innovations requiring consumers to adopt new behavior patterns e.g., TV, fax machines, Internet

Market oriented definitions: Judges the newness of a product in terms of how much exposure consumers have to the new product. The definitions could be:

A product id considered new if it has been purchased by a relatively small (fixed) percentage of the potential market.

A product is considered new if it has been on the market for a relatively short (specified) period of time.

Consumer oriented definitions: A new product is any product that a potential consumer judges to be new.

The channels of Communication

How quickly an innovation spreads through a market depends to a great extent on communications between the marketer and consumers, as well as communication among consumers i.e., word-of-mouth communication. Thus this communication will include two types of communication:

Communication between marketers and consumers

Communication between marketers and consumers

Consumer information sources fall into four categories:

Personal sources: Family, friends, neighbors, and acquaintances.

Commercial sources: Sales people, advertising, sales promotion techniques.

Public sources: Mass media, consumer rating organisations

Experimental sources: Demonstration, handling samples.

Depending on the innovation or new product, and the prospective customers, the firms try to adopt a cost effective way of communicating with them.

                                                                                                               Adoption and Diffusion of Innovation Process

The Social System

The diffusion of a new product usually takes place in a social setting frequently referred to as a social system. In our case, the terms market segment and target segment may be more relevant than the term social system used in diffusion research. A social system is a physical, social, or cultural environment to which people belong and within which they function. For example, for new hybrid seed rice, the social system might consist of all farmers in a number of local villages.

The key point to remember is that a social system’s orientation is the climate in which marketers must operate to gain acceptance­ for their new products. For example, in recent years, the World has experienced a decline in the demand for red meat. The growing interest in health and fitness thought the nation has created a climate in which red meat is considered too high in fat and calorie content. At the same time, the consumption of chicken and fish has increased, because these foods satisfy the prevailing nutritional values of a great number of consumers.

Time

Time pervades the study of diffusion in three distinct but interrelated ways:

The amount of purchase time: Purchase time refers to the amount of time that elapses between consumers’ initial awareness of a new product or service and the point at which they purchase or reject it. For instance, when the concept of “Home Land” super market was introduced by Asha Chavan in Pune, apart from offering a variety of quality products, also give an unconditional guarantee of replacement or refund, home delivery of all, even single item telephonic orders at no extra cost. And beyond business, Homeland also offers free services like phone, electricity, credit card and cell phone bill payments.

The identification of adopter categories: The concept of adopter categories involves a classification scheme that indicates where a consumer stands in relation to other consumers in terms of time. Five adopter categories are frequently used viz., innovators, early adopters, early majority, late majority, and laggards. Let us discuss about these categories later in the chapter.

The rate of adoption: The rate of adoption is concerned with how long it takes a new product or service to be adopted by members of a social system i.e., how quickly it takes a new product to be accepted by those who will ultimately adopt it.

Importance of Time in the Diffusion process

The marketing objective for launching new products is to gain wide acceptance from the market as quickly as possible. So as to obtain huge market share with the new product, marketers either adopt a Penetrating strategy, i.e., low introductory price to discourage competitors from entering the market or go for a Skimming strategy.

Influence of Product Characteristics on diffusion

The rate of spread of innovation depends on a number of factors listed below:

Type of group: Some groups, who are young, affluent and highly educated, accept changes faster than the old, traditional and poor groups. This shows that the target market is an important determinant of the rate of diffusion.

Perceived risk: The more the risk associated with changing to new innovation, the slower is the rate of diffusion. The risk consists of the product not performing as expected, the risk of the consequences of change-over, and the risk of reverting back to the old product, if not satisfied with the innovative product.

Type of decision: An individual vs. a collective decision. Individual decisions lead to faster diffusion than collective ones.

Marketing effort: This also affects the diffusion process. More aggressive marketing effort, consisting of high and continuous advertising expenditure, diffuses faster than otherwise.

Trial: The trial can be taken at low cost and low risk, the diffusion is faster. Some products can be borrowed, rented or, their trial can be taken at retail outlets. These products like medicines and other low priced items have faster diffusion. These days even car outlets are giving free trials and rides to prospective customers, to make their new models of cars diffuse faster.

Fulfillment of felt need: The faster a need is satisfied or fulfilled by a product, the greater is the rate of its diffusion.

Compatibility: The more the product is compatible with the beliefs, attitudes and values of the individual or group the faster the diffusion - vegetables soup for vegetarians, ordinary microwave no roasting.

Relevant advantage: The advantage could be of price, quality, ease of handling, product quality. To have quick diffusion, the product must offer either a price advantage or a performance advantage. Washing machine is expensive, but a labour saving device.

Complexity: If the product is complex (difficult to understand and use) the diffusion is slower. The product may be complex but its use must be easy. Complexity may be because of many attributes (at-tributes complexity which are difficult to under- stand). The other complexity may be trade off complexity. The trade off takes place between cost of purchase and economy. Convenience vs. space or speed of cooking, vs. quality of cooking, as in microwave ovens.

Observability: The more easily the positive effects of the products can be observed, the more discussion takes place and faster the diffusion process, e.g. cell phones.

Classification of Adopters

Adopters can be classified into five groups based on the time when they adopt.

Innovators: The first 2.5 per cent to adopt innovation.

Early adopters: The next 13.5 per cent to adopt.

Early majority: The next 34 per cent to adopt.

Late majority: The next 34 per cent to adopt.

Laggards: The final 16 per cent to adopt.

Innovators

Innovators are venturesome risk takers. They are younger, more educated and socially mobile. They have the capacity to absorb risk associated with the new product. They are cosmopolitan in outlook, are aware and make use of commercial media, and are eager to learn about new products, are progressive, ready to use new products.

Early adopters

They take a calculated risk before investing and using new innovations. They are opinion leaders and provide information to groups, but they are also concerned about failure. Therefore, they weigh advantages and disadvantages of the product before plunging in for a purchase.

Early majority

They tend to be more continuous and use the product after the innovators and early adopters seem to be satisfied with it. They are elders, well educated and less socially mobile. They rely heavily on inter-personal source of in- formation. They constitute 34 per cent of the consumers.

Late majority

They are doubtful and skeptical about the innovation of new products. They tend to use the product not so much because of innovation, but because of other pressures, non-availability of the product and social pressures. They have less social status, and are less socially mobile than the previous group.

Laggards

They are more traditional. They possess limited social interaction and are oriented to the past. They adopt the innovations with great reluctance. They constitute a small portion of 16 per cent of the consumers. As depicted in figure below adopter categories are generally depicted as taking on the characteristics of a normal distribution i.e., a bell-shaped curve that describes the total population that ultimately adopts a product.

                                                                                                                                  Adopter categories

Non adopter Categories

A classification of the non-adopter categories would include:

The unaware group: Those consumers who are not aware of the new product

Symbolic rejecters: Who, though aware of the product, have decided against buying it.

Symbolic adopters: Who know the product will be useful or them but have not tried it.

Trial adopters: Who have tried the product and also rejected the same.

Trial rejecters

Role of Personal Influence

Personal influence is another important factor, which plays a role in the adoption process of new products. This refers to what effect the statements made abut ‘a new product’ by one person will have on another person’s change in attitude or probability. This means that based on the comments or views expressed by ones personal friend or acquaint acquaintance one may change the decision to adopt a new product or innovation. It is usually observed that consumers and especially women prefer to consult one another’s friends and value the opinions expressed by them about new products, the quality differences among the different brands, store at which to purchase to experience shopping and so on.

Market strategy Related to Diffusion

There are differences in the early purchasers or innovators and late purchasers (Laggards). The strategy for the target market adopted is a “moving target market” approach. First the general target market is selected, and then the focus shifts to innovators, early adopters, early majority, late majority and laggards. This takes place as the product keeps getting acceptance from the consumers. There is then a change in the media and advertising themes for different target groups.

Diffusion Enhancement Strategies

The idea is to find out the diffusion inhibitors and to eliminate them for the enhancement of diffusion. For this the diffusion determinants are analysed, and diffusion strategies framed, as given in table below.

                                                                                                        Diffusion enhancement strategies

These diffusion inhibitors have to be analyzed, and strategies formulated accordingly.