BUS2001 Mini Presentation – The buyer decision process for new products

Group member:Li Chung Lam Louis (s128591)Lee Ho Yin Andrew (s126998)Tai Chit Yam David (s127296)Au Kam Yeung Felix (s126505)

Content

Definition ---------------------------------------------------------------------------- P.3-4

Introduction of 5 stages in the adoption process -------------------- P.5

5 stages in the adoption process (with example) -------------------- P.6-15

Individual differences in innovativeness --------------------------------- P.16-18

Influence of product characteristics on rate of adoption -------- P.19-20

Self-test question ----------------------------------------------------------------- P.21-24

Q & A Section --------------------------------------------------------------------- P.25

References ------------------------------------------------------------------------- P.26

The Buyer Decision Process For New Products

What is a new product? A new product is a good, service, or idea that is perceived( 被被被 ) by some potential customers as new.

Is it a new product? It depends.

The Buyer Decision Process For New Products

Decision/Adoption process: It is the mental process through which an individual passes from first hearing about an innovation to final adoption.

Adoption process

The Buyer Decision Process For New Products

5 stages in the adoption process:

Note: Each stage of the adoption process must be overcome before passes to the next stage.

The Buyer Decision Process For New Products

The first stage: Awareness( 被被 / 被被 )

The consumer becomes aware of the new product, but lacks information about it.

1st stage

The Buyer Decision Process For New Products

For example: Assume Andrew who is the loyal customer of Samsung (i.e.

Andrew never use Apple’s products). Apple’s products are new products to him.

Aware of the new product: He sees some of his friends are using iPhone 5s Or Many people are using iPhone 5s in the MTR. He notices that there is a new product – iPhone 5s Lacks information: What is the function of iPhone 5s? How much is it? Where can I buy it?

1st stage

The Buyer Decision Process For New Products

The second stage: Interest The consumer seeks information about the new product. Price? Function?

Also, they may seek information in such ways: Personal sources (friends) Commercial sources (advertising, displays) Public sources (TV, Internet) If no sufficient information is available, then no further

adoption.

2nd stage

The Buyer Decision Process For New Products

For example: Seeks information: Andrew will directly go to the store which located in

Central to seek information about iPhone 5s.

After that, he should get sufficient information about iPhone 5s such as:

Price: $5588 HKD New function (absence in iPhone 5): a Touch ID fingerprint

identity sensor Years of maintenance: 1 year

2nd stage

The Buyer Decision Process For New Products

The third stage: Evaluation ( 被被 ) The consumer considers whether trying the new product makes sense.

Cost VS Benefit?

If he/she thinks that trying the new product is not make sense, then no further adoption.

3rd stage

The Buyer Decision Process For New Products

For example: Evaluation: Is it make sense for Andrew to buy an iPhone 5s? Buy or not buy?

If Andrew believes that buying an iPhone 5s is make sense (benefit>cost), then he will pass to the next stage – Trial.

Cost:1. Price of iPhone 5s2. Time for searching

information

Benefit/value:1. Helpful in daily life (more

functions)2. User friendly than Samsung3. Self-esteem4. Peer recognition

VS

3rd stage

The Buyer Decision Process For New Products

The fourth stage: Trial ( 被被被 )

The consumer tries the new product on a small scale to improve his or her estimate of its value.

4th stage

The Buyer Decision Process For New Products

For example: Tries the new product on a small scale: Andrew will buy an iPhone 5s and test whether Apple’s

products meets his estimated value / expectation.

If Andrew discovers that the iPhone 5s has a poor performance than he expected, then he will not consider to adopt Apple’s products.

Otherwise he will pass to the next stage – Adoption.

4th stage

The Buyer Decision Process For New Products

The final stage: Adoption ( 被被 )

The consumer decides to make full and regular use of the new product.

Final stage

The Buyer Decision Process For New Products

For example: Make full and regular use: After Andrew notices that iPhone 5s has an excellent

performance than he expected, he will make full and regular use of Apple’s products.

Continue to purchase Apple’s products in the future.

Samsung galaxy s4 被 iPhone 5s Samsung galaxy tab2 被 iPad Air Samsung galaxy player 4.2 被 iPod touch 4

Final stage

Individual Differences in Innovativeness

Five adopter groups:

Innovators: They try new ideas at some risk. (The fastest group)

Early adopters: They are opinion leaders in their communities and adopt new ideas early but carefully.

Individual Differences in Innovativeness

Early majority: Although they rarely are leaders, they adopt new ideas before the average person.

Late majority: They adopt an innovation only after a majority of people have tried it.

Laggards ( 被被被 ): They are suspicious ( 被被 ) of changes and adopt the innovation only when it has become something of a tradition itself. (The slowest group)

Individual Differences in Innovativeness

For an innovating firm which develops new products frequently,

they should target their market to Innovators and Early adopters

Here is the division of five adopter groups:

Influence of Product Characteristics on Rate of Adoption

Five major characteristics on new products:

Relative advantage: The degree to which the innovation appears superior to existing products.

Compatibility ( 被被 ): The degree to which the innovation fits the values and experiences of potential consumers.

Influence of Product Characteristics on Rate of Adoption

Complexity: The degree to which the innovation is difficult to understand or use.

Divisibility: The degree to which the innovation may be tried on a limited basis.

Communicability: The degree to which the results of using the innovation can be observed or described to others.

Influence of Product Characteristics on Rate of Adoption

Other characteristics:

Initial and ongoing costs

Risk and uncertainty

Social approval

Self-Test Question

According to the previous example, which adopter group does Andrew belong to?

A. Innovators B. Early adopters C. Early majority D. Late majority E. Laggards

Self-Test Question

Answer:

Late majority: They adopt an innovation only after a majority of people have tried it.

Self-Test Question

Do you think iPhone 5s has a high rate of adoption? (Discuss base on 5 characteristics of new product)

Relative advantage Compatibility Complexity Divisibility Communicability

Self-Test Question

Answer:

Relative advantage 被 New functions 被 Superior than existing products (high)

Compatibility 被 Depends on different customers’ expectation Complexity 被 Existing users of Apple’s products 被 Easy to understand or use (high) 被 New users of Apple’s products 被 Difficult to understand or use (low) Divisibility 被 Relatively expensive / Can’t divide into small amount (low) Communicability 被 Very easy to observe the results through different media

(high) Conclusion: iphone 5s has a moderately high rate of adoption

Q & A

Reference

1. Kotler, Armstrong, Ang, Leong, Tang & Yau. (2011). Principles of Marketing An Asian Perspective.

2. The Apple Store. (2014). Shop iPhone. Retrieved February 19, 2014, from http://store.apple.com/hk/iphone/family/iphone/compare