The publication of a study of Ryan and Gross on the diffusion of hybrid corn in Iowa was the first sustainably visible contribution in a broader interest in innovations which was especially popularized by the textbook by Everett Rogers (1962),Diffusion of Innovations (Rogers 1962). He defines diffusion as "the process by which an innovation is communicated through certain channels over time among the members of a social system." 

Elements of diffusion of innovations 

The key elements in diffusion research are:

Innovation 

Rogers defines an innovation as "an idea, practice, or object that is perceived as new by an individual or other unit of adoption".

Communication channels 

A communication channel is "the means by which messages get from one individual to another".

Time 

"The innovation-decision period is the length of time required to pass through the innovation-decision process". "Rate of adoption is the relative speed with which an innovation is adopted by members of a social system".

Social system 

"A social system is defined as a set of interrelated units that are engaged in joint problem solving to accomplish a common goal".

Types of innovation-decisions 

There are three types of innovation-decisions within diffusion of innovations. Two factors determine what type a particular decision is: 1. Whether the decision is made freely and implemented voluntarily and 2. Who makes the decision. Based on these considerations,three types of innovation decision have been identified:: Optional innovation-decisions, collective innovation-decisions, authority innovation-decisions.

Optional Innovation-Decision

This decision is made by an individual who is in some way distinguished from others in a social system.

Collective Innovation-Decision

This decision is made collectively by all individuals of a social system.

Authority Innovation-Decision

This decision is made for the entire social system by few individuals in positions of influence or power.

Five stages of the adoption process 

Knowledge

In this stage the individual is first exposed to an innovation but lacks information about the innovation. During this stage of the process the individual has not been inspired to find more information about the innovation.

Persuasion

In this stage the individual is interested in the innovation and actively seeks information/detail about the innovation.

Decision

In this stage the individual takes the concept of the innovation and weighs the advantages/disadvantages of using the innovation and decides whether to adopt or reject the innovation. Due to the individualistic nature of this stage Rogers notes that it is the most difficult stage to acquire empirical evidence (Rogers 1964, p. 83).

Implementation

In this stage the individual employs the innovation to a varying degree depending on the situation. During this stage the individual determines the usefulness of the innovation and may search for further information about it.

Confirmation

Although the name of this stage may be misleading, in this stage the individual finalizes their decision to continue using the innovation and may use the innovation to its fullest potential

Diffusion and management 

Much of the evidence for the diffusion of innovations gathered by Rogers comes from agricultural methods and medical practice.

Various computer models have been developed in order to simulate the diffusion of innovations. Veneris developed a systems dynamics computer model which takes into account various diffusion patterns modeled via differential equations.

There are a number of criticisms of the model which make it less than useful for managers. First, technologies are not static. There is continual innovation in order to attract new adopters all along the S-curve. The S-curve does not just 'happen'. Instead, the s-curve can be seen as being made up of a series of 'bell curves' of different sections of a population adopting different versions of a generic innovation.

Market segmentation is the process of dividing the market into different segments acording to the tastes and preference of the consumers.

Basis for segmenting the market

Geographic

• Region of the country or state or city
• Urban or rural

Demographic

• Age, sex, family size, marital status
• Income, occupation, education
• Religion, race, nationality

Psychographic

• Social class
• Lifestyle type
• Personality type, motivation, learning, attitude, perception

Behavioural

• Product usage - e.g. light, medium ,heavy users
• Brand loyalty: none, medium, high 
• Type of user (e.g. with meals, special occasions)

Criteria for Effective Targeting of Market Segments

• Identification

• Sufficiency

• Stability

• Accessibility

New Product Development

Development of original products, product improvements, product modifications, and new brands through the firm’s own R & D efforts.

New Product Development Strategy

•New products can be obtained via acquisition or development.

•New products suffer from high failure rates.

•Several reasons account for failure.

Stages of the New Product Development Process

•Stage 1: Idea Generation

Internal idea sources:

•R & D

External idea sources:

•Customers, competitors, distributors, suppliers

Stage 2: Idea Screening

Product development costs increase substantially in later stages so poor ideas must be dropped

Ideas are evaluated against criteria; most are eliminated

Stage 3: Concept Development and Testing

Concept development creates a detailed version of the idea stated in meaningful consumer terms.

Concept testing asks target consumers to evaluate product concepts.

Stage 4: Marketing Strategy Development

•The target market, product positioning, and sales, share, and profit goals for the first few years.

•Product price, distribution, and marketing budget for the first year.

•Long-run sales and profit goals and the marketing mix strategy.

Stage 5: Business Analysis

Sales, cost, and profit projections

•Stage 6: Product Development

Prototype development and testing

Stage 7: Test Marketing

Standard test markets

Controlled test markets

Simulated test markets

•Stage 8: Commercialization

Product Life-Cycle Strategies

•The Product Life Cycle (PLC) has Five Stages

Product Development, Introduction, Growth, Maturity, Decline

Not all products follow this cycle:

•Fads

•Styles

•Fashions

The product life cycle concept can be applied to a:

Product class (soft drinks)

Product form (diet colas)

Brand (Diet Dr. Pepper)

•Using the PLC to forecast brand performance or to develop marketing strategies is problematic

Product development

Begins when the company develops a new-product idea

•Sales are zero

•Investment costs are high

•Profits are negative

Introduction

Low sales

•High cost per customer acquired

•Negative profits

•Innovators are targeted

•Little competition

Marketing Strategies: Introduction Stage

•Product –Offer a basic product

•Price –Use cost-plus basis to set

•Distribution –Build selective distribution

•Advertising –Build awareness among early adopters and dealers/resellers

•Sales Promotion –Heavy expenditures to create trial

Growth

Rapidly rising sales

•Average cost per customer

•Rising profits

•Early adopters are targeted

•Growing competition

Marketing Strategies: Growth Stage

•Product –Offer product extensions, service, warranty

•Price –Penetration pricing

•Distribution –Build intensive distribution

•Advertising –Build awareness and interest in the mass market

•Sales Promotion –Reduce expenditures to take advantage of consumer demand

Maturity

Sales peak

•Low cost per customer

•High profits

•Middle majority are targeted

•Competition begins to decline

Marketing Strategies: Maturity Stage

•Product –Diversify brand and models

•Price –Set to match or beat competition

•Distribution –Build more intensive distribution

•Advertising –Stress brand differences and benefits

•Sales Promotion –Increase to encourage brand switching

Decline

Declining sales

•Low cost per customer

•Declining profits

•Laggards are targeted

•Declining competition

Marketing Strategies: Decline Stage

•Product –Phase out weak items

•Price –Cut price

•Distribution –Use selective distribution: phase out unprofitable outlets

•Advertising –Reduce to level needed to retain hard-core loyalists

•Sales Promotion –Reduce to minimal level

Types of Advertising

•Cause advertising - institutional messaging that promotes a specific viewpoint on a public issue as a way to influence public opinion and the legislative process.

Television

Newspapers

Radio

Online and Interactive Advertising

Sponsorship

Other Media Options

Public Relations




The most important elements of a brand should be:

Brand Position

• Who is addressed by company’s branded products or services. What the company does and for whom
• The company’s unique value and how customers benefit from products and/or services
• Key competitive differentiators, what makes the brand be chosen, be different from its competitors

Brand Promise

• The ONE most important thing that the brand promises to deliver to its customers — Every time!
• What customers and partners should expect from every interaction, how should they feel as brand’s customers

Brand Personality

• What the brand is to be known for
• Personality traits that customers, partners, and employees use to describe the company. What comes to the (potential) customer’s mind when addressed about the brand

Brand Story

• The company’s history and how the history adds value and credibility to the brand
• A summary of products/services/solutions

Brand Associations

• Physical artifacts: name, logo, colors, taglines, fonts, imagery
• Ideally, it must reflect the all the above statements about the brand and the company

Brand Elements

• Brand Names & URLs

• Logos & Symbols

• Characters

• Slogans & Jingles

• Packaging & Signage