The Effect of Consumer Innovativeness on Adoption of IPhone 5C (Dissertation Review Sample)

The Effect of Consumer Innovativeness on Adoption of Smartphone
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Chapter 2: Literature Review
Introduction
The digital environment is presently evolving at a very high rate. New products in the market are currently experiencing a shorter life cycle owing to the magnificent development and application of modern technologies. In this regard, in order to maintain and still increase the market share, business entities ought to improve their ultimate competitiveness by developing new products that satisfy the diverse consumer demands. According to Schmidt & Calantone (2002), nearly 50% of the sales and profits of businesses fundamentally originate from products that have been manufactured or developed within a period of five years. Consequently, a number of companies stake their commercial survival on the development of key products that are significantly unique. In view of that, the success of new products in the market is critical to the development of a given business.
However, the development of innovative products entails numerous risks that if not handled with definitive care, may result to an entity’s corporate extinction. Hoffmann & Soyez (2010) ascertained that the rate of failure of innovativeness is very high accounting to about 80% in certain companies. This is largely because; the development and marketing of a given product often requires significant time and money. Eccentrically enough, failure of a newly developed commodity to hit the market results to massive losses in terms of cost. Therefore, it is vital for businesses to gain considerable customer recognition of their developed products immediately they are introduced in the market in order to maximize profits and reduce the product life cycle. Based upon the above realities, this writing applies the New Product Adoption Theory to ascertain the effects of consumer innovativeness on the Adoption of the Smartphone.
Consumer Innovativeness
Consumer innovativeness attributes its roots in the “Diffusion of Innovations Theory”. In essence, Rogers & Shoemaker (1971) defined Consumer Innovativeness as “the degree to which an individual is earlier in adopting new ideas than the average member of his or her social system”. Generally, consumers with high innovativeness levels are characterized by a number of factors. These are; [1] readiness to comply with changes involving concepts and things, [2] capability to manipulate others to take on the new concepts and things, [3] ability to meaningfully solve issues and make pertinent decisions in a company or social system, and [4] the rate as well as the extent of time involved in the adoption of the abovementioned transformations in a purposeful relationship. Prior studies on innovations have exposed that innovative consumers often endow other consumers with information and suggestions pertaining to new products. Largely enough, their opinions influence other consumers and for that reason new products are typically accepted in the market.
As Midgley & Dowling (1978) perceive the definition of consumer innovativeness given by Rogers & Shoemaker (1971) as merely an operationalzed meaning, Steenkamp, Hofstede, & Wedel (1999) assert that consumer innovativeness is principally the predisposition of a consumer to purchase new and different products as well as brands instead of remaining with prior choices and consumption trends. As noted in prior sections, the rate of failure of the diffusion of new products is awfully high, and for that reason the cost of organizational collapse is significantly high. To reduce the peril related to diffusion failures, marketers have the obligation to address the demands of innovative consumers. It is important to note that, the principle client of any diffusion process is the consumer and therefore all innovations should be centered on towards ascertaining their satisfaction.
Arguably, the adoption of new products by innovative consumers in public often triggers the buying power of the same products by other consumers. From earlier studies, it was established that the adoption of innovative products focuses on two main aspects. First, it focuses on the demographic variables effects on the adoption of innovative products. Researcher with this school of thought, have empirically prove validated that consumer innovators are considerably different from other general consumers. Second, it focuses on consumer innovativeness to establish consumer innovators. In this, it is argued that innate consumer innovativeness does not depend on a particular product, but rather it is concerned with an individual’s unsystematic and unobservable inclination towards innovations and is pertinent across product classes (Im, Bayus, & Mason, 2003). Therefore, this investigation actualizes that by establishing consumers with a higher degree of innovativeness, businesses can precisely anticipate the extent of acceptability of their innovative products. This will in the long run save time as well as cost in marketing.
Individual predisposition is paramount to consumers’ adoption of innovations. This assertion has highly been mentioned in studies involving brand loyalty, preference, communication, and decision (Hirschman, 1980). Consumer innovativeness has been adequately utilized in psychological studies to expose an individual’s innovativeness in the market front (Im, Bayus, & Mason, 2003). This is because it highly reflects an innovative predisposition, personality, and cognitive style.
Adoption of new products
Kotler (1994) ascertained that new products consist of original products, product modifications, new brands, and product improvements that a business develops by means of its own research alongside development efforts. According to Blackwell, Miniard, & Engel, (2006) new products are “products that are to be introduced into the market or are perceived by the consumers as newer than existing products”. A plethora of literature reveals that consumers and businesses have absolutely different perceptions regarding to new products, and that the meaning of new or innovative products varies across disciplines. Essentially, a product that is perceived to be new by consumers may arguably not be new to businesses. The reverse is also true.
With regard to consumers, a product they have never seen in the market is perceived to be new. Guiltinan (1994) asserted that new products can be classified into three distinctive groups namely; [1] trial and purchase, [2] innovation adoption alongside diffusion, and [3] customer migration. In the “New Product Adoption Model” developed by Holak (1988), product attributes, environmental variables, and consumer traits variables affect the intention by consumers to purchase and adopt a given commodity. He further argues that consumers ought to take into account the attributes of the new product as well as their own traits as they evaluate the viability of a new product in the market.
Basing on the aforementioned Holak’s framework, this literature will examine two main factors that affect adoption of new products by consumers. They are; product attributes and consumer traits. Among several consumer traits, this writing will focus on consumer innovativeness after which it will seek to ascertain its effect on the adoption of the IPhone 5C to Smartphone.
Measuring Consumer Innovativeness
Studies seeking to measure consumer innovativeness often use one of the following three strategies: cross-sectional method, time-of-adoption, or self-report. Each of these methods has its own methodological and theoretical strengths and weaknesses.
Time-of-adoption
Researchers often take into consideration the time limit that a product takes to fully diffuse and be accepted by consumers. This is from the time of product introduction to the time of product adoption. Products that take a long time before being adopted fully have poor consumer innovativeness than those that that take a shorter period. However, this approach has been highly criticized by a number of proponents based upon methodological and theoretical reasons (Taylor & Todd, 1995). Their criticism is grounded on the fact that “time-of –adoption” is basically a temporal aspect and therefore is not related to operational setbacks. Consequently, this strategy has been criticized for its lack of reliability and validity measures. Therefore this method cannot be used to predict future market trends.
Cross-sectional method
After critics extorted the viability of the prior method, researchers opted for another decisive method. They finally settled for the cross-sectional method of ascertaining consumer innovativeness. Midgley & Dowling (1978) defined the cross-sectional method as “a strategy used in determining how many of a pre-specified list of new products a particular individual has purchased at a time of the survey”. This method has been praised for its ability to provide a reasonable degree of construct “innate innovativeness”. However, this method has also been criticized for its ability to only give a global perspective of innovativeness. Studies seeking to establish a specific domain of innovativeness would arguably not employ this strategy.
Self report
This method employs a critical SWOT analysis of the innovative product by seeking to ascertain the Strengths, Weaknesses, Opportunities, and Threats of the new product after which recommendations are made about the products innovativeness based upon the acquired self report.
Factors influencing Consumer Innovativeness
Innovation fundamentally relies on the uniqueness of a product that can foster its adoption in the market industry. Some products diffuse high...