Imapct factor(SJIF): 6.56
A Refereed Monthly International Journal of Management
Evidencing Adoption and Diffusion amongst Textile Marketers: A Study
Dr. G. K. Deshmukh 1
Institute of Management,
Pt. Ravishankar Shukla University,
Raipur, Chhattisgarh, India
Dr. Sanskrity Joseph 2
Institute of Management,
Pt. Ravishankar Shukla University,
Raipur, Chhattisgarh, India
Purpose: The purpose is to study adoption and diffusion of innovation amongst textile marketers in the city of Raipur, Chhattisgarh, India towards services provided by Wholesalebox.
Design/methodology/approach: Authors have done empirical research while analyzing the data
gathered through primary sources and discussed their viewpoints.
Findings: Respondents were categorized in to three categories namely “first adopters”, “late adopters” and “non adopters.” Merchant and website factors affect the process of adoption and diffusion of innovation amongst textile marketers.
Originality/value: This is a fairly original paper which studies and discusses adoption of innovation.
Keywords: Innovation, Adoption, Diffusion, Merchant Factor, Website Factor, Purchase Intention.
Paper type: Research Paper
Competition is the driving force of monopolistic economy which is characterized by large number of sellers who offer heterogeneous offerings to large number of buyers. In monopolistic competition non price competition has dominated its economy more in comparison to price competition. Heterogeneous product offerings with different features, application of all aspects of promotion mix and establishment of new sources of product procurement and delivery are dominating the markets for establishing the point of differentiation between two sellers. The sellers are approaching diverse markets and selling more commodities to distribute their fixed cost on large number of products manufactured or distributed by them. In recent times monopolistic competition is more fueled by advent of information technology. Information technology is helping the marketers to cover the untapped markets for product sourcing as well as product delivery from new, distant as well as remote markets from geographically dispersed suppliers. Further the symbiotic relationship of marketing and information technology is also helping the marketers to reach the untapped markets. The culmination of information technology with market research has led to development of a scientific approach for marketers to reach different sellers and procure goods and services according to needs, preferences, and purchasing power of their target customers. Market research and information technology have paved way for many innovations. Innovation can be defined as “an idea perceived as new by the individual” (Rogers, 1983). Adoption and diffusion of innovation has become more evident and clear in monopolistic economy. New product development, new media for promotion and new channels of delivery, are making their entry in the markets, are simultaneously adopted by innovators and are slowly diffused in the markets on the basis of their practicality and usage. Adoption and diffusion of innovation in more general terms refer to usage of newly introduced product or service by varied groups of customers in a social system over a period of time which can be justified or tabulated through available information. Schumpeter (1939) opined that the final and last stage of development of technology must be related with diffusion of technology in the market. A large plethora of research has been conducted to understand the process of adoption and diffusion of technology. Rogers (1962) indicated that adoption and diffusion is a systematic process which can be studied in five stages namely (i) awareness, (ii) interest, (iii) evaluation, (iv) trial, and (v) adoption. Researchers have also studied the parameters which guide the process of technology adoption and diffusion. Narayanan (2001) opined that technology adoption and diffusion is correlated with developing innovation, diffusion or propagation of innovation, time required by innovation to propagate amongst different units of social systems. Further in recent times technology innovation is relevant for economy due to government policies like Make in India and Start up India (Vedpuriswar,2003). Entrepreneurship is linked with technology and is commercialized in steps like imagining, incubating, demonstrating, promoting and sustaining technologies for marketable use. Change is the key to innovation. In recent times markets have witnessed introduction of large variety of new products and services. The desire for change by consumers have prompted marketers to produce better quality products and services and make them available through new and improved delivery systems. The advent of technology and its culmination with marketing has brought a revolutionary change in large groups of industries mainly telecommunication, banking and retail. It has become increasingly essential for marketers to understand the dimensions of adoption and diffusion to take strategic advantages in competitive markets.
Further researchers like Pareek (1999) indicated that the slow growth of market with respect to markets can be attributed to factors like distance, diversity and dispersion. It has become difficult for innovators to understand how their idea can be converted into a marketable venture with respect to innovation adoption and diffusion. Gruber and Verboven (2000) opined that technological and regulatory framework of a country also plays important role in adoption and diffusion of innovation. The government of respective countries which understand the future technological growths can map the market better with regulatory framework for better growth and spread of innovation. Consumer’s perception plays an important role in adoption of and diffusion of new technology as their consumption pattern decides the fate of innovation in the market. The consumers are basically the user of an innovation and in this respect Kwon and Chidambaram (2000) indicated that Individual characteristics of customers, their perception towards ease of usage of a product or service, their perception regarding the usefulness and benefits related with a innovation, their extrinsic motivations, attitude towards enjoyment/fun, social pressure and apprehensiveness from reference groups play an important role in adoption and diffusion of innovation. Tathod and Pandiya (2003) opined that marketers are responsible for preparedness of market for any innovation. The marketers must find solutions related with physical distribution, channel management and promotion and marketing communication which can adversely affect the service as well as cost aspect. In the above backdrop the researchers have tried to understand the following issues:
(i) Conceptualization of adoption and diffusion of innovation
(ii) Factors affecting adoption and diffusion of innovation in market.
2. Conceptualization of Adoption and Diffusion of Innovation
Innovation in more general terms can be defined as commercialization of creative idea of an individual or organization. Baregheh et. al (2009) opined that innovations are creative ideas which are translated by organizations into distinct products and services to gain competitive advantage in the markets. Luecke and Katz (2003) further emphasized on the process of innovation and indicated that innovations are usually linked with successful introduction of new products and services in the market. Schumpeter (1912) provided an economic extension to innovation and indicated that all products and services with which the consumers are not familiar can be termed as innovation. He further explained that innovation is related with (i) production of different kinds of products, (ii) adoption of new techniques of production, (iii) discovery of new sources’ of raw materials, (iv) discovery of new markets and (v) change in organization of production. Adoption and diffusion of innovation is a step by step systematic process which cannot be replicated for all products. The adoption and diffusion process depends upon the time duration taken by consumers at every step of the process. The process of adoption and diffusion can stop at any stage when the consumer’s show disinterest towards an innovation. Rogers (2003) provided a framework to discuss the flow of innovation. Innovation Diffusion was considered a five step process which began with Knowledge shaped by personal characteristics, social economic background and communication behavior of customers and was followed by persuasion which is a result of perceived benefits associated with relative advantage, compatibility, complexity, trialabilty and observeability and decisions which is related with adoption in terms of continued adoption or later adoption or rejection marked by discontinuance or continued rejection, implementation where innovation is put into practice and confirmation where customers looks for support of their decision from the reference group. The researchers have however tried to understand the steps involved in adoption diffusion process. Narayanan (2001) indicated that adoption diffusion process begins with chance discovery of researched innovation which is propagated by marketers in a time frame where the units of social system accept and use the commercialized innovation. The diffusion process in particular which highlights the rate and degree of adoption is affected by internal and external factors working in the economy. Rogers (2003) indicated that diffusion of technology can be studied through an S shaped curve which is studied through parameters like innovation, adopters, communication channels, time and social system.
Figure 1: Diffusion of Innivations according to Rogers (1969) (Source: https://en.wikipedia.org/wiki/File:Diffusion_of_ideas.svg)
Rogers divided the market on the basis of interest shown by consumers towards an innovation. He highlighted that the market is divided in five distinct category namely (i) Innovators, (ii) Early Adopters, (iii) Early Majority, (iv) Late Majority and (v) Laggards. Researchers, academicians and practitioners over the years have tried to understand the concepts of adoption and diffusion with the help of various models. Bass (1969) propounded a model which indicated that adopters can be classified in two categories namely (i) innovators and (ii) imitators. Further the model suggested that diffusion of innovation depends on the extent of innovativeness and the rate of imitation amongst adaptors in market.
Figure 2: Bass Diffusion Model (Source: https://en.wikipedia.org/wiki/File:Bass_diffusion_model.svg)
Further Kano et. al (1984) classifies the customer requirements into four categories: Must-Be, One-dimensional, Attractive and Neutral. Kano model studies satisfaction and dissatisfaction towards presence and absence of an innovative feature.
Figure 3: Kano’s Model of Customer Satisfaction (https://en.wikipedia.org/wiki/File:Kano_model_showing_transition_over_time.png
Further customers can be grouped on the basis of their response into adopter categories. The marketers must analyze the attributes the presence of which will lead to satisfaction or dissatisfaction amongst customers. The attributes need to be assessed and the marketers must try to practically fix the operational aspects of implementation of innovation demanded by the customers.
2.1 Factors Affecting Adoption and Diffusion of Innovation in Market
The researchers have tried to analyze the adoption and diffusion process using the models suggested by various researchers across globe. Sahin (2006) reviewed the Rogers’ Innovation diffusion model to assess the usage of this model in understanding technology diffusion in an economy. She concluded that Rogers’ Model is a widely used model to study diffusion related with technology innovation. Her study concluded that knowledge of innovation and persuasion by the marketers will lead to better diffusion of innovation. Isleem (2003) studied the level of computer usage for instructional purposes by faculties of Ohio public school. Her study concluded that teachers perceived that access to technology and attitude towards computers are basic antecedents which lead to diffusion of technology amongst them. Further Medlin (2001) highlighted that diffusion of innovation is shaped by social, personal and organizational motivational factors which forces them to accept or reject an innovation. The study further emphasized that opinion of reference group, infrastructural support of organization and personal interest for better performance and improved efficiency motivates an individual to adopt a technology. A host of studies have also been conducted to understand the characteristics of early adaptors in market. Jacobson (1998) highlighted that early adopters are able to comprehend the relative advantage, related with an innovation better in comparison to other customers and are more compatible with the new innovation due to their need for higher self efficacy. Bass (1969) mathematically established that current purchase in market is the linear function of prior purchases made in the market by a consumer. Bass studied diffusion of innovation against time and found that there are only two categories of customers in the markets namely innovators and imitators. The innovators are basically early adaptors who had early patronized new technologies in form of purchases. Robinson and Lakhani (1975) indicated that price of product is the major decision variable which influences adoption and diffusion of product and services in market. The price of the product exponentially effects the adoption and diffusion in almost all categories. Kamakura and Balasubramanian (1988) further added factors like price index, population growth and product replacement parameters as factors which affect the adoption and diffusion in an economy. Kalish (1985) highlighted that adoption and diffusion of new product can be studied in two levels (i) diffusion of awareness and (ii) adoption of product. The first stage is represented by cumulative sale of product, potential product market, price of product, advertising of product and awareness of product. The second stage of adoption and diffusion is dependent upon cumulative sales, initial potential market, and the information about price and new product provided by initial adopters. Horsky and Simon (1983) opined that initial sales is the result of advertising at a point of time, effectiveness of advertising, cumulative sales and market potential.
3. Research Methodology
The researchers studied the adoption and diffusion of innovation of Wholesalebox service amongst retailers and wholesalers in Raipur City. Wholesalebox is an online web platform for buying and selling of mainly textile materials started by a group of technology and business experts. The researchers identified four unique services features offered by Wholesalebox, namely, single platform for buying and selling online (F-1), cost reduction on procurement of order (F-2), complete marketing support (F-3), drop-shipping (can sell products not in stock) (F-4). Than researchers prepared a structured questionnaire to study adoption and diffusion of innovation as per the framework suggested by Kano. Every service feature was containing two sets of questions in functional and dysfunctional form. Functional form was seeking respondents’ opinion if the particular feature is present and dysfunctional form was seeking their opinion if the particular feature is absent or not available. The data was collected from 80 retailers and 20 wholesalers operating in biggest cloth market of Raipur. The data was collected through a questionnaire and analyzed with the help of KANO model. After getting respondents response about innovative services feature of Wholesalebox the researchers conducted structural equation modeling to study respondents online shopping behavior. The researchers formulated the following hypothesis:
H1: There is significant relationship between merchant factors (MF) and the respondents’ intention for web-shopping (Intention).
H2: There is significant relationship between website factors (WF) and the respondents’ intention for web-shopping (Intention).
H3: There is significant relationship between the respondents’ intention for web-shopping (Intention) and their online-shopping behavior (OSB).
H4: There is significant relationship between online-shopping behavior (OSB) and frequency of online shopping (F).
H5: There is significant relationship between online-shopping behavior (OSB) and expenditure during online shopping (Ex).
H6: There is significant relationship between online-shopping behavior (OSB) and buying product online (PB).
H7: There is significant relationship between online-shopping behavior (OSB) and selling product online (PS).
4. Data Analysis and Interpretation
4.1 Kano Analysis
The researchers made a comprehensive analysis of retailers’ response about innovative services features offered by Wholesalebox and extent of their satisfaction with these services features using Kano evaluation table. Table no. I shows scheme of categorization of respondents after evaluating their response for functional and dysfunctional form of a question with respect to a particular service feature.
Table No. I: Categories of Attribute based on Kano Model
As per the methodology suggested by Kano the response of retailers are summarized in to different categories as shown in Table no. II along with satisfaction and dissatisfaction score.
Table No. II: Respondents Opinion about Innovative Features of Wholesalebox
Feature one (F-1) and four (F-4) are found in “attractive category” with 71% and 79% score. If they are not present, dissatisfaction is negligible 0.122 & 0.14 and if they are present degree of satisfaction is high 0.755 & 0.85, meaning respondents are satisfied when this service feature is present but in case of absence they have no feeling. Feature two (F-2) is found in “one dimensional” category with 78% score. It means respondents are satisfied if this service feature is present and dissatisfied in case of absence. Feature three (F-3) is found in “attractive category” with a score of 42%. It is also reveals that this service feature has a significant score of 34% in “must be” category. This shows that if this service feature is absent dissatisfaction is significant (0.64) and incase of presence of this service feature satisfaction is 0.62, meaning respondents are slowly migrating towards “must be” category.
Figure 4: Satisfaction Potential of Services Features of Wholesalebox (Source: Survey Data)
Figure 4, shows the set of service features, with the potential for dissatisfaction on the left and the potential for satisfaction on the right. It also reveals that if service feature two (F-2) and service feature three (F-3) are not included in the Wholesalebox they may have greatest potential of dissatisfaction. All the service features have almost similar potential for satisfaction on the basis of analysis.
Figure 5: Adopter Categories for Services/ features of Wholesalebox (Source: Survey Data)
Respondents whose responses fall in one dimensional category and must be category belong to “First Adopters” and are likely to avail services of Wholesalebox in near future. First Adopter category includes 12% respondents for service feature one (F-1), 87% for service feature two (F-2), 54% for service feature three (F-3), 14% for service feature four (F-4). Respondents whose responses fall in attractive category belong to “Late Adopters,” they are interested in the services features of Wholesalebox but will delay their decision to avail until its popularization. Late Adopter category includes 71% respondents for service feature one (F-1), 10% for service feature two (F-2), 42% for service feature three (F-3), 79% for service feature four (F-4). Respondents whose responses fall in indifferent category belong to “Non Adopters,” they are not interested in the core services features of Wholesalebox and will not use this in the foreseeable future. Non Adopter category includes 15% respondents for service feature one (F-1), 3% for service feature two (F-2), 4% for service feature three (F-3), 4% for service feature four (F-4). Responses of questionable and reverse category constitute error hence not included in the analysis.
4.2 Structural Equation Modelling
The data in this study was considered normal on the basis of mean scores (above the midpoint of two), standard deviation range (between .43 to .67), skew index (between -.31 to .29), kurtosis index (between -.58 to .26). All these values are under recommended guidelines (Kline, 2005) and data is found fit for structural equation modelling. Various reliability tests of the structural model were conducted by the researchers. Construct validity of the model was tested which includes factor loadings, convergent validity, composite reliability and discriminant validity. Composite reliability of all construct variables were above 0.74 which is indicative of good scale reliability as per the rule of thumb suggested Hair et al (2010); Nunnally and Bernstein (1994). Discriminant validity of all the constructs were above .83 and average variance extracted (AVE) were between .67 to .85 as suggested by Hair et al. (1998). All these values met the recommended guidelines and indicted that constructs in this study are adequate. According to the suggestions of Andreson and Gerbing (1992) the researchers first conducted confirmatory factor analysis (CFA) to identify goodness-of-fit index for the variables than hypothesized model was tested with structural equation modeling (SEM) using AMOS 21 software to identify the relationship between constructs. CFA results validated the distinctiveness of the constructs and revealed that the hypothesized model fits the data adequately (Chi square = 37.427; df = 24; GFI = .916; NFI = .903; IFI = .938; TLI = .927; CFI = .916; RMSEA = .64) after imposing constraints as modification indices (Steiger, 1990). Chi square / df ratio is less than 3.00 and CFI and other incremental fit indices are more than above 0.90 then satisfactory model fit can be inferred (Kline, 2005). RMSEA value also shows model fit. RMSEA value 0.64 indicates reasonable fit. RMSEA value should be .08 or lower to indicate good model fit (Browne and Cudeck, 1992).
Figure 6: Standardised Structural Model Tested by Researchers
Table No. III: Hypothesis Testing Results and Structural Model estimates
It can be inferred from table no. III that all the hypothesis are supported by the statistics as path coefficient between the constructs are more than 0.20 as suggested by Hair et al. (2010) and critical ratios are also above +1.96. Thus it can also be interpreted from the results that merchant factor, website factor together formulate respondents intention for web-shopping which impacts their online shopping behaviour which is inclusive of frequency of online shopping, expenditure during online shopping, buying product online and selling product online.
5. Managerial Implications of the Study
The growth of technology acceptance in recent past has modeled ways for new internet based products and services. Integration of technology for findings solutions related with business problems and minimizing efforts related with day to day life has led to adoption and diffusion of technology based services. The managers and marketers must devote time to find existing gaps related with need and wants of the market and introduce products and services. The firm specific characteristics or market demanded characteristics can define an innovative product and increases its market potential. It is essential for marketers to analyze and understand the factors which will lead to innovation and its adoption and diffusion. The textile marketers in Raipur city indicated that features like finding ready stock for procurement without travelling to distant locations has lowered their operational cost and increased their return on investment. A further facility like drop shopping is helping them sell products which they don’t have on ready availability but is demanded by customer with the help of interaction made with their wholesaler through web interface. This facility will help them maintain their customer base and will avoid retailer switching by customers. Further retailers also demanded functional benefits like expert support and cost reduction as an essential requirement from a web interface. The retailers and wholesalers in Raipur city wanted innovative features like dropshipping, single platform, cost reduction and consumer support from the web based interface for wholesalers and retailers.
Figure 7: Adoption Diffusion Cycle for Web based Interface for Wholesale and Retail Buying
Further for adoption and diffusion it is necessary for the web platform to create awareness regarding the web based services through promotion mix. Further the customer support executives need to educate the customers regarding the innovative features of the service and develop benevolence for the services. It is also essential for the web based interface to continuously develop competence for providing high end services to the tech savvy retailers who have understood that future belongs to virtual markets. The continuous interaction between the buyers and sellers on the web based interface will help in development of attitude and trust formation for web interface and will motivate them for repeat purchases. In market Purchase intention is related with willingness to use a service, consistency with the price between the purchaser and seller. The marketers must try to match the price perception with benefits and draw willingness for repeat purchases. A market research survey must be conducted to discuss the characters related innovators and imitators existing in the market. The rate of adoption and diffusion of web based interface by retailers and wholesalers will increase sale of products and services by increasing the volume of sale by procurement of wide variety at low cost.
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Table No. I: Categories of Attribute based on Kano Model
Table No. II: Respondents Opinion about Innovative Features of Wholesalebox
Table No. III: Hypothesis Testing Results and Structural Model estimates
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