hbr case study

1. ADOPTION OF PAYMENT
SYSTEMS IN TEN COUNTRIESA CASE STUDY OF DIFFUSSION
OF INNOVATION
GROUP MEMBERSAARUSHI JAIN : SMBA12001
SHIVAM GOYAL : SMBA12029
ABHIMANYU JATANI : SMBA12039
GEORGIE JACOB : SMBA12052
MANOJIT SASMAL : SMBA12057
YOGESH SINGLA : SMBA12077

2. CASE INTRODUCTION
 Previous adoptions
 Consumer personality trait (Innovativeness)
 Brief about adoption of various payment systems
in different countries
 Discussing adoption pattern using various
hypothesis and research discussed in the case

3. LITERATURE REVIEW
DIFFUSSION OF INNOVATION
A theory that explains how, why and at what rate
new ideas and technology spread through cultures.
2 stages included are as follows DIFFUSSION PROCESSIt is a macro process concerned with the spread of a
new product from its source to the consuming
public. It is concerned with how innovation spreads.
 ADOPTION PROCESSIt is a micro process that focuses on the stages
through which an individual consumer passes when
deciding to accept or reject a new product.
Consumers engage themselves in extensive

4. DIFFUSSION PROCESS

5. INNOVATION
 Products are constantly evolving.
 Companies are making innovations on the
previously developed models for easy adaptability
by the market.
 Here, we talk about the payment systems adoption
from a list of countries during 1988-1996.

6.  Relative advantageExpresses to what extent the new product is better
then the one its replacing
 CompatibilityLevel of innovation which fits into the specific
society
 ComplexityIt is the extent of how difficult it is for an adopter to
understand and use an innovation
 DivisibilityDegree to which a new product is capable of being
tried on a limited basis
 CommunicabilityEase with which a product’s benefits can be
observed, imagined or described to potential
consumer.

7. INNOVATION:
 Firm oriented innovationTreats the newness of the product from the
perspective of the company producing or marketing
it.
 Product oriented innovationFocuses on the feature inherent in the product itself
and on the effects these features are like have on
consumers established uses patterns.
- Continuous innovation
- Dynamically continuous innovation
- Discontinuous innovation

8.  Market oriented innovationJudges the newness of the product in terms of how
much exposure consumer has to a new product.
 Consumer oriented innovationNewness is based on the consumer perception of
the product rather than the physical features or the
market realities.

9. CHANNELS OF COMMUNICATION:
 How quickly an innovation spreads through the
market depends on the communication between
marketer and consumer as well as communication
among the consumers.
 Correct communication channels used during the
process of diffusion, oriented towards behavior and
preferences of the target category of adopters.
 Impersonal sources like advertising and press
coverage and inter personal sources like sales
people.
 Internet, TV, Radio, banners, SMS, Newspapers,
e-commerce.

10. SOCIAL SYSTEM:
Diffusion of new product usually takes place in a
social setting.
Social system = Physical + Social + Cultural
environment.
May influence entire society to accept or reject the
new product.
Characteristics of Modern Social System Positive attitude of members of the social towards
changes
 Progressive technologies
 Positive attitude towards science and education
 High level of homogeneity
 Rational relationships then emotional ones

11. TIME:
 Proper timing of introduction of innovation into the
market is very important.
 Time is the main constituent of diffusion process.
1. This is the total time that elapses between
consumers initial awareness of the new products
and the point at which he/she accepts/rejects it.
2. It is important because the average time the
consumer takes to adopt a new product will be
the precursor to the overall length of time it will
take for widespread option.

12. ADOPTION PROCESS

13. ADOPTER CATEGORIES
 Innovators
 Early adopters
 Early majority
 Late majority
 Laggards

14. RATE OF ADOPTION
How long it takes for the consumers of the social
system to adopt the new product.
SIGMOID CURVE (S Curve)With successive groups of consumers adopting the
new technology, its market share will eventually
reach the saturation level.
F(t)= Introduction of the innovation
t= Time lapsed since the innovation
B= Reflex speed of adoption
A= Constant reflecting the location

15. PROBLEM DEFINITION
 MANAGEMENT DECISION PROBLEM:
Understanding the rate of adoption of Smart Cards
among consumers.
 MANAGEMENT DECISION PROBLEM:
a. Effect of Adoption of previous payment systems
of new innovations.
b. Estimation of external and internal influences
from the social aspects of payment systems.

16. OBJECTIVE OF THE ANALYSIS
To understand the rate of adoption of various
payments systems that are existing with
respect to diffusion of innovation.

17. THE EXISTING PAYMENT
SYSTEMS
 CHEQUE:
A cheque is a document that orders a payment of
money from a bank account. The drawer writes the
various details including the monetary amount, date,
and a payee on the cheque, and signs it, ordering
their bank, known as the drawee, to pay that person
or company the amount of money stated.

18.  VISA:
A credit card is a payment card issued to users as a
system of payment. It allows the cardholder to pay
for goods and services based on the holder's
promise to pay for them.

19.  ATM:
An automated teller machine (ATM) is an electronic
telecommunications device that enables the clients
of a financial institution to perform financial
transactions without the need for a cashier, human
clerk or bank teller.

20.  BANK CARD:
A Bank Card is a plastic card issues by a bank to its
clients that may perform one or more of the
following servicesa. ATM Card
b. Debit Card
c. Credit Card

21.  SMART CARD:
A smart card, chip card, or integrated circuit card
(ICC) is any pocket-sized card with embedded
integrated circuits.

22. COUNTRIES STUDIED
1. Belgium
2. Canada
3. France
4. Italy
5. The Netherlands
6. Portugal
7. Spain
8. USA
9. Sweden
10. Switzerland

23. EXPLORATORY RESEARCH
SECONDARY DATA RESOURCES
GENERAL
BUSINESS
GOVERNMENT
SOURCES:
SOURCES:
Retail banker
Statistical yearbooks,
International,
Banks of international
Nederlandse Bank,
settlements
MasterCards, VISA
SAMPLE SIZE:
100/CountryCheque
100/CountryCredit cards
1000/CountryATM

24. H1: The speed of adoption(B) of a recent
payment innovation will be higher than that
of past innovations.
Thus, confirms

25. H2: The internal influence (q) on the speed
of adoption of payment systems is higher
than the external influence (p).
Thus, confirms

26. H3: The innovation coefficients (p)
regarding different innovative payment
systems are positively correlated across
countries.
Thus, rejects

27. H4: The level of adoption of the current
systems X at a time t is positively related
to the speed of adoption of a new payment
system Y introduced at a time t.
Thus, confirms

28. CONCLUSION
 Adoption of newly evolved payment systems is
accepted quickly based on adoption rate of the
predecessor.
 Adoption process of payment system is mainly
driven by internal influencer q (social learning).
 The external influencer had less or no impact of
the rate of adoption.
 Marketing manager can develop strategies to
develop adoption rate by practicing social learning
through word of mouth, reference group & social
media.

29. THANK YOU!!!