Essay: innovative automotive technology diffusion

Chapter 1-Introduction

1.1 Overview

The challenges faced by today’s auto industries are on an exceptional scale. Globalisation, the pace of technological change and consumer demand has affected the style in which businesses are carried out. Out of the lot, fore mostly, gaining attention of the consumer has been found toughest and crucial; especially when huge investments were made towards research and development (basically on innovation). Porter (1998) has mentioned that one of the key factors for an industry’s success comes from certain specific competitive advantages such as innovative capabilities. Innovation is a one player game – where the consumer who plays can change the rules by the way they accept an innovation that has been introduced into the market. Efforts have been made by several companies to understand the ways in which an innovation can be translated effectively into the market and so forth to keep it sustaining (Stiff, 2006). This has actually motivated the study to an interesting area and investigated whether the consumer really appreciated and understood the innovation before and after the purchase of an automobile.

The case has been taken in a gradual process of understanding the industry, technology and later on moving towards consumer oriented theories. This study has examined the consumer acceptance of a technology and theoretical frame works by Roger (1995) have also been discussed. Interest in the topic to study on consumer’s take on innovation also came mainly because of the intense competition within the industry and also due to the state of the economy being challenged during this crisis time. Growth, being an important vibrant process of managing for innovation, has to be understood and prepared for by the company (Ancona, et al., 1999).

Product innovation has been a trademark of the auto industry since the first car was built. It was indeed innovations in the internal combustion engine dating back as far as 1806 that credited Karl Benz with the invention of the first automobile in 1885. Today, the automotive industry is under terrific pressure and never seen before downfall of companies are seen to occur (http://uk.reuters.com, 14 June 2009). As a result, innovation continues to be on the minds of global CEOs (Chief Executive Officers) as a way to stay ahead of the curve or simply to survive. This dissertation proved that the innovation diffusion has no affect due to lack of consumer understanding on innovation. The final analysis has been able to determine this as a fact.

1.1 Aims and Objectives

The main aim of this study was to examine the extent to which innovative automotive technology diffusion has been impacted by the consumer in UK’s automotive market.

To pursue the aim, a number of objectives were devised, which are as follows:

1. To discover how consumer was able to access innovation and to what level it educated them.

2. To discover if consumer gender will impact on innovation acceptance and diffusion in the auto market.

3. To discover whether the consumers who had accepted the technological innovation valued it high against money.

1.2 Research Justification

Research on Innovation Adoption has been the most considered topic by many academics, economists and business managements not only for auto industries but for several other disciplines (Donnelly, Mellahi and Morris, 2002). The specific objectives framed for this dissertation had made it an exclusive work for studies conducted in the Innovation context. All the more, the subject of consumer acceptance of technological innovations has not been adequately surveyed. On learning the issue on consumer acceptance of innovation, it was noted that a large number of the innovations have been disregarded by the consumer. Rejection of an innovation during this time of crisis is too expensive. Consumer decisions were learnt as a result of many factors. But, ideally information to the consumer determines successful deployment of innovation (Ancona, et al., 1999). It was understood from many authors that consumer unawareness has lowered acceptance of technological innovations. So this research would be encouraging for marketing and advertising professionals (advertising and promotion) to consider in the line of opening new avenues for consumers to understand innovation in a new and educational manner. The main limitation of the research was that only a sample of eighty was taken from my church in North West London. This cannot obviously determine the response of a whole nation. Hence, it has to be noted that this research has enabled to impart only a vague figure against the actual demographics.

1.3 Research Approach

The research was grounded on the theory of innovation diffusion that consumer decides innovation acceptance and diffusion and gradually the research progressed into accumulating quantitative data and later analysis of the data was done. The methodology chosen for gathering quantitative data was through a survey, which made possible the collection of valuable responses from a certain number of people in order to build context and create an understanding of the study (Creswell, 2003). The results were then analysed so as to determine the relation between consumer acceptance and innovation adoption. This information was then synthesized with existing research and theory in order to provide an examination of the rationale behind innovation’s success as well as providing support for these observations from the existing literature.

1.4 Research outline

This chapter introduced the subject matter and examined the reasons for studying the issue at hand, which included adding value to the automobile industry by providing an understanding of the reasons for success or failure and value additions to the industry by verifying the current innovation diffusion theory. It described the aims and objectives as well as providing a brief overview of the intended outcomes of the paper and an examination of the intended outcomes. The following chapter presents a literature review that initially discuses and later examines the issues concerning the significance of the UK Automobile Industry, Product variety, theories on innovation diffusion to the product life cycle. Chapter 3 provides an in-depth view of the methodology used, while Chapter 4 presents the results of the analysis by using SPSS (a statistical software tool). Chapter 5 summarizes the paper and provides areas of interest for future research.

Chapter 2-Literature Review

The research topic was a result of gradual reading on various topics relating to automotive industry, innovation, innovation diffusion and consumer oriented theories. This chapter initially has discussed on the UK auto industry’s performance and influence on the national economy over the years. The interest was then diverted in analysis the effectiveness of technological innovation. Theories concerning innovation and innovation diffusion were hence taken into consideration to find any ambiguity. With a rough picture on the significance of consumer in innovation diffusion further study was done in the line of consumer related theories. The study was culminated with research hypothesis and later based on the hypothesis research objectives were framed.

2.1 UK Auto industry over the recent years

The fight to come up had been a long road of struggle for the UK car industry since the recession in 2008 (Economic web institutes. http://www.economicswebinstitute.org/essays/carthai.pdf. 20 August 2009). Considering the volume of production since 2000 the UK has been able to acquire its place as 4th Within the Europe, achieving to about 8.8% of European output in 2007, down from 9.6% in 2000 (Holweg, 2009). By the year 2008, the UK had produced 1,649,515 vehicles taking its place to 12th in the global output league (NAIGT, 2008). This represents 2.4% of global output in terms of number of vehicles (Holweg, 2009). Only Germany, France and Italy have indigenous volume vehicle makers, with all other nations reliant on inward investment for their volume vehicle plants, supplemented in some cases by niche products for local markets (NAIGT, 2008).

The significance of this industry in terms of its contribution to the national economy has been immense. There has been many ways by which the economic contribution of this industry sector could be assessed to the wider economy, such as employment or contribution to GDP (Berr Automotive sector. http://www.berr.gov.uk/, 25 June 2009). The chosen way to estimate economic contribution was by using value added data in the manufacturing of vehicles and components as it was a direct method of understanding the true value to the national economy of what was potentially offshorable. Therefore, the following data reflect only the value-added in manufacturing, and do not take into account sales and services or do they reflect supporting industries.

By the standard HMG definition, the UK auto industry has been employing 194,000 people in 3,300 businesses; this has generated approximately �10.2bn value added in 2007 (Berr Automotive sector. http: //www.berr.gov.uk/. 25 June 2009). The figures suggest that 5.9% of UK manufacturing employment has been accounted directly by the auto industry, 6.4% of gross value added, and accounts for around 12% of UK manufactured exports, and 13% of manufactured imports. The vehicle production in the year 2008 was just under 1.65 million units, down 5.8% as the industry started to respond to a sharp downturn in vehicle markets worldwide. This included 1,446,619 cars (down 5.7%) and 202,896 commercial vehicles (down 5.9%). In the export list: 77% of the cars and 61% of the commercial vehicles were exported (Berr Automotive sector. http: //www.berr.gov.uk/. 25 June 2009).

Hence, manufacturing sector alone generates around 14% of the total UK GVA and provides around 10% of total UK employment. It follows that the automotive manufacturing sector directly represents around 0.8% of the UK economy in terms of value added, and directly provides around 0.6% of total UK employment. This does not include goods and services bought in: hence the true contribution to the economy was probably in the order of two to three times these figures (Berr Automotive sector. http: //www.berr.gov.uk/. 25 June 2009).

According to the official statistic (refer to figure 1.1) there has been a total confirmation of 753 companies in the vehicles and engine sector. Out of these companies, 20 of them account for 90% of sector sales and 84% of sector employment (This Money news article – http: //www.thisismoney.co.uk. 23 June 2009). The data was not entirely reliable, as some companies divide their operations in separate reports, whilst others put everything together. Figures from Ford include the Southampton van plant, engine plants at Dagenham and Bridgend, and the Dunton research and development facility. Meanwhile Vauxhall’s accounts include Ellesmere Port, and their UK sales operation, but their van manufacturing plant (IBC) has been reported separately (http: //findarticles.com. 23 June 2009). The chart gives a good indication of the relative values of the businesses though comparisons have not been perfect. The size shown in the chart was in terms of vehicle output. The unit output and company sales do not correlate exactly by value, as there shows differences in the scope of the operations as well as differences in value of the product. In terms of vehicle output over time, the following chart shows the UK passenger car output since 1940 (http: //www.thisismoney.co.uk. 23 June 2009). The decline in the 1970s has been due to the bankruptcy and subsequent nationalisation of British Leyland, while the increase in the 1980s and 1990s has been largely followed after the arrival of the Japanese transplants. The decline since 2000 was related to the downfall of MG Rover and the consequences of the plant closures by GM Luton and Ford (Auto business in the 1990’s. http://findarticles.com/p/articles/ mi_m1038/is_n1_v33/ai_8880725. 26 June 2009.).

As a result, the regular claims that the UK auto industry has been providing a stable output of 1.6 million units had misplaced: the UK has in fact seen a great deal of volatility of outputs, and the fact that the production level was considerably below its peak in the 1960s and 1970s (Auto business in the 1990’s. http://findarticles.com/p/articles/ mi_m1038/is_n1_v33/ai_8880725. 26 June 2009.).

The data for the commercial sector was commonly included in the motor vehicles industry; the figure 1.2 lays out the industry in terms of output making it distinct from the passenger car sector. In volume terms (figure 1.3), the panel vans made by Ford and IBC dominate, but Leyland Trucks were about half the size of the IBC operation in terms of sales and employment. Unit output was less than 20% of IBC’s, but value per unit was much higher (Auto business in the 1990’s. http://findarticles.com/p/articles/ mi_m1038/is_n1_v33/ai_8880725. 26 June 2009.).

This information suffices that this industry has an essential role in the economy and certainly there should be scope in making improvements with the industry internally or externally. Below, some facts had been captured to find out the image innovation in the industry in terms of technology and checked its deliverance in achieving a market specific production.

2.2 Innovation approaches and achievements in the industry

The data on UK auto industry’s Research and Development has been extracted from the DTI research and design scoreboard. It has been noted that one aerospace company was recorded in the auto sector and several auto companies were found elsewhere in the document. Having these amendments, it was supposed that at least 30 auto related companies were operating in UK top 850 companies as defined in the Scoreboard. UK automotive research and design was dominated by Ford (Dunton) and Land Rover (figures include Jaguar).

In this figure 1.4 for GKN probably includes some aerospace Research and design. The data presented here has been extracted from company accounts, using the company list identified in the recently published Design Engineering SCE. The largest player was Ricardo. Lotus figures include the car business and figures don’t enable the Design Engineering contribution to be separated out from car manufacturing (refer figure 1.5).

Product variety was defined as the number of vehicle permutations on hand to the consumer of a particular model. This variety was generally market-specific; as all major markets have diverse standard specifications (for instance the air-conditioning might be offered as standard in the UK, but it may not be the same for Germany, and so on.). The study on product variety has not been done in much detail, even though preliminary studies have been carried out by McDuffie et al (1996) or Clark and Fujimoto (1991), who had proposed initial metrics on how to measure variety and complexity in the auto industry. Their works were mainly focused on the actual assembly operation, while ICDP (1998) showed that the real impact of product variety was on the vehicle distribution strategies. It was also observed that the main impact of variety happens when the variety offered was more, and it may be least expected that the consumer will find the right vehicle amongst finished car stock. Hence the more variety offered, the less successful sales sourcing from stock will work, or the higher the discounting risk, whereby the consumer was sold a vehicle which compromises on his original specification, using sales incentives. The variety may be measured on the number of body styles, engines, and paint colours, and so on offered over a particular vehicle. The choice of the consumer depends on the level of comprehension of technological ideas that has been incorporated by the manufacturer.

All of this shows that the development of the industry was directly relative to the economic stability and growth (refer figure 1.6) Here lies an important fact that a major share of these figures can be positively changed through Innovation in the product rightly. This in fact was a broad perspective. Concerning this work the focus has been on launching product innovation effectively.

2.4 Technology Innovation

Before proceeding too much further it will be worth defining some of the terms. Here, by innovation, it was essentially talking about change and the focus as mentioned earlier in the research objectives lies particularly upon technological change. As Tidd, Bessant and Pavitt (2002) states that changes were of two kinds: (1) changes in the things (products or services) which an organisation renders, and (2) changes in the ways in which things were created and delivered. This was traditionally termed as product and process innovation (cited in Tidd, Bessant and Pavitt, 2002). As mentioned earlier, the area under discussion on innovation here was product innovation (which concerns with the technology added into the (automobile) product). Basically, technology innovation has four stages towards its successful diffusion.

This part of the chapter has discussions on issues in the automotive technology and also has briefed the latest auto technology itself. An article (The Guardian Environment. http://www.guardian.co.uk/environment/2009/oct/12/ electric-cars-tackle-climate-change. 12 October 2009).on automotive technology has been noticed focusing on today’s climate threatening challenges faced by the UK government regulators. The government has been backing up automotive industries in introducing electric cars since 2005. These cars have been tested success for its fuel efficient performance and eco-friendliness. Ever since its induction to the UK market the sales has been booming until 2007 as the recession had struck the country during that period, writes the author. More and more consumers are adapting to these new technologies not because they completely understood them, it’s because the government itself is pushing the technology into the citizens. Some of the latest technologies that have been introduced in the automobiles were the EPS (Electric Power Steering), ABS (Anti-lock Braking System), ESC (Electronic Stability Control), MPFI (Multi Point Fuel Injection) for petrol cars, CRDI (Common Rail Diesel Injection) for diesel vehicles (Berr Automotive sector -http://www.berr.gov.uk/ whatwedo/ sectors/automotive/naigt/tor/ page45613.html, 25 June 2009).

2.5 General Innovation Diffusion Theory

A brief background and overview of general diffusion theory has been provided in this section. Here the reader must consider the most important fact in discussing diffusion theory that it hasn’t been one, well-defined, unified, and comprehensive theory. A large number of theories, depending on the variety of disciplines, each focusing on a different element of the innovation process, combine to create a meta-theory of diffusion.

The most likely reason why there wasn’t a unified theory of diffusion could be due to the fact that the study of innovation diffusion was a rather new field. Rogers (1995) indicates that the study conducted by Ryan and Gross in the year 1943 at Iowa State University provided the beginning of contemporary diffusion research. The Ryan and Gross (1943) research in the field of rural sociology had interviews with adopters of an innovation and it examined a number of factors related to adoption. The interview-based methodology used in the Ryan and Gross study has remained the predominant diffusion research methodology ever since (Rogers, 1995). A number of researchers from rural sociology (Fliegel and Kivlin, 1962) and other disciplines like auto industry (Weinstein, 1986) have built on the ‘Ryan and Gross’ work to conduct studies and develop theories related to the diffusion of innovations.

Everett M. Rogers has been noted as the researcher who has done the most to synthesize all of the most significant findings and compelling theories related to diffusion. The frame work of the diffusion theory has been captured from Rogers’ book Diffusion of Innovations, first published in 1960, and now in its fourth edition (Rogers, 1995) has been cited as the closest any researcher has come to presenting a unified theory of diffusion. Four of the theories discussed by Rogers (1995) were among the most widely-used theories of diffusion: Innovation Decision Process; Individual Innovativeness; Rate of Adoption; and Perceived Attributes.

2.5.1 Innovation Decision Process

According to the Innovation Decision Process theory by Rogers (1995), it states that diffusion was a process that occurs over time and can be seen as having five distinct stages. The stages in the process are Knowledge, Persuasion, Decision, Implementation, and Confirmation. In this theory, potential adopters of an innovation shall learn about the innovation, be in no doubt as to the qualities of the innovation, make a decision to adopt, put into practice the innovation, and validate (reaffirm or reject) the decision to adopt the innovation. This theory has been so widely cited in the product technology literature that Sachs (1993) writes, somewhat derisively, “after looking at [the literature] in our field, one might get the impression that the only important thing we need to know about how to encourage the adoption of innovations or how to be better change agents was that there are five stages to the innovation adoption process “. In the book Sachs correctly concluded that even after many others significant theories of innovation diffusion were overlooked, the Innovation Decision Process theory remains among the most useful and well known. The various stages in the Innovation Decision Process follow.

2.5.2 Individual Innovativeness

The Individual Innovativeness theory (Rogers, 1995) states individuals who were inclined to being innovative will adopt an innovation earlier than those who were less inclined. In Figure 1.7 Individual Innovativeness shows the bell shaped distribution and the percentage of potential adapters theorized to fall into its respective category. On one extreme of the distribution were the Innovators. Innovators, in this theory, have been considered as the risk takers and pioneers who adopt an innovation very early in the diffusion process. On the other extreme were the Laggards who resist adopting an innovation until rather late in the diffusion process, if ever (further discussed in chapter 2.5 Product Life Cycle).

2.5.3 Rate of Adoption (S-curve)

The third widely-used diffusion theory examined by Rogers (1995) was the theory of Rate of Adoption (or called the S-curve theory). Rate of Adoption theory states that innovations get diffused over time in a pattern that resembles an s-shaped curve. Rate of Adoption theorizes that an innovation goes through a period of slow, gradual growth before experiencing a period of relatively dramatic and rapid growth. An example of how rate of adoption might typically be represented by an s-curve was shown in Figure 1.8. The theory also states that the trend followed by the new product goes through a period of rapid growth, the innovation’s rate of adoption will gradually stabilize and eventually decline.

2.5.4 Perceived Attributes

The Theory of Perceived Attributes (Rogers, 1995) emphasises that potential adopters’ tend to arbitrate an innovation based on their perceptions in regard to five attributes of the innovation. These attributes are:

1. Relative advantage. This was the degree to which potential consumers perceive the innovation as advanced to existing substitutes. In other words it could be seen as the intensity of the penalty or reward when adopting or rejecting the technology. The factors that lead to the conclusion may involve economic profitability, low initial costs, lower perceived risk, and decrease in discomfort, savings in time and effort and immediacy of reward. Anticipatory innovations were slow to diffuse and have a low rate of adoption due to the immediacy of reward factor. Take for instance the seatbelt, it makes sense and should be accepted by the consumer. But if it were just another product, not the one that takes on controversial life and death issue, and where consumers had had the option � based upon its benefits versus its costs � on whether or not to install it in their cars, it probably would have failed long ago. Relative advantage has been found to be positively related to the diffusion rate. A crisis emphasizes relative advantage and quickens its diffusion rate (Rogers, 1995).
2. Compatibility. This was the degree to which potential consumers were ready to accept that the innovation was in tune with their socio-cultural norms or was consistent with existing values, experiences, and needs. The adoption of any new innovation was considered to be impacted by previously introduced ideas. The rate of adoption was influenced by the old idea it supersedes � the more compatible it was with the previous idea, the less of a change it would have. Hence Compatibility has a positive relation to the diffusion rate.
3. Complexity. This was the degree to which the innovation was supposed as difficult to know or use. Complexity was also related to the number of decisions required as well as the number of decisions that must be repeated (Hurter and Rubenstein, 1977). Those that require frequent repeated decisions may be less attractive than those which require one or infrequent decisions. Complexity was hence highly negatively correlated to the rate of diffusion.
4. Trial ability (divisibility). This was the degree of capability of a new product to be tried or tested on a limited basis by consumers. Trial ability was a positively related trait to the rate of diffusion.
5. Observability. This was the degree to which the advantages of a product’s or its attributes can be observed, imagined, or described to other with ease. This was also positively related to the rate of diffusion.

Thus from the theory it was evident that an innovation experiences an increased rate of diffusion if potential adopters perceive that the innovation: 1) Can be tried on a limited basis before adoption; 2) Offers observable results; 3) Has an advantage relative to other innovations (or the status quo); 4) was not overly complex; and 5) Is compatible with existing practices and values. Several other views on this theory that had been cited in other works were simulated in the proceeding chapter 2.6.

2.6 Product Life Cycle

This part of the chapter has listed out the significant reflection of the consumer’s behaviour on the product. It also explains the product life cycle theory and its relation to Innovation. The product life cycle model (refer figure 1.9) helps to analyse the various stages of a product from its introduction to its maturity. This theory can be utilised to make clear the innovation adoption process. According to the theory a product after a period of development was introduced or launched into the market; at various stages of its growth in the market it gains more and more consumers; eventually the market reaches stability and the product becomes mature; next with in a period of time the product would have been overtaken by development and the introduction of superior competitors, during this stage the product position in the market declines and eventually gets withdrawn from the market. However, most products fail in the introduction phase. Others have very cyclical maturity stages where declines see the product promoted to regain consumers.

(1) Introduction

Being the first stage, the pressure does not lie on the need for immediate profit was. Instead a huge emphasis lies on product’s promotion in order to create awareness in the market. Depending on the product’s position against competitors (whether with few or no competitors), a skimming price strategy was employed. In that case there would be a limitation in the quantity of products through few channels of distribution. The categories of consumers were termed as ‘early adopters’ also called as innovators or experimentalists (Rogers, 1995).

(2) Growth

This was where the competitors get attracted to the market and penetrate with very similar offers. At this point products would have reached attained profit and companies would have formed alliances, joint ventures and even take over each other. There would be higher expenditure on advertising and gaining brand loyalty would be the crucial focuses. Market share tends to stabilize. The categories of consumers were termed as ‘early majority’ (Rogers, 1995).

(3) Maturity

This was the third stage of the product life cycle and the products that survived the earlier stages tend to spend longest time in this phase. Sales growth has a decreasing rate and then stabilizes. At this point, manufacturers attempt to differentiate products and brand loyalty stands as the key to achieve this. Competition would become intense and ultimately lead to price-war based competition. After all the pricing fight the market for the product gets saturated. More importance on widespread promotion was given and media was mainly used at a much higher tempo. The categories of consumers were termed as ‘late adopters’ (Rogers, 1995).

(4) Decline

This was the product’s final stage where it has a downturn in the market. For instance more innovative products were introduced or consumer tastes have changed. There was intense price-cutting and many more products were withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting. Even then there were still some consumers who contribute to sales called ‘laggards’ (Rogers, 1995).

The figure 1.7 illustrated and gave bell shape with its base dependent on time. Most of the product decline was faster due to slower diffusion of the product in the market. The pattern formed has been a result of relative behaviour of the consumer. Though innovation diffusion was claimed to be driven by competition by most authors (), it has become a doubt on how much the consumer had perceived about the innovation before and after making a purchase. All of the innovation and innovation diffusion theories has led to inquire more on what would be the consumer’s take on innovation. The next module of this chapter has made discussions in regard to the consumer behaviour in the automotive market.

2.3 Consumer in the Automotive Market

A customer has been described as the person who comes to buy a product where as consumer as the one that actually uses the product (Solomon, 2006). To make ideologies simpler both the customer and consumer has been assumed as one entity – consumer. In this section the character of the consumer has been put on focus. It has always been crucial for market researchers to understand on how the consumer made decisions to buy a product (Solomon, 2006). Buying is not merely purchasing but it has been observed as a process that covered all the stages that a consumer has gone through that made the purchase (Wright, 2006).

2.3.1 The Decision Making Model

The process as given by Solomon (2006) involves the following stages:

• A need is felt which creates a problem to be solved.
• A solution is sought for that problem.
• Alternative solutions are analysed and assessed.
• A decision is made as to which is the best solution to the problem.
• The decision is implemented.
• A review is made of the decision.

At any stage it may be necessary to go back to a previous stage and review earlier thinking. This has been called as a feedback loop. This basic process can be shown as a very simple model in figure 6.1. The major attempt by companies during the whole process has been to win the attention of the consumer and convince them as the provider of their requirement (Wright, 2006).

The Decision-making Unit

According Solomon (2006) consumers could buy as an individual or as a group of people. The set of individual(s), involved in buying have been considered as the Decision-making Unit (DMU). It has been accepted that often a purchase was carried out to meet the requirements of more than one person, which meant that more than one person was involved in the purchasing decision processes (Wright, 2006). The roles have been identified as follows:

• The initiator: the person who brought the idea of buying an item
• The influencer: the person, or people, who shaped the outcome of the decision
• The decider: the person who has the power or authority to make the decision
• The buyer: the person who made the actual purchase
• The user: the person who has eventually used the product

And, of course, in many purchases there were also:

The gatekeeper or the agent: the person who has been known to prevent the decision from being made or made it more difficult, e.g. a receptionist who had prevented a salesperson from seeing a buyer, or a friend who told someone that a product was a waste of money – simply because they never saw the need for it themselves. Although these descriptions were more often used to describe group purchases, the individual purchaser has also played a lot of the “roles” (Wright, 2006). It has been quite interesting to think about what actually makes the buyer buy the product, car in this case. Is it possible that the buyer and later the consumer understood what they had bought? In the next section a study has been done to find out how the consumer decides on their product.

Types of Purchasing

One way of considering the decisions which most consumers took was to classify them broadly as either “new buys” or “repeat buys” (Solomon, 2006). Some of the classifications are given below:

� New Buy Decisions

According to Solomon (2006) the consumer’s new buy decisions may be for items of small value, such as changing your toothpaste or choosing a different food; mostly they would have involved only small amounts of money, but the risk of being dissatisfied exits leaving the outcome not so disastrous. It could also be considered as a consumer who threw away an item because of dislike and accepted that he or she has wasted a tiny part of their resources (Wright, 2006). Some new buys were noticed to be more serious because they involve products which cost more money and would not be thrown away so easily. The grades of this type of buying were many and it has been easily put into an order of importance. It could begin from of clothing, then kitchen equipment, furniture, a car, a holiday; and for some of us, a house is the most expensive new buy item (Solomon, 2006).

� Repeat Buy Decisions

This kind of decision happens when the consumer has bought something they had used previously, they have had the benefit of experience to help them, so they had less difficulty in choosing the product (Wright, 2006). The levels of decision making still may vary depending on the product value range (Wright, 2006). In all these categories, the experience of previous deals will make the decision to buy or not to buy less difficult. This could be a common case of a son who buys a car because of the brand loyalty towards a particular make that his father had preferred.

This was a rather simplistic analysis for marketing purposes, and more light was shed by using a model which was originally introduced by Assael (1987). This asserted that the type, or nature, of purchasing was affected by two variables:

(a) The involvement of the buyer with the product, and

(b) The differences available (between products/brands).

The figure demonstrated the interaction between these variables

Figure 6.2

� Habitual Buying

Habitual buying has been a result of repetitive buying which takes the consumers little to thinking about. Few differences were apparent between products and brands and the consumer allocated little, or low, importance to the purchase (Solomon, 2006). It may be that the consumer has, in the past, considered alternatives and has found “the ideal” (Wright, 2006). The consumer has become happy to stick with their decision and has, in fact, become “loyal” (Solomon, 2006).

� Variety Seeking

This type of purchase happened to involve relatively low importance in the mind of the purchaser; apparently there has been lots of choice and variety for the consumer (Solomon, 2006). If a product was tried and found to be lacking in some aspect, the buyer will simply try another one the next time they buy, or they may actively decide to keep trying different brands to see which is best, e.g. people who drink beer often try different types just as an experiment. Most of the automotive consumers were noticed as seekers of variety in models of car (Solomon, 2006).

� Dissonance Reducing

Dissonance reducing purchasing was the kind of purchasing which was designed to reduce post-purchase “doubt”(Wright, 2006). Because the degree of involvement was high, usually because of value and the item being something which was only bought rarely (e.g. an electric bed), the buyer may have no previous experience to use as a base for comparison in the search process. The same could be considered in the case of automotive technology where in the consumers may or may not be new to it.

If you add this lack of experience to the fact that there were only minor differences between the types of product available, it was easy to see why the buyer needs to ensure that the item he or she bought was good. The search process may therefore be extended. This type of purchasing can also mean that, because there are so few differences in the models or brands available in the market, the actual purchase itself may be made relatively quickly (Wright, 2006). This theory surprised as to how the consumer manages to decide on the various innovations in the market. It clearly puts for a question as to how much the consumer has perceived about a technology and what sources made them to incline to that product or innovation.

Complex Buying

This was the case when consumer has a plenty of options to choose from and purchase has become an extremely hazardous type of purchase for a buyer (Solomon, 2006). If the example of buying a car is taken, the problem could be understood easily. The case was when there was already one make of computer and the buyer was quite happy with it, but now the understanding has outgrown the present model and need another. The new necessity has made it expensive so the buyer will have to make sure he or she got good value for money (Wright, 2006). There has been a lot of advancement in terms of technology with automobiles; the needs would be skewed with respect to the price variations (Solomon, 2006).

Influencing the consumer’s buying behaviour

The main challenge of marketing managers has been to focus in the “people” business (Solomon, 2006). Though their attempt has been to make profits, they were to understand individual and group behaviour both from the internal (supply) and external (demand) points of view (Solomon, 2006).

According to (Solomon, 2006) Behaviour stems from:

* Needs (requirements), and

* Wants (desires).

“It has been said that today’s wants are tomorrow’s needs and a great deal of marketing effort is put into trying to make this the case where buyers are concerned” (Solomon, 2006).

* Needs can be basic (physical) or higher (psychological).

* Wants are “desires”.

It could be said that if behaviour was not understood, marketers were unlikely to be successful in obtaining their objectives and in overcoming conflict.

It would be every manufacturer’s dream to produce products that every buyer in the world wanted to buy, but we know that is impossible simply because buyers are people, and people differ in many ways (Wright, 2006). Marketers therefore have to understand what makes people different from one another, if they want to help the customers to satisfy their needs (Wright, 2006).

There were several factors influencing consumer behaviour, the following model has illustrated some of them:

Cultural

The influences under this heading can be sub-divided into three sections:

� Culture

Under culture were abstract ideas and beliefs, as well as physical artefacts, which were important to a society (Solomon, 2006). The society basically built up the mindset of the buyer and it summarised the learned values and attitudes of a society as a whole (Wright, 2006. For example, the different standards between the Muslim and Christian religions impose different levels of acceptance on certain behaviour and, therefore the same would reflect on purchasing habits. As an individual grows, they would have absorbed and acquired the behavioural norms which were acceptable to their particular society; these inbred beliefs were very strong (Solomon, 2006). It was an accepted fact that the society in which a person lives and has been reared was one of the greatest influences on the final character of that individual (Solomon, 2006).

� Sub-culture

Cultures of all kinds have had their own smaller groups or sub-sections (Wright, 2006). The differences may be based on life style, religion or on belief in some ideal, for example in Spain has the Basque separatists, who were part of the overall culture of Spain but can be regarded in their own right as a sub-culture (Solomon, 2006).

� Social Class

Despite the claims for “classless societies” which have been heard from politicians, class systems have been in existence around the world. Social classes were the “divisions” which a society accepted and they may be based on status, money or education. In the UK the social class system (A, B, C1, C2, D and E), which has been still widely used, was defined on the job of the head of the household but, because of the changes which have taken place in the UK society, this method may not always be an appropriate measure (Solomon, 2006).

Social

The social influences were those headed from family and friends or other reference groups, such as clubs and interest societies. The buyer’s picture on how other people should notice him or her was seen as another concern of the buyer (Solomon, 2006).

For example (illustrated from Solomon (2006)), if father has always bought Rover cars, son may be influenced into buying a Rover when son was made his first car purchase. However, should son be part of a group that has adopted another make of car, e.g. university students who buy Yugo cars as a status symbol or statement, you could be influenced by that attitude in your wish to conform to the “norm” of the group. Once you get your first major job as a manager, though, you may realise that a BMW car would fit your status better than a Yugo and you will make another change.

Personal

This has to be concerned to an individual’s characteristics, which will be age, life style, occupation, wealth and character (Solomon, 2006).

For example, a young man of 21 who enjoys danger is more likely to be attracted to a motor cycle, with flames painted on its side, than another wealthy young man, of the same age, who enjoys the theatre. A lady of 45 will want different clothes from a lady of 25. A company director will have different purchasing expectations from those of a mechanic in a garage. As we move through our lives, we change our purchasing habits according to the prevailing conditions.

Psychological

According to Wilson, Gilligan and Pearson (1992) have identified four psychological characteristics as being important: motivation; perception; learning; and beliefs and attitudes.

� Motivation

This was what driven many to do or want something. It has stemmed from a range of human needs, from basic to higher (Wilson, Gilligan and Pearson, 1992).

Perception

This was how consumers “see” things. Consumers were conditioned to expect certain things and this conditioning means that they took in images but converted them to what was acceptable to their minds. It was their way of organising the information they had taken in each day (Wilson, Gilligan and Pearson, 1992). Two people, who were subjected to the same advertising message, at the same time, may “see” the message in completely different ways. For example, one person at a holiday time-share demonstration saw the salesperson as being very good and knowledgeable on the subject, but another person at the same demonstration saw the same salesperson as being a “slick fast-talker”, who was just interested in taking money (Wilson, Gilligan and Pearson, 1992).

� Learning

Learning has to do with experience (Solomon, 2006). As the consumer leant new innovations or technologies, it would change their levels of expectations so much so that the newly acquired knowledge was met (Solomon, 2006). For example, taking the case of computer games, one would have gradually built up the knowledge until such time as the present machine was not good enough for the user. At the end the user would have purchased a newer version of the computer and this cycle will repeat again and again.

� Beliefs and Attitudes

The dictionary definition of “belief” is “principle, proposition or idea accepted as being true without positive proof“. Belief was understood as a personal label to each individual. Most of the time buyers were convinced through socialisation, learning, etc. that one particular brand was better than another and they prefer to buy that brand until something happens to change their belief.

“Attitude” was defined as being “the way a person views something or behaves towards it, often in an evaluative way” (Solomon, 2006). Hence the consumer was observed to be an influenced buyer when regarded to the attitude towards the item being purchased. For example, you may see an item as being “good value for money” or “cheap and nasty“.

Gender

Many studies have been done to understand the variations in perceptions of innovations. The differentiation of products also began at an early age as well (Solomon, 2006). Early there had been a perception by marketers that men were the decision makers for car purchasing but now the whole perspective has changed (Solomon, 2006). Gender was seen as significant in this study because for both men and women the perception on innovation has been evolving with time (Rogers, 1995). Automotive companies had made product variance based on gender, for example the mini cooper has been noticed as a car for women and so the technical features of the car was also made with much lesser than other cars that most men would prefer like Bentley or Merk.

Age

As discussed earlier on, the consumers’ interest, needs and wants vary in accordance to the age of the consumer. The automotive companies have noticed the luxury segment sales have mostly been taken between the ages 45 to 60 years (Wright, 2006). This signifies that while studying the consumer behaviour, it is essential to know the perception of innovation in regard to specific age groups. Thus more emphasis has been given in studying the behaviour of consumers between various age groups.

2.7 Innovation and the consumer

The most triumphant innovations have been a combination of practicable technological bases, entrepreneurial skills, and knowledge of the needs and wants of the consumers � the innovation triumvirate (Heeler and Hustad, 1980). Out of these three criteria, by a long way the most essential one has been the consumer needs. For a product or service to flourish in the market it has to be significant, have established value and meet precise needs of the consumer. Once this was triggered the innovative process becomes a market opportunity and an entrepreneur who can make out both the market opening and a new product or service that can satisfy it would succeed in the venture (Lancaster and Taylor, 1986). Change in technology was time and again required but in itself was not sufficient; the key to success being the consumer’s need (Rogers, 1971). Most often, however, the marketing mechanism employed was not marketing pull but technological push: first, a new scientific principle was discovered and a novel technology developed (Heeler and Hustad, 1980). Right afterwards it takes to designing a product for a market need which was not yet known or apparent. For instance structuring a better mousetrap does not cause the world to beat a path to your door if there were no mice in the locale; there would be much satisfactory with the one that exists and more over it would be priced lesser, or your sensational trap necessitates bait which was unavailable. Like proponents of the enhanced mousetrap, marketers often take for granted that since the technology has been nurtured and an innovation has been created, its diffusion was foreseeable, a fait accompli, they all too often to their disappointment disregard any reasoning towards the acceptance of these innovations by its potential users prior to its launch. Many products fall short to win over sufficient users to become a commercial success; the failure has been majorly due to the industry’s lack of sensitivity to the consumer acceptance of the new technology being pushed into the market [see Figures 1.10 and 1.11].

2.7.1 The Assumption of Consumer Acceptance

Consumer adoption has been made known to occur through a steady and fairly predictable adoption process � the classic “S” curve. This curve (also called in another version as the Gompertz curve) being spontaneously appealing: Rogers (1995) states that the initial slowness in the product’s adoption process has been due to the inertia caused by the usually immense investments made in the existing technologies and the limited size and resources of pioneers; the rapid growth in the middle of the curve has been due to competitive imitators who tend to adopt only after the initial adopters have proven its usefulness and taken corrective measures over the bugs in the innovation (decreasing the risk for the many) � these pressures cause a bandwagon effect, literally requiring usage; the slowdown or levelling at the top occurs after the most promising areas have been exploited first and the remainder was often not economically feasible.

According to Rogers (1995) usefulness of an analysis of the diffusion of a technology was most useful early in the life of a technology, at the very beginning of the “S” curve, and the earlier the better when the information can allow changes to easily be incurred; however during this time the data available would also be least. At least eight data points were needed to prepare an analysis for a stable and robust estimation of the diffusion process of any product; even then, the restriction was given to one step front forecasts (Heeler and Hustad, 1980).

In order to have a prediction over future sales, a historical track record of the innovation’s progress of the product were therefore required for framing most models of adoption behaviour. For this reason the assumption of consumer acceptance was rarely challenged. In most cases, if an innovation was quickly rejected, it was usually withdrawn from the market after a short period of time. The data points for failures do not exist due to their limited market exposure (Heeler and Hustad, 1980). When the data points do exist, it was for successful products where the acceptance by the consumer has already been proven (this was in contradiction with the theory of diffusion). Therefore the most classic and widely used diffusion models only track successes which were by their very nature accepted products. This factor cannot be assumed to exist for all innovations or technologies.

2.7.2 Pro-change Bias in the Adoption Process

The traditional adoption process includes these steps in the decision to purchase or reject a new product (technology): awareness, interest, evaluation, trial, and adoption (or rejection). The rate of diffusion of awareness/knowledge has been found greater than the rate of adoption. For most of the diffusion models intense emphasis has been on the innovating organization amid notable neglect of information on the consumer. The following are limitations of the adoption process model:

(1) It does not adequately concede that a need or problem identification stage may precede the awareness stage.

(2) It does not adequately provide for the rejection of a product after its trial.

(3) It does not adequately be aware of that the evaluation occurs throughout the decision- making process and not exclusively at the evaluation stage.

(4) It does not explicitly include post-purchase evaluation or past implementation which may make stronger obligation or lead to a decision to the product is not fit to use (Rogers, 1967). To overcome these limitations, an innovation decision process has been proposed: knowledge, persuasion, decision, implementation and confirmation (Rogers, 1971). The mistake that most of the marketers have made was the assumption that by targeting opinion leaders the lemming-like consumers will follow. If the product failed, the guilt upon its failure goes on to the individual rather than the communication channel or the source. This lead to the assumption of pro-change bias, that was any and every innovation was a good thing and should be adopted by everyone � the predictability of success of an innovation. In many theories efforts had been invested on a large proportion to describe traits and to differentiate between early adopters and laggards whereas effort laid in understanding the differences between innovations and the potential adopter perception of attributes that were most important in determining the rate of adoption has been very subtle (Lancaster and Taylor, 1986). The method of demographic and psychographic features has been applicable in describing the innovators and the early adopters but its efficacy as a stepping-stone to calculate the rate of diffusion to the broad-spectrum market was questionable.

2.7.3 Significance of Consumer’s Perspective

All too often innovations fail because OEMs (Original Equipment Manufacturers) and suppliers knew too little about consumer requirements and did not pay adequate attention to innovation marketing. The actual purchase rate of innovations has been only about one out of six innovations offered. The market carries too many complicated innovations for the consumers which were received in the traditional intuitive way. Out of the whole lot of drivers few of them were acquainted with all the functions in their cars. Even deep-rooted functions has remained hidden to many consumers: for instance: about 70 percent of German and U.S. car drivers know about ABS (Anti Lock Braking Systems) but only 40 percent were familiar with ESC (Electronic Stability Control). Even supposing many former optional features have become serial equipment, but now optional features have multiplied: In the BMW 7 series, the total rose from 14 extras in 1986 to 92 in 2006 (http://www.consumerpsychologist.com. 26 June 2009). Consumers of today were snowed under by the absolute number of serial and optional equipment. The complicated feature names and acronyms specified for the respective technologies has often made it difficult for the consumer to even guess what function a given extra could possibly deliver. In a recent advertisement (http: //www.consumerpsychologist.com. 23 Jun 2009) 35 percent of all Lexus GS features were named with acronyms and abbreviations. Consumer perception differs from one consumer group to another depending on their perception on the benefits of automotive innovations. The success of innovative features, however, largely extends to regional differences: Asian car buyers, for instance, were much more interested in infotainment electronics than their American or European counterparts. The budgets for optional equipment were noticed to be limited for most car buyers and this price sensitivity issue was largely unknown to OEMs. The main reason for low order rate has been due to the consumers’ limitations and differences in knowledge, desire and budget. However, consumers tend to be content with a new function that has been bought (Heeler and Hustad, 1980).

2.7.4 Innovation Acceptance

An imperative reason for the failure of many products, in Rogers’s (1995) opinion has been due to the lack of acceptance by the “pragmatist” population, those people who considered the cost of learning the new technology far overshadowed any benefits the innovation may have to offer them. The middle adopters formed the pragmatist that comprised of a great 50 per cent chunk of the population; that must be convinced for most innovations to be a commercial success (explained in chapter 2.4). The innovators or experimenters (also known as the early adopters) were those who like to trial almost any new gadget, experience, or style (1-2 per cent) and these well-defined and studied individuals were usually savvy on technology and often remain the marketers’ targets; however, it was the silent widely held number of pragmatists capable of making or breaking an innovation and marketers’ attention should always be at focus on this group. Another great majority lies in the deprecating opinion of the laggards � as if they were dullards or know-nothings. There exists a clear arrogance of pro-change bias to the diffusion of most innovations. As Moschis et al. (1985) describe it, “non-acceptance was a roadblock to Electronic Shopping Diffusion as it requires changes in existing habits and development of new ones”. Technology has succeeded entirely due to the consumer’s decision to make changes in habits and use the technology. This pro-bias viewpoint presumes the superiority of the technology. A technocrat said (http: //www.economicswebinstitute.org. 3rd August 2009) that users will be asked to make substantial changes in the way they live and they must be educated to enable them to utilize the innovation. In other words, the manufacturer assume that they know what was best for the consumers and this was how they must change to use our great new better mousetrap. Consumer usage of new innovations often does indeed require changes in existing habits and development of new ones; the greater the change, the greater the resistance typically encountered. However, the consumers will not simply buy into a new technology for the sheer novelty of it all and, unless it was capable of meeting or exceeding their needs than any other product or alternative in the market, it was doomed to failure. The apt marketing-oriented view would be to look at the reasons behind a non-acceptance of a technology or why acceptance has lagged behind preliminary expectations. A review shall be conducted addressing the reasons for rejection and then attempt has to be made to modify the product or service to account for those factors found to have caused the rejection. Mostly this part of solving the source of the problem was left unattended. Studies have assumed that poor dissemination of information was the major reason for non-adoption and have ignored the factor of consumer needs/wants/desires vis-�-vis the product/technology/innovation. Rather than re-examining their efforts they redouble their attempts to communicate the greatness of their product. Previous studies of innovation have shown that in a large number of cases technological primacy was not the crucial variable determining market success. Successful innovations were often those which paid more attention to market demand than to technological opportunity. About 60 to 80 per cent of significant innovations in a huge variety of fields have been in return to market demands and needs (Utterbank, 1974). Many times the consumer himself/herself was the catalyst for a new product or innovation and the supplier has to be persuaded to manufacture the product. On more than one occasion unenthusiastic suppliers have seen users design, manufacture, and market ideas thus increasing the number of competitors they face by one (Von Hippel, 1986). There has always been a symbiotic relationship between technology and marketing (Kiel, 1984). Induction of a technological innovation without marketing can be considered equivalent to throwing money out of the window; marketing without technical innovation (the usual form of comparative advantage) can definitely assure only little probability towards long-term success. There should be “desire” as well as “necessity”. Often there exists a mismatch between products and market needs. One British study indicated that consumer involvement was the major difference contrasting German success and British failures; the Germans involved the consumers early in the process (Wilson, 1984). The participation of the consumer in the innovation would gain them more insight on the new technology and also it might convince them in buying the product because of the technology. Hence it is important to ensure that the consumer really comprehends the innovation. The understanding capacity and capability of a consumer may vary dependent on the various demographic categories that are explained below.

2.8 Summary

On the basis of all the views that have been gathered the main stream of focus has been laid down for innovation. The thesis on the automotive industry has proved that innovation can boost the current pressure in the auto sector provided they can be accepted by consumer. In the future, OEMs and suppliers must test the chances for success of their innovations much more thoroughly. There was seen a necessity to make consumers understand in what manner really the highly invested innovations could make the difference when compared to the former. In another article cited online (http://www.birminghampost.net. 14 August 2009) said about car dealers that little interest was shown in selling innovations and even less knowledge about their nature and benefits. Regarding innovations that were non-core to the specific car brand, only two percent was observed to be actively sold to the consumer. But still many sales have been happening even today. Is this happening because the buyers or the consumers understood what they had bought? Is innovation really sold?

Therefore, the hypothesis taken for the analysis was that the consumer acceptance of an innovation is based on consumer’s understanding on innovation. This would mean that for innovation diffusion to be successful it has not been dependent on consumer’s complete understanding on innovation. In other words, innovation is not effectively sold to the consumer in the automotive industry even today.

Chapter 3-Methodology

The second chapter on the literature review culminated in the critical overview of existing research. This chapter on research methodology, however, encompasses the frame work of the research inquiry also known as the hypothesis, the research design chosen to conduct the study, and the description about the research tools administered to carry out the inquiry. The end part of the chapter also characterizes validation of the data collected while carrying out this study. The framework drawn for this research inquiry was based on the uniform method of approach towards research, using a survey methodology to gather quantitative data. Quantitative study makes use of the numeric data that has been collected from a group of people which was then analysed and interpreted with statistical tools and results were derived (Cresswell, 2003); while qualitative methodology was theory based study that analyses the collected data by building a theory and its reasoning (Sapsford and Jupp, 1996). It involves gathering descriptive data from various relevant sources and analysing it with appropriate data analysis tools. The survey methodology was suitable for quantitative research process, because it allows for rapid collection of data and the data required as per the research objective may be classified as “quantifiable facts” than “qualitative behaviour”. Also, this has made it easy for integration of results during the process (Zikmund, 2002). It should be noted that some individuals do have difficulty accepting the validity of qualitative research, because it was not possible to generalise the experience across situations, and it may be subject to bias from the researcher, and a number of other objections (Flyvbjerg, 2006). Nevertheless, the researcher believes that survey methodology has been one of the best research methods because of the grounding in quantitative data and the interpretation of results in the context of data which will reduce the issue of bias and allow for a clear interpretation of results. Hence the research methodology chosen was quantitative research methodology.

Flyvbjerg (2006) has mentioned the different types of methodologies under quantitative research as below:

* Face-to-Face Interviewing

Interviews of this type were taken either in the street where more people would gather like shopping malls, high streets etc. or in case of more complex projects they were conducted in people homes.

* Telephone Interviews

In this type of interview was quick and cost effective way of achieving data. One of the drawbacks mentioned by Flyvbjerg (2006) was that it would fail for the interviewer to conduct each interview successfully in case the respondent terminates the call in between an interview.

* Online/Internet Research

Here, the panels of respondents (or sample)were purchased and candidates were invited to take part in online surveys. In most cases the respondents would have already signed in to take part in surveys.

* Postal and Self-Completion Market Research

This was explained as the most convenient and cheap method of gathering data but takes a relatively long time to collect the survey forms back. Although other methodologies were equally good the survey questionnaire has been chosen because of its unbiased approach. In most interviews the conversation would tend to lead the respondent to choose a particular Flyvbjerg (2006). This puts the liberty of the respondent to a question and would make the data corrupt. Also, in the case of face to face interviews the body language also might tend to mislead the conversation with the respondent if the questions or the interactions were not suitable to the context. Online surveys were also challenging as to determine the real details of the participants. In the case of survey questionnaire, the participants were met in person and they were given sufficient time to complete the questionnaire by themselves (Zikmund, 2002).

As mentioned, the study instrument used included a survey questionnaire and was used in order to gather information. This had allowed for collection of data from a wide range of sources, as well as the finest possible mixture of breadth of answers and vigour of information gathered. The research methodology chosen for the study was appropriate taking into consideration the type of information being required. Most of the participants in the survey were general consumer and was expected to provide a good and non-biased response. Although limited quantitative analysis (as the numbers of participants were few) was carried out, the study questions do not all lend itself readily to statistical analysis, as that will provide only one facet of a complex issue. Whilst indicating the difference between qualitative and quantitative research methods, Birley and Moreland (1998) emphasized on the benefit of the quantitative approach, that, it measured the reactions of a number of people to a limited set of questions, thus it made easy comparison and statistical aggregation of the data. This led to a broad, generalisable set of results. Respondents’ clarity on the questionnaire was tested by conducting a pilot survey prior to its induction (Saunders et al, 2002) and the questionnaire was improved based on that. Pilot survey was conducted with Masters Scholar and few randomly selected participants. Based on their feedback, questionnaire was iterated, before sending it to the actual participants.

3.1 Data Collection

The most vital branch in the research study was data collection and this was performed by employing one special means. According to Walliman (2001) a research method was chosen to reduce the scale of collection of relevant data specific to the research so that data could be gathered pertaining to the problem area. Primary data research was performed, including research of literature (secondary data) in order to provide an understanding of the context and theoretical grounding of the paper, as well as examining previous empirical research in the area of innovation diffusion and innovation acceptance. This information was presented in the previous chapter (Chapter 2, Literature Review). This data was combined with the primary research data and was presented in Chapter 4 (Analysis).

The survey involved use of scrutinised questionnaire (presented in Appendix A) to determine the factors that impact the ability to effectively diffuse an innovation from the auto industry. The questionnaires were distributed within North West London and a range of information was gathered from them. A total of eighty questionnaires were circulated in my church. The participants were notified regarding the nature of research and duly instructed on how to fill it. The percentage of feedbacks expected before the distribution of the questionnaire was hundred percentage. Finally all the eighty questionnaires that were distributed were returned back. Some surveys were marked for further follow-up so that the potential issues that arose in the surveys could be explored and these respondents were then approached separately to clarify the issues promptly. In the end, all the eighty samples were assembled and placed for analysis. The analysis was done using computer software called SPSS version 15.0, the software on entering the survey results plotted cross tables depending on the questions prompted to compare by the user. On comparison of the facts and figures from cross tables, valuable data was retrieved to conclude findings.

3.2 Questions for Data Collection

The next step was to collect quantitative data through survey of potential automotive consumers. The survey questions were formulated in order to give proper support to the hypothesis:

4. To discover if consumer acceptance is a deciding factor for innovation diffusion in the auto market.

5. To discover whether innovation is really sold to the consumer.

6. To discover if consumer gender will impact on innovation acceptance and diffusion in the auto market.

7. To discover whether the consumers who had accepted the technological innovation valued it high against money.

3.2.1 Justification of selection of questions in the questionnaire

Prior to the handover of the questionnaire participants were briefed about the questions and even at times some were guided so that the survey became effective. All the questions were closed type. Most questionnaires rely on questions with a fixed number of response categories from which respondents select their answers. These are useful because the respondents know clearly the purpose of the question and are limited to a set of choices where one answer is right for them.The questions were framed for the questionnaire to capture the best data. For instance in the question number 2 (refer Appendix A:1) regarding consumer’s age, the particular distribution was chosen because of the fact that consumers aged above forty were considered more capable of affording higher range cars and also that the youth hangs on to new trend and technology cars (Anurit, J., Newman, K and Chansarkar, B., 1999). Similarly, question number 5 was framed to understand the classification of consumers (in the bell shape graph) attending to. Question 6 and 7 were placed to check on the consumer’s know-how and attentiveness towards automotive technology. Basically the reason as to why in question 6, the technical terms EPS, ABS and ESC were added was in order determine the knowledge of the consumer on existing automotive technologies. These technologies have been around over 5 years and so there should have been every opportunity for the consumer to learn these technologies. Question 8 had a lot to do with consumer’s concern on technology in terms of money value. Again the choices provided for the consumer were framed to know how close they were in accepting an automotive technology money-wise. For example, the choice ‘very strong’ – this would mean that the consumer was hundred percent sure of buying automotive technology as compared to the inverse option ‘very low’.

Likewise gender and age have been chosen as a parameter to note the variation in consumer behaviour as discussed in chapter 2.

3.3 Analysis

Having a lot of data and being without any analysis hardly can make any sense to a research study (Walliman, 2001). Also, it’s important to ensure a good quality data was collected for the analysis which has been assured in the later chapter.

The analysis of the material was performed using quantitative methods once all the questionnaires have been gathered. The results were entered in to the software programme that analysed the gathered data. Outcomes from the quantitative questions on the study were examined in a software program called SPSS version 15.0 in order to determine descriptive statistics and trends in the outcomes of the research, as well as providing information for the respondent profile. Further in the analysis, a tool known as cross tables in the SSP were used to compare the data from the survey and objectives were considered one by one in order to solve them during analysis. This led to the justification of the hypothesis.

3.4 Summary

This chapter offered the data collection and analysis method that were utilised within this paper to explore the issues at hand and examine the study objectives. The analysis was conducted upon quantitative data gathered so as to provide grounding and understanding of the subject matter, as well as some overall information that was used to examine the issues at hand. This study design was believed by the researcher to be of best choice for the aims and objectives of the study. Quantitative research method was selected for this study due to the reasons mentioned before. Propose of the survey methodology and its implementation has been detailed here. Findings from this chapter and how conclusions were derived are discussed in next chapters.

Chapter 4-Results and Analysis

The questionnaires were distributed to a maximum of eighty and the respondents were in full strength. The analysis was done, as mentioned earlier, using SPSS 15.0. The data was entered and analysed to plot descriptive statistical tool known as cross tabulation. Cross tabulation is specifically used for discrete data type comparison. By the cross tabulation of selective survey results, it was possible to analyse the objectives one by one. Each question asked had a significance which was to understand the consumer’s take on innovation and their level of understanding. The analysis made way to discover the objectives and also to adversely prove the hypothesis.

4.1 Objective I:

To discover whether the innovation technology communicated to the consumers were effective in making it attentive to them.

In the chapter 2, a list of consumer characteristics that triggers innovation diffusion was discussed. Theory-wise consumers that triggered an innovation were observed as early adopters, early majority, late majority and then the laggards. Out of the four, the early adopters were looked upon as the initiators in the market as mentioned in the literature review. In the questionnaire there was one question that directly determined the source of information that the consumers used that was question number 5. Question 6 ideally tested the consumer’s awareness on most popular automotive technologies like the ESC (Electronic Stability Control), ABS (Anti-lock Breaking System) and EPS (Electronic Power Steering). Though these were only the few ones among a lot of other automotive technologies, it has been able to show enough variance in the result. So as to find the depth of understanding by the consumers on innovation corresponding to their source of innovation both questions 5 & 6 were compared. The following results were obtained:

Q.5 which of the following has been your source of information on auto technology?

And,

Q.6 Out of the 3 abbreviations (EPS, ABS, ESC) taken from automobiles, which of them are familiar to you?

From table 1.2 it was observed that a majority (35 of 80) of the consumers depended on word of mouth followed by 21 of them who relied on Auto websites or TV reviews and 18 of them gained knowledge from Auto magazines or News paper Adverts and the remaining relied on the information given by the car dealers. Among all the sources it was evident from the comparison that 18 of the respondents whose knowledge was dependent on word of mouth knew at least two of the technologies. Also among them five of them knew about ABS (Anti-lock Braking System) and three knew all the mentioned technologies. The entire distribution of sources has shown the extent to which these sources influenced the consumers to understand various technologies. In case of word of mouth, it was possible for the consumers to gain view on technologies from agents, people around them and so on and most of them knew at least two of the technologies mentioned in the questionnaire. This actually proved that word of mouth was a very influential tool for consumers to understand technology. The Auto websites or TV reviews were the next opted source of information and it was clear from the feedback that 17 out of 21 respondents were not aware of the mentioned technologies. This means this source of information hasn’t been very effective in educating the consumers or buyers about automotive technologies whereas the Auto magazines or News papers had relatively strong impact as it showed that 12 respondents knew at least any two of the technologies and few more at least knew one of them.

Q.5 which of the following has been your source of information on auto technology?

And,

Q.7 Have you been able to notice any of these abbreviations on the car?

The table 1.3 cross tabulates and relates to the previous table 1.2. The technological abbreviations were significance as it tested the attentiveness of the consumer in identifying the technological weight age of the car. The comparison of values clearly showed that a majority of the consumers were not sure and didn’t know that they noticed any of the mentioned abbreviations. Though the technology was known they weren’t able to practically relate it to the real model. Also it signified that the consumers weren’t really confident with what they had known concerning a technology in the car which was why a majority weren’t sure of it.

4.2 Objective II:

To discover if consumer gender will impact on innovation acceptance and diffusion in the auto market.

It was assumed in the literature review that consumer acceptance of innovation wasn’t dependent on consumer understanding of innovation technology. According to the theory for male or female consumer to accept the technology they should firstly understand the technology and then decide to buy it (as given in the literature review). If the consumer was ready to value the technology high even then it could be taken as a sign of innovation acceptance and of course its adoption as well. The theory on gender (refer literature review) suggested that consumer choices varies with consumer gender but the question was whether these choices were made based on proper understanding of the technologies.

For analysing whether gender impacts innovation diffusion, cross tabulation has been done to compare the ratio of male and female respondents to the level of their awareness on these technologies. Comparison to money was also done against gender mainly to understand how consumer’s consideration on innovations differed with money value. It was found previously that the consumer’s who promote innovation diffusion were those who had their source of information as ‘word of mouth’. Having this in consideration questions 1 and 5 were compared below:

Q.5 which of the following has been your source of information on auto technology?

and,

Q.1 Gender?

In table 1.5, the number of respondents (43% of the male and 44 % of the female respondents were the respective percentages corresponding to ‘word of mouth’) who accepted the technology (refer to objective I’s explanation) were those who had their source as ‘word of mouth’. Out of them the difference in the shares of males and females were comparatively less, which means that the acceptance didn’t dependent on whether the respondent was male or female.

This has been further analysed below by the comparison of results from questions 1 and 6 and later amongst 1 and 8 of the questionnaire.

Q. 6 Out of the 3 abbreviations (EPS, ABS, ESC) taken from automobiles, which of them are familiar to you?

and,

Q. 1 Gender?

Referring to table 1.6, the question 6 assessed the knowledge of the respondents towards technologies in the automobile industry. 19 of the females and just 8 of the males didn’t know any of the technologies. It was evident from the table that male respondents had more knowledge sense towards automotive technology. This need not necessarily mean male respondents were actual buyers and in order to test it, comparison was made between question 8 and question 1 for further analysis:

Q. 8 finally, how do you find the effectiveness of these technologies in terms of money value?

and,

Q. 1 Gender?

The table 1.7 signified the fact that though male respondents had more knowledge than the female respondents, the female respondents in table 1.7 had an equal share of being potential buyers when compared to males as a majority of female consumers supported positively for innovations in terms of money value.

The male respondents though they had more knowledge it was evident that the female respondents equally had a good number of potential buyers. Hence the three tables 1.5, 1.6 and 1.7 clarified that gender wasn’t a factor for innovation acceptance.

4.3 Objective III:

To discover whether the consumers who had accepted the technological innovation valued it high against money.

To inquire the facts of this objective two questions were raised question 6 and question 8. The question 6 of the survey was able to gather information in relation to the consumer understanding on some of the basic automotive technologies. As it was discussed in Chapter 3, the technologies specified had been around in the market since five years. Comparing the cross tabulation of survey results between questions 6 and 8, the following was found:

Q.6 Out of the 3 abbreviations (EPS, ABS, ESC) taken from automobiles, which of them are familiar to you?

and,

Q.8 finally, how do you find the effectiveness of these technologies in terms of money value?

From the table 1.1, it is evident a majority of the respondents (31 out of 80) knew at least any two of the technologies specified in question number 6. It also shows for the same respondents’ category, 15 of them very strongly and 11 strongly considered the technological innovations were worth the value for money. Apparently, the second majority comprising of 27 respondents out of 80 had no knowledge of these abbreviations and at the same time they rated the value of technology innovation as high across money value. Like the case analysed for gender earlier, comparison has been drawn against gender as well.

On considering the tables 1.6 and 1.7, the first table clarified that the number of male respondents were higher than the female ones with respect to their technology awareness. However the table 1.7 showed that most of the female respondents who did not know about the technology were the ones considered the technologies of good value for money. This was evident that those innovation technologies had not influenced the female buyers knowledge-wise and that they should have been convinced by some other factors to accept the technology whilst male respondents were more aware of it. Hence, this finding concluded that consumer understanding on innovation wasn’t a deciding factor for them to value the technology.

Summary

The research analysis has proven the hypothesis negative. From objective I, it was concluded that the consumers or buyers had no understanding on innovation yet they were ready to buy the innovation. One of the considerations was to know whether this conclusion differed with gender but analysis on objective II proved that gender wasn’t a factor for innovation acceptance. So it meant that consumers (whether male or female) though they never understood innovation they sought to buy it. Finally the objective III remarkably proved that more understanding on innovation made no difference in which the consumers valued technology in terms of money.

Chapter 5-Conclusion

This chapter presents the summary of the entire research process undertaken and sheds light on the review of the study along with the summary of the findings. The chapter concludes with possible future directions for further research.

5.1 Areas for further research

The main focus of the dissertation had been on analysing whether the consumer’s role in understanding innovative automotive technology made any significance in innovation diffusion. A major portion of this research had primarily focused on consumer’s acceptance on innovation and adoption. Theories supported that consumer understanding on innovation has been vital in diffusing it. This has been an achievement because the anticipation of innovators as discussed in the literature review would be that their innovations will be sold by properly educating the consumers about the innovation. This seemed to be practical; however, the survey results gave a contradictory result against the hypothesis which was that most of the consumers in the automotive industry would accept a car without actually understanding the big innovations in it. This certainly showed that there were other factors that drove innovation diffusion and definitely as an extension to this research another research could be done to understand the various factors that can influence innovation diffusion. This was one of the scopes identified for future research.

5.2 Summary

This dissertation had been an approach to solve the subject on consumer’s role in diffusing automotive innovations. Initially the study argued that consumer’s knowledge made positive impact on diffusing innovations. Later the research and analysis proved that consumer understanding on innovation didn’t make any impact on innovation diffusion. Consumers accepted or even rejected innovation based on some other outside factors. The findings also showed that innovation acceptance wasn’t inevitable to vary based on gender as both male and female consumers or potential buyers made their choice not on their understanding on innovation.

This research can be used as a foundation for doing further researches, for example on automotive companies who have introduced new car models which has incorporated latest innovations. Automotive companies can get to understand the consumer’s perspective and level of understanding on those models and probably find ways to educate the buyers.