Consumers' Adoption Pattern For High Technology Products - a Strategic Analysis in Newly Industrializing Asia Pacific

ABSTRACT - The adoption of high technology products by consumers of the newly industrializing countries of Asia is undergoing significant change. Rapid adoption has been made possible by the widespread diffusion of technology around the Asian Pacific Rim and also by the increasing sophistication of the Asian consumers.



Citation:

Wenlee Ting (1985) ,"Consumers' Adoption Pattern For High Technology Products - a Strategic Analysis in Newly Industrializing Asia Pacific", in SV - Historical Perspective in Consumer Research: National and International Perspectives, eds. Jagdish N. Sheth and Chin Tiong Tan, Singapore : Association for Consumer Research, Pages: 95-99.

Historical Perspective in Consumer Research: National and International Perspectives, 1985     Pages 95-99

CONSUMERS' ADOPTION PATTERN FOR HIGH TECHNOLOGY PRODUCTS - A STRATEGIC ANALYSIS IN NEWLY INDUSTRIALIZING ASIA PACIFIC

Wenlee Ting, American Graduate School of International Management

ABSTRACT -

The adoption of high technology products by consumers of the newly industrializing countries of Asia is undergoing significant change. Rapid adoption has been made possible by the widespread diffusion of technology around the Asian Pacific Rim and also by the increasing sophistication of the Asian consumers.

INTRODUCTION

This paper is an attempt in formulating a strategic framework for analyzing the adoption behavior of consumers of high technology products in the rapidly industrializing Pacific Basin countries. There appears to be an arc of accelerating technological growth unfolding around the northern rim of the Pacific Asian Basin. The arc stretches from the innovation power houses in the silicon valleys of western United States and loops over to that Asian technological giant, Japan, and arches down to the newly industrializing dynamos of South Korea, Taiwan, Hong Kong and Singapore, each with their own little silicon valleys and high technology aspirations (Ting 1985).

The pattern of supply-side interactions along this Technology Rim seems to rather well documented in the technology transfer and direct investment literature (Ting 1979). The licensing flows of U.S. innovations to Japan in the early seventies and now the reversal in technology flows from Japan to the U.S. is a case in point. In addition, the literature is replete with studies on the flow of direct investments especially to the four Asian newly industrializing countries or NICs i.e. Singapore, Taiwan, South Korea and Hong Kong. Thus, although the production side of the technology interactions is rather well investigated, there appears to be a gap in the literature on technological interactions in the consumption side of the process. This perhaps is largely due to the fact that the area of high technology consumption itself is a relatively unresearched area and secondly because of certain obsolete notions concerning the international transfer- of consumption pattern.

COINCIDING PRODUCT LIFE CYCLES

Central to the prevailing thinking on the international transfer of product consumption is the product life cycle concept which is hypothesized to evolve sequentially from the innovating market, such as the U.S. to other recipient foreign markets as the multinationals move their productions abroad (Onkvisit and Shaw, 1983). However, with the almost instantaneous diffusion of innovation along the Technology Rim of the Pacific, the slow evolution of the product cycle as it cascades from one market level to another seems to be less tenable. Instead, coinciding product cycles for the same product develop quite simultaneously in the different national markets both in terms of production and consumption (Ting 1985, pp.69-77). On the consumption side, the widespread market penetration of personal computers in the NICs perhaps best illustrate this emerging trend. On the level of production technology the same process appears to prevail. For instance, even as U.S. textile producers attempt to upgrade and automate their manufacturing operations to keep pace with intensifying foreign competition from Asia, the Asian producers themselves are augmenting efficiency by precisely adopting the same automated technology almost instantaneously.

Not only is there no market lag in the adoption of some high technology products between the U.S. and the Asian markets, the latter are even assuming a leadership position in certain product categories. For instance, it is a rather well known fact that the high tech bazaars and alleys of Japan and Korea and the shopping centers of Hong Kong and Singapore abounds with consumer electronics of such radical designs that consumer acceptance of such products in the West appears relatively remote. However, most of the innovation are primarily concentrated at the product design and modification level. Many of the new directions involve product design innovations such as bundling multiple peripheral features onto a main product. Examples include adding a talking feature or incorporating a small screen television set to a microwave oven. Strictly speaking, therefore, no new product technology is created. Rather, the advent of the miracle computer chip has allowed Asian producers to innovate product designs as far as their imaginations can take them simply by integrating and recombining product features and designs (Ting, 1982).

ADOPTION PARADIGMS

This paper examines adoption behavior on the basis of the two underlying product cycle "scenarios" : the sequential product cycle and the coinciding product cycle. As noted earlier, the sequential cycle assumes a gradual movement of the consumption of a product from one market level to another. On the other hand, the coinciding product cycle paradigm assumes the simultaneous development of product cycles for a particular item over different national markets.

Sequential Product Cycle

Using the conventional adopters categories (Roger, 1962 and Rogers/Shoemaker, 1971.), the adoption continuum for a high technology product such as personal computer descends in a stepwise fashion from one national market level to another. Thus, the innovator-early majority-late majority and laggards continuum at the initial market level or the market in which the product first appears would always precede the corresponding adoption continuum at the recipient market level, as Figure 1 shows. This implies that the innovator adopter at market level 2 would only begin to adopt the product after the laggard stage in the original innovating country. Likewise, the innovator category at market level 3 lags behind the late adopters of the country at market level 2.

FIGURE 1

SEQUENTIAL PRODUCT CYCLES

FIGURE 2

COINCIDING PRODUCT CYCLES

The adoption pattern under the sequential cycle assumption is mainly a function of the stage of economic development and the intensity and pervasiveness of industrialization. Consumers in market level 1 and 2 presumably lack behind the consumers in consumption sophistication simply because the state of their economies have not progressed to the stage of full fledged mass consumption characteristic of the more advanced countries. However, enclaves of heightened consumer awareness and sophistication do exist even in the less developed economies because of the dualistic structure of these economies. In India, for example, sophisticated and high technology sectors with their concomittant modern consumption systems coexist with sectors of varying levels of undevelopment and underdevelopment. Other large dualistic economies share pretty much the same characteristics.

Consumption innovators in such dualistic economies are thus operating under considerable constraints in passing on their consumption skills to the early and late majorities. This partially accounts for the slow evolution of the consumption cycles both within a national market level and as well as between market levels internationally. Adoption of new products essentially slows down to a small trickle over a longer period of time. The entire undeveloped marketing infrastructure acts as a dampening factor on the rapid spread of modern consumption. In one large Asian country with a dualistic economy, for example, television ownership in the large urban centers runs as high as 60 percent of all households. In the more dispersed rural sectors, by contrast, the ratio is one set for every 40 house-holds.

Coinciding Product Cycle

The alternate scenario in the international diffusion of consumption assumes that product cycles emerge simultaneously at the different national market levels. Thus, the adoption continuum "stacks" up almost vertically at the various market levels as soon as the innovation develops in any one of the innovating source. The consumption innovators in market levels 2 and 3 match the consumption pattern of their counterparts in market level I both in terms of adoption time and sophistication. Figure 2 illustrates this process.

Unlike the sequential movement of the product cycles gradually down the various market levels, as in the previous scenario, all the market levels begin the adoption process at almost the same time. The major force contributing to the simultaneous commencement of the adoption process is the instantaneous spread of technology among the various market levels. In the Asian NICs for example, the rapidity and pervasiveness of the industrialization process together with the rising affluence and awareness of the consumers produce a highly favorable and dynamic consumption environment. Rising incomes and greater consumer awareness lead not only to a more positive consuming stance by the expanding middle class but also to a more demanding and discriminating orientation.

The entire marketing atmosphere is characterized by the introduction of advanced marketing infrastructure such as the increased availability of electronically disseminated information, product liability requirements, mass merchandising and as well as rising consumer rights movement. Aided by such a favorable consumption environment, the adoption process by the innovators and early adopters is greatly facilitated at all the market levels. Also, any one of the various market levels can be an innovating source for new products and consumption technologies. The rapid technological diffusion can therefore not only promote the consumption process within a national market level but also between the market levels. The northern rim of the Asia Pacific and the Southeast Asian NICs precisely conform to this pattern of simultaneous technology and consumption cycles. Adoption of new products such as personal computers, microwave ovens, video cassette recorders and similar high technology electronic products appears to have simultaneously permeated the markets of these technologically emerging countries.

ADOPTION BEHAVIORAL PATTERN

As noted, the process of consumption transmission under the sequential product cycle paradigm assumes that innovation and technology advances is restricted to one dominant source and adoptors in the recipient markets must wait for the product to move down gradually to them. This is mainly because the technological capability of the recipient market has not developed to the extent of being able to support the mass consumption of the product in question. Adoptive behavior is therefore influenced by the slow trickle of imports of the product or the tentative forays made by the foreign manufacturers into the local markets. The overall adoption process appears to be stymied by the "foreigness" of a relatively expensive product. Also, because of the remote nature of a trickled down product, a sizable group of consumers assume a late majority stance by adopting a more cautious wait and see attitude with respect to the item. Consumption innovators and early adopters therefore account for a very small and insignificant percentage of the consuming public. In short, there is a high degree of perceived social as well as economic risks associated with the adoption of a new and unfamiliar product.

As technological diffusion proliferates around the Pacific's Technology Rim, the upgraded capability of the local production enables a product to penetrate the local market speedily because widespread availability. Local consumption innovators are therefore in a better position to evaluate the product firsthand in the context of an indigenized consumption environment. The adoption process, once initiated by the innovators and the early majority, has a tendency to accelerate more rapidly than in the sequential cycle case.

The widespread and inexpensive availability of a localized product further reinforces the rapid adoption process. Many consumers who would otherwise be late majority adopters move up their consumption timetable by becoming early adopters. Thus, the coinciding product cycles phenomenon which enable instantaneous localized production to take place is able to trigger a more rapid adoption of the product. For instance, when local producers in Taiwan announced plans to commence production of VCRs, sales of the item picked up substantially.

In short, the localization of a product in terms of technology and consumption, accordingly reduces the perceived social as well as economic risks associated with its adoption. The negative social connotations of being first to adopt a foreign and untried product are no longer pertinent for an adopter of a localized item. Although the exclusivity of being one of the privileged few to own a specific product may be a perceived benefit to some, it is a risk factor as far as the majority of the adopters are concerned. Most of the early and late majorities attempts to reduce perceived risks by finding safety in numbers. Substantive adoption of a localized product serve to send a signal to potential adopters that they are in fact not "sticking their necks" out by adopting the products. The introduction of ATMs or automatic teller machines in Singapore and Hong Kong is a case in point. Widespread acceptance of the ATMs did not substantially take off until a couple of large local banks began to install the machines as part of their package of consumer services.

ADOPTERS' PROFILE

The generally accepted profile of a consumption innovator is a young upwardly mobile professional with above average disposable income and college education. His buying behavior is characterized by a well balanced search for information and a moderate aversion to risks. Purchase decisions are made without an overly cautious approach to minimize risks. Rather, the innovator assumes a pro-active stance in evaluating the perceived benefits of the product against an acceptable level of risks. The early majority are somewhat more stringent in their level of risk acceptance. However, the same balance process with respect to trading off benefit and risks applies. The key ~ to an understanding of the adoption process by -the innovators and early majority is the emphasis on informational search and a willingness to live with a reasonable level of purchase risks (Engel and Blackwell, 1982, pp. 390-394).

The late majority and laggards, by contrast, are characterized by a highly conservative attitude to both social and economic risks in their purchase decisions. Apart from being less educated and ranking lower in the level of disposable income, the late adopters are stymied by a narrower social perspective especially in terms of product knowledge and consumption skills. There is also a comparative lack of desire in experimenting with new lifestyles and the accompanying arrays of reinforcing products and services. Consumption remains essentially at a basic necessity level with a time horizon oriented toward the satisfaction of immediate needs.

The average consumption innovator in the Asian NICs conforms to the expected profile of a typical well-educated and affluent consumer readily willing to attempt new directions in terms of products and services. Mainly as a result of the rapid industrialization and rising affluence, many of the innovators and early adopters are actively pursuing a consumption pattern that reinforces their newly established lifestyles (Mitchell, 1983). Apart from the more obvious adoption of the latest in electronic wizardry such as computers and high performance SLR cameras, they are also receptive to packaged convenience services. Fast food outlets, supermarkets, credit card buying and instant automated services are now part of the everyday consumption milieu in the Asian NICs.

Besides the usual correlates of an advanced consumption profile such as higher disposable income, better education and a job in the executive or professional category, a greater affinity for leisure related consumption is also emerging. At the same time, the consumption leaders in the NICs are more keenly aware of their consumer rights and protection. Hygiene, health and safety awareness campaigns, fur instance, are frequent pre-occupations of the media in Taiwan. In Singapore and Hong Kong, consumer rights movements have been active for years.

IMPLICATIONS FOR MARKETING STRATEGIES

The differential rate of adoption under the two different product cycle scenarios suggests that marketing strategies for the international markets would have to be adjusted and adapted accordingly. A sequential cycle structure would require a more differentiated approach since the adoption process is marked by slower progression and more resistence on the part of the local consumers. Promotional strategy would have to be geared more to educating and motivating the late majority. Overall marketing strategies would have to be time-lagged to correspond to the slower moving foreign markets. Introduction of high technology products would still remain within the advanced consumption enclaves of the different national markets. The diffusion of consumption beyond the enclave may be limited not only because of the dualistic nature of the market, but also because the distribution network is highly fragmented. It would take years for evolving market development to overcome the inherant constraints of such lagging market conditions.

On the other hand, the coinciding product cycle scenario, for instance, require a more integrated and standardized product strategy given the similarity in the adoption rate between national markets. A multinational marketer would find it easier to implement a global product strategy under coinciding product cycle conditions since the adoption profile of buyers may be almost identical in different national markets in terms of adoption time and sophistication. Similarly, promotional and distribution strategies could also be more standardized under the coinciding cycle scenario. For example, direct marketing outlets may be established from scratch. Also since the consumption environment is more standardized, franchising could be efficiently used for simultaneously marketing to the various national markets. In short overall marketing strategy does not have to be time-lagged over the different national markets and in fact a strategy of simultaneous standardization of the marketing mix can be feasibily adopted.

SUMMARY AND CONCLUSION

As technology advances and proliferates around the Technology Rim of the Pacific, international marketers may have to re-think their marketing strategies as production as well as consumption unfolds in the various national markets almost simultaneously. As the coinciding product cycle phenomenon replaces the older notions of sequential product cycles, multinational marketing strategies would take on a more uniform and standardized format. Any international marketer operating under the assumption of slow moving sequential cycles, may find his/her international markets slipping rapidly away. On the other hand, a marketing manager attune to the dynamics of rapidly advancing national markets and the parallel rates of development would be able to reap the resultant benefits of a globalized approach.

REFERENCES

Engel, James F. and Roger D. Blackwell (1982), Consumer Behavior, Fourth Edition, Hinsdale, Ill.: Dryden Press.

Howard, John A. and Jagdish N. Sheth (1969), The Theory of Buyer Behavior, New York: John Wiley.

Mitchell, Arnold (1983), The Nine American Lifestyles: Who We Are and Where We Are Going, Now York: Macmillan.

Onkvisit, Sak and John J. Shaw (1983), "An Examination of the International Product Life Cycle and Its Application Within Marketing", Columbia Journal of World Business, Fall, 73-79.

Rogers, Everett M. (1962), Diffusion of Innovation New York: Free Press.

Rogers, Everett M. and F. Floyd Shoemaker (1971), Communications of Innovations, Second Edition, New York: Free Press.

Ting, Wenlee (1985), Business and Technological Dynamics in Newly Industrializing Asia, Westport, Conn: Greenwood Press.

Ting, Wenlee (1982), "Product Development in NICs Multinationals", Columbia Journal of World Business, Spring, 76-91.

Ting, Wenlee (1979), "Transfer of Intermediate Technology by Third World Multinationals", Proceedings, Academy of International Business Asian Pacific Dimensions of Business Meeting, Honolulu, Hawaii.

----------------------------------------

Authors

Wenlee Ting, American Graduate School of International Management



Volume

SV - Historical Perspective in Consumer Research: National and International Perspectives | 1985



Share Proceeding

Featured papers

See More

Featured

Do You Trust the System? Interaction Effect between Perceived Economic Mobility and Socioeconomic Status on Fair Market Ideology and Consumer Responses

Chun-Ming Yang, Ming Chuan University, Taiwan
Chia-Chi Chang, National Chiao Tung University

Read More

Featured

H1. How Anthropomorphized Roles Influence Consumers' Attitude Towards Innovative Products

yuanqiong He, Huazhong University of Science and Technology, China
Zhou Qi, Huazhong University of Science and Technology, China

Read More

Featured

The Impact of Product Type on Disposal Intentions

MUSTAFA KARATAŞ, Koc University, Turkey
Rabia BAYER, Koc University, Turkey
Zeynep GURHAN-CANLI, Koc University, Turkey

Read More

Engage with Us

Becoming an Association for Consumer Research member is simple. Membership in ACR is relatively inexpensive, but brings significant benefits to its members.