ADOPTION OF PAYMENT SYSTEMS IN TEN COUNTRIES-A CASE STUDY OF DIFFUSSION

OF INNOVATION

GROUP MEMBERS- AARUSHI JAIN : SMBA12001SHIVAM GOYAL : SMBA12029

ABHIMANYU JATANI : SMBA12039GEORGIE JACOB : SMBA12052

MANOJIT SASMAL : SMBA12057YOGESH SINGLA : SMBA12077

CASE INTRODUCTIONPrevious adoptionsConsumer personality trait (Innovativeness)Brief about adoption of various payment systems in different countries

Discussing adoption pattern using various hypothesis and research discussed in the case

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

DIFFUSSION PROCESS

INNOVATIONProducts are constantly evolving.Companies are making innovations on the previously developed models for easy adaptability by the market.

Here, we talk about the payment systems adoption from a list of countries during 1988-1996.

Relative advantage-Expresses to what extent the new product is better then the one its replacingCompatibility-Level of innovation which fits into the specific societyComplexity-It is the extent of how difficult it is for an adopter to understand and use an innovationDivisibility-Degree to which a new product is capable of being tried on a limited basisCommunicability-Ease with which a product’s benefits can be observed, imagined or described to potential consumer.

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

Market oriented innovation-Judges the newness of the product in terms of how much exposure consumer has to a new product.Consumer oriented innovation-Newness is based on the consumer perception of the product rather than the physical features or the market realities.

CHANNELS OF COMMUNICATION:How quickly an innovation spreads through the market depends on the communication between marketer and consumer as well as communication among the consumers.

Correct communication channels used during the process of diffusion, oriented towards behavior and preferences of the target category of adopters.

Impersonal sources like advertising and press coverage and inter personal sources like sales people.

Internet, TV, Radio, banners, SMS, Newspapers, e-commerce.

SOCIAL SYSTEM:Diffusion of new product usually takes place in a social setting.Social system = Physical + Social + Cultural

environment.May influence entire society to accept or reject the new product.Characteristics of Modern Social System- Positive attitude of members of the social

towards changes Progressive technologies Positive attitude towards science and education High level of homogeneity Rational relationships then emotional ones High level of compatibility of innovation

TIME:Proper timing of introduction of innovation into the market is very important.

Time is the main constituent of diffusion process.

1. This is the total time that elapses between consumers initial awareness of the new products and the point at which he/she accepts/rejects it.

2. It is important because the average time the consumer takes to adopt a new product will be the precursor to the overall length of time it will take for widespread option.

ADOPTION PROCESS

ADOPTER CATEGORIES

InnovatorsEarly adoptersEarly majorityLate majorityLaggards

RATE OF ADOPTIONHow long it takes for the consumers of the social system to adopt the new product.SIGMOID CURVE (S Curve)-With successive groups of consumers adopting the new technology, its market share will eventually reach the saturation level.

F(t)= Introduction of the innovationt= Time lapsed since the innovationB= Reflex speed of adoptionA= Constant reflecting the location

PROBLEM DEFINITIONMANAGEMENT DECISION PROBLEM:Understanding the rate of adoption of Smart Cards among consumers.MANAGEMENT DECISION PROBLEM:a. Effect of Adoption of previous payment

systems of new innovations.b. Estimation of external and internal

influences from the social aspects of payment systems.

OBJECTIVE OF THE ANALYSIS

To understand the rate of adoption of various payments systems that are existing with respect to diffusion of

innovation.

THE EXISTING PAYMENT SYSTEMS

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

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

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

BANK CARD:A Bank Card is a plastic card issues by a bank to its clients that may perform one or more of the following services-a. ATM Cardb. Debit Cardc. Credit Card

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

COUNTRIES STUDIED1. Belgium2. Canada3. France4. Italy5. The Netherlands6. Portugal7. Spain8. USA9. Sweden10.Switzerland

EXPLORATORY RESEARCHSECONDARY DATA RESOURCES

GENERAL BUSINESS SOURCES:

Retail banker International,

Nederlandse Bank, MasterCards, VISA

GOVERNMENT SOURCES:Statistical

yearbooks, Banks of international

settlementsSAMPLE SIZE:100/Country-

Cheque100/Country- Credit cards

1000/Country- ATM

H1: The speed of adoption(B) of a recent payment innovation will be

higher than that of past innovations.

Thus, confirms Hypothesis 1

H2: The internal influence (q) on the speed of adoption of payment systems is higher than the

external influence (p).

Thus, confirms Hypothesis 2

H3: The innovation coefficients (p) regarding different innovative

payment systems are positively correlated across countries.

Thus, rejects Hypothesis 3

H4: The level of adoption of the current systems X at a time t is positively related to the speed of

adoption of a new payment system Y introduced at a time t.

Thus, confirms Hypothesis 4

CONCLUSIONAdoption of newly evolved payment systems is accepted quickly based on adoption rate of the predecessor.

Adoption process of payment system is mainly driven by internal influencer q (social learning).

The external influencer had less or no impact of the rate of adoption.

Marketing manager can develop strategies to develop adoption rate by practicing social learning through word of mouth, reference group & social media.

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