Communication strategy: an investigation into the relative importance of formal and informal communication for the diffusion and adoption of discontinuous innovations

Abstract

For many years marketing academics have stated that different types of communication tools, such as word-of-mouth and advertising, have different roles in the consumer decision process and different effects on consumers. However, the empirical work in this area is limited, and no generalisable model exists to guide managers with regards to what tools to use to achieve different purposes. This research is designed to fill this gap and provide a basis for future research in this area. The thesis begins by examining the reason why such research is important. To do this the concepts of diffusion and adoption are used. These concepts are compared and contrasted and the term 'diffusion theory' in marketing is clarified and its relationship with adoption explained. From this analysis it is found that the normative model of diffusion is useful but the mechanics behind this model have not yet been adequately examined which limits its practical use. This thesis suggests that one of the major mechanisms behind the normative model of diffusion is the consumer decision process. That is, how people decide to make a purchase. It is suggested that working in tandem with the decision process is the information processing model and hence the importance of determining the impact of differing communication tools on the consumer. From an analysis of the literature, a model is extracted and several hypotheses are formulated. The basic premise to be tested is that as a person moves through the decision process for a dynamically continuous or discontinuous innovation the influence of formal communication decreases while the influence of informal communication increases. This model was tested using a survey methodology and the results were statistically analysed. From the analysis it was found that the tools within the formal and informal communication divisions operate in very different ways, and some even operate in an opposite direction to other tools within their respective divisions. A different, almost contradictory model to what the literature has suggested to date, was found with informal communication being more important at the awareness stage of the consumer decision-making process. By the information processing stage both formal and informal communication had no statistically significant difference between them. The research came to the following conclusions; Firstly, the results of this study showed grounds for building on the literature's current perspective with regards to the roles of both formal and informal communication over the consumer decision process. This study showed that these two divisions not only worked differently than expected, but tools within each of the divisions were shown to work differently, even contrary, from other tools in the same division. This suggests that the categorisation of communication tools needs to be re-examined. The formal/informal typology of communication tools, has been shown in this research not to be a valid, generalisable distinction as the results showed discrepancies with regards to the way the tools worked within their divisions. A new division of communication tools is suggested based on the role of the tool for a particular product, rather than the type of tool. With regards to practical implications, firstly the research showed that awareness is best generated through informal sources such as word-of-mouth. Further, the research also showed that both formal and informal communication tools are relevant at both the information search and purchase stages of the decision process. This implies that while marketers may spend time and money creating informal communication at the early stages of a product's life cycle, informal communication stimulation (such as PR and sponsorship type activities) should continue throughout the life-cycle of the product. Finally, it was found that none of the communication tools scored highly on the indices used to measure their influence and marketers should therefore not neglect other important areas such as merchandising, corporate image and customer service, to name but a few. Further research areas are suggested to further enhance the relevance and generalisability of this research in the future.