Group Members:
- Tracy Batu@Batok 5949816
- Joel Isaac Daniel 5983101
- Jeffrey Lim Yang Jinn 5982157
- Darren Ong Kenn Chong 5990300
- Lee Jin Yang 5949610
1) Identify a product, service or style that was recently adopted by you and/or some of your friends. Identify what type of innovation it is and describe its diffusion process up to this point in time. What are the characteristics of the people who adopted it first? What types of people did not adopt it? What feature of the product, service or style are likely to determine its eventual success or failure?
A service that we have chosen is a ride hailing company called Grab. Grab is a transportation network company that operates in few Asia countries such as Malaysia, Singapore, Philippines and more. In addition to transportation (Grab Car), the company also offers food delivery, known as Grab Food via mobile app. To use this service, a person must have a Grab application account to book a ride, or to choose the menu for Grab Food. As many agree, Grab service is a new trend for people that emphasize on daily transportation. By having this app on our mobile devices, it is convenient for the customer to proceed to their destination, whether it is a short or long distance. Not only that, Grab has made life easier by adding service in delivering food for customers. On top of that, Grab always give rewards through earning points or promotion discounts for their riders and eaters which adds the value to the company. These points can be exchanged for other goods and services, such as food and airline flier miles (Lim 2018).
Diffusion is a process by which the acceptance of an innovation or new product, a new idea, a new service, is spread by communication to members of a social system over a period of time (Schiffman & Wisenblit 2015). Grab has gone through typical diffusion where the process shows a slow growth or adoption. It rises rapidly until slow rise is recognised. Few years ago, Grab was not recognised by many people as e-hailing service was very new in our country. It slowly gained popularity as many consumers started to acknowledge the brand and switched from street hailings to e-hailing. According to Grab Malaysia country head Sean Goh, consumer preferences did not shift away from taxis towards private cars, but rather away from traditional street hailing towards e-hailing (Tariq 2018). Grab started to expand and move towards increased growth due to their Grab Food service as there is a lot of demands for food delivery nowadays. In addition, an innovation is an idea, practice, or product that are perceived to be new by an individual or a group (Schiffman & Wisenblit 2015). A product is said to be an innovation when it is perceived by the potential market as a change, and not by a technological change brought in it. Grab adapts continuous innovation where minor behavioral changes are required for adoption of the product. For example, travellers that travel often might have to change their perspective on this new ‘trend’ or adapt to something new such as switching from traditional hailing to e-hailing services.
People that adopt this service first are classified as innovators. Innovators are venture some risk takers. They are younger, more educated and socially mobile. They have the capacity to absorb risk associated with the new product. They are cosmopolitan in outlook, are aware and make use of commercial media, and eager to learn about new products, are progressive and ready to use new products (Schiffman & Wisenblit 2015). They are the first of 2.5% people who adopt innovation. Since Grab requires technology for booking and payment, the youngsters and young adults are more open to adopt this service because they are more tech savvy. Other than that, people who does not own their own car will use this opportunity as it is more convenient and very useful for them to travel instead of riding traditional taxi which is rather expensive nowadays and sometimes the customers can get cheated too. This is one of the reasons why Grab has begun to dominate the taxi market in the country (Wee 2017).
However, people that do not adopt this service are known as late majority group. They are doubtful and sceptical about the innovation of new products. They tend to use the product not so much because of innovation, but because of other pressure such as non-availability of the product or social pressures. They have less social status and are less socially mobile than previous group. They are average in age, education, social status and income (Schiffman & Wisenblit 2015). They make little use of social media because they rely heavily and trust more on informal sources of information. For example, regarding to generation, elderly people usually prefer using traditional way such as paying for the taxi fees, or taking public transports. This is because they are not tech savvy like the young people and they are more comfortable using services that do not require them to utilise the internet. Other than that, people who fall under this classification also are the people that have less money to use Grab service as it can get quite expensive too, depending on the distance travelled. People with low income usually will opt for a cheaper alternative to travel around with public transport such as free bus or train.
In order to maintain the success of the business, we believe that features like fixed fares will determine whether the business is sustainable in the long run. Riders that travel a lot will surely appreciate fixed cost of travel as people are up to cheaper alternatives these days as Malaysia’s economy is glooming. This feature is already implemented by Grab itself where the price is fixed regardless how bad the traffic and delay is. Grab insists that fares will remain affordable. For fixed-price trips via GrabHitch or GrabShuttle, the fare is determined by the distance travelled. Taxi rides hailed via GrabTaxi (the Standard Taxi option) will continue to charge fares based on metered fares and standard booking fees (Lee 2018). We believe that if this feature is not up to standard, Grab might lose customers. With this being said, fixed fares feature can affect both of the company’s success and failure.
2. The key characteristics that influence buyer behaviour toward new products are perceived risk, media influence, social characteristics, and demographic characteristics. Imagine that you are planning to purchase a brand-new luxury motor vehicle and explain how each of these factors would affect your purchase decision. Please use example to support your responses.
The luxury motor vehicle that we have chosen is Mercedes Benz. Before making a purchase, there are multiple factors that we took into consideration. This is because we are looking to make the best decision as there are several other competing brands and we’d like to get the most out of our purchase.
The first factor we considered is perceived risk. Perceived risk is the belief about the presence of possible uncertainties and negative outcomes from the purchase of certain products and services (Gokcek, Carikcioglu & Yuksel 2019, p.120). One of the risks is the financial risk. The financial risk looks at things from the monetary side of the purchase as we would want it to be worth the cost that we paid for the product (Rajendran & Jayakrishnan 2018). For instance, the price of a Mercedes Benz ranges from RM200,000 to RM2,000,000. Having to pay that much for a car, we expect it to offer us more than what a cheaper car could.
Besides that, media influence also affects the consumers buying behaviour. Social media in this era plays a major role in influencing potential customers. Mercedes Benz uses brand ambassadors to influence the minds of their target market. Two current ambassadors of Mercedes Benz are Roger Federer and Mesut Ozil, both of whom are famous sportsperson that have a significant amount of followers on Instagram. As both of them are my favourite sportsperson, they have influenced me to think of Mercedes Benz first ahead of other brands such as BMW or Audi.
Other than that, social characteristics refers to a person or a group which contributes or belong to specific interests or niche. Based on Maslow’s hierarchy of needs, human beings generally will look for a sense of belonging as they’d like to belong somewhere to in group. As we have an interest in cars and would like to meet people with similar interests as us, being in a car group community would influence us to purchase a car that can offer us this opportunity. Mercedes Benz do have an Owners Community Malaysia which allows us to meet fellow owners who share similar interests as us.
The next factor is demographic characteristics. Demographics can be broken down into gender and income. Mercedes Benz as a luxury brand targets the higher middle income to high income group. However, they do not target a specific gender which means that Mercedes Benz is suitable for both male and female. I as a potential consumer fit into the demographic characteristics which Mercedes Benz has targeted and this will directly influence my purchase intentions because if I don’t fall into the target market, the chances of me buying a Mercedes Benz is very low.
REFERENCE LIST
Gökcek, HA, Çarikçioğlu, PS & Yüksel, CA 2019, ‘The Effect of Consumer Decision Making Styles on Cognitive Di̇ssonance along with the Role of the Perceived Risk as a Moderator in Online Shopping’, Journal of Academic Research in Economics, vol. 11, no. 1, pp. 118–127, accessed 20/4/2019, <https://searchcohost.com.ezproxy.uow.edu.au/login.aspx?direct=true&db=a9h&AN=135807573&site=eds-live>.
Lee, J 2018, ‘Things you need to know now that Grab is acquiring Uber in Southeast Asia’, Mothership, March 26, accessed on 25/4/2019, https://mothership.sg/2018/03/grab acquires-uber-explained/
Lim, A 2018, ‘Grab cuts user discounts and driver incentives’, The Strait Times Singapore, May 18, accessed on 24/4/2019, https://www.straitstimes.com/singapore/transport/grab-cuts-user-discounts-and-driver- incentives
Rajendran, K & Jayakrishnan, J 2018, ‘CONSUMER PERCEIVED RISK IN CAR
PURCHASE’, Journal of Business Research, pp.736-741, viewed on 22/4/19, < http://ictactjournals.in/paper/IJMS_Vol_4_Iss_2_Paper_5_736_741.pdf >
Shiffman, L.G & Wisenblit, J.L 2015, Consumer Behavior, 11th edn, Pearson, Edinburgh Gate, UK.
Tariq, Q 2018, ‘Grab: Commuters okay with taxis but not street hailing’, The Star Online, October 25, accessed on 25/4/2019, https://www.thestar.com.my/news/nation/2018/10/25/grab-commuters-okay-with -taxis-but- not-street-hailing/
Wee, V 2017 ‘Everything You Need to Know About Grab’, Techedt, accessed 25/4/2019
Everything You Need to Know About Grab
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