How Will Innovation Diffuse with Smart Customers? - Exploring with Agent-based Model

Abstract

Due to the explosive advancement and dissemination of information technologies, near-perfect market information is available to customers via smartphone and internet. In turn, customers have not only become smarter but become heterogeneous with regards to their smartness

the smartness can play critical role in customers purchase decision and diffusion of innovation. However, previous studies have not considered the influence of smartness in innovation diffusion. Along this line, the primary objective of this study is to examine the diffusion patterns of innovation when customers heterogeneity on smartness is considered as the determining factor. In doing that, the term smartness is defined by introducing the concept of customer involvement and IT use, and the effect of smartness on the decision process is discussed. The agent-based modelling (ABM) approach is adopted for the methodology in this research since it has the ability to explicitly incorporate customers heterogeneity and flexibility to accommodate sensitivity analysis. Specifically, the adoption process of customer agents with heterogeneous smartness is modelled

the patterns of diffusion in aggregated customers are explored through the agent-based modelling technique. Although an exploratory study, this research contributes to diffusion analysis in that it attempts to take a new perspective on innovation diffusion in response to paradigmatic shift of customers characteristics. Furthermore, it provides a better understanding of the customer behavior and insights on positioning innovation in a market by considering smartness of customers.