As the strategic and financial importance of launching new products increases, a firm's success is often determined by its ability to target the most innovation-prone segments of consumers. While a clear understanding of the individual's adoption process can lead to more effective segmentation, little empirical research has examined this process from an information processing perspective. In this research, I examine the influence of both prior category knowledge and innovation continuity on how consumers learn about and construct preferences for new products.
Numerous studies in the consumer behavior literature have demonstrated that prior knowledge influences the cost and the content of thinking, and the extensive literature on diffusion suggests that the cost and the content of thinking, in turn, influence diffusion speed and success. Drawing on Rogers' (1983) scheme for classifying innovations, I link these two streams of research by proposing that prior category knowledge systematically influences consumers' perceptions of an innovation's (1) compatibility and complexity (i.e., the cost of thinking) and (2) its relative advantages and risks (i.e., the content of thinking). Additionally, I propose an individual-level definition of innovation continuity which may be more useful to marketers, in terms of targeting and segmenting consumers, than the aggregate-level definition historically employed.
A series of three studies is used to test these propositions. Because the first study reveals a significant, negative relationship between objective category knowledge and adoption, the last two studies are designed to examine the processes underlying the knowledge-preference relationship. Specifically, Study 2 examines the moderating influence of innovation continuity on the relationship between prior knowledge and perceived complexity, compatibility, relative advantage, and risk. Study 3 uses the analogical learning paradigm to test whether manipulating access to different types of knowledge bases influences consumers' preferences for discontinuous innovations.