Relative advantage represents the degree to which consumers notice a new brand like better one than existing alternatives with regard to specific benefits or attributes. Relative advantage is the use of consumer perception and is not a case if a new brand in a new product category is really better through objective standards. The Relative advantage is favorably correlated with an innovation's adoption rate. It means that the greater an innovation's relative advantages assimilate to existing offerings, the quicker the rate of adoption, all other considerations held steady. Conversely, is with a new brand's relative disadvantages:
- the difficulty of learning how to adopt a new product,
- high price
will delay the rate of adoption.
Generally, the relative advantage exists to the extent where a new brand offers:
- the immediacy of reward
- better performance compared to other options or
- savings in effort and time.
Example of relative advantage
For example, with regard to the adoption of hybrid-engine (gas and electric) cars. In spite of the fact that many car owners are affected not only about high fuel prices but also about environmental pollution, and additionally about the payback on the higher-priced hybrid cars stays elusive to many mainstream-market customers. The incremental car's price in $2.000-4.000 relative to the fuel savings over time merely do not make the relative advantage (compared to highly fuel-efficient, a cheaper compact, gasoline-powered car) is compelling enough for many consumers-yet.
Additionally to the dollar price, the ambiguity of high-tech products might carry on to emotional worry, a type of psychic cost. The customer can have uncertainty, fear, and doubt about if the promised benefits will deliver the technology, and the customer will have the capabilities and skills to realize those benefits. A lot of high-tech entrepreneurs trust that their invention is the Holy Grail, the next best thing to sliced bread and a better mousetrap - all rolled into one. However, the factor of relative advantage proposes that it is not sufficient for the inventor to trust that she or he really has a better product. The improvements have to be readily noticed through the customer and be worthy of the money and other costs of adoption.
Rogers definition of relative advantage
The relative advantage of the innovation might influences the adoption decision. Rogers determines relative advantage as "the degree to which an innovation is perceived as being better than the idea it supersedes". This definition might be expanded since advantage relative to other positions might be considered in a broader sense. Definition of Rogers' proposes that the advantage of innovation is just referred to as the situation where this innovation was not available yet .
- (T.A. Shimp 2008)
- (J.J. Mohr, S. Sengupta, S.F Slater 2010)
- (A.H Brummans 2006)
- Brummans A.H., (2006)., Adoption and Diffusion of EDI In Multilateral Networks of Organizations,Rozenberg Publishers
- Mohr J.J., Sengupta S., Slater S.F., (2010)., Marketing of High-technology Products and Innovations, Pearson Prentice Hall
- Shimp T.A., (2008)., Advertising Promotion and Other Aspects of Integrated Marketing Communications, Cengage Learning
Author: Jakub Postawa