Beyond diffusion: an affordability model of the growth of new consumer durables

Abstract

A ®rm's ability to compete in new product markets is vital to its pro®t-ability and long-term survival. Therefore, it is important to understand the development and growth of these markets. Following a pioneering study by Bass (1969), di€usion models have traditionally provided this understanding in marketing. The great appeal of the Bass model is that it is a simple one that ®ts the data very well and provides parameters that have an intuitive behavioural interpretation. The model su€ers from three well-known limitations: (1) it does not include marketing variables that could in¯uence new product di€usion and sales; (2) the model's parameters are unstable; and (3) the model's forecasts are inaccurate before the sales peak and especially prior to the point of in¯ection. Subsequent research has made progress especially in extending the Bass model to include marketing variables. However, the extensions have come at the cost of simplicity: the new models are far more complex than the simple Bass model. We propose an alternate simple model of new product growth for consumer durables, based on the concept of a€ordability rather than on di€usion. We compare this model with the di€usion model in terms of ®t, stability and validity of parameters, and forecasting ability. The alternate model is a little inferior to the di€usion model in ®t, but superior in terms of the stability and validity of parameters and forecasting ability. We discuss the limitations and implications of our model. #

Media Discontinuance: Modeling the Diffusion “S” Curve to Declines in Media Use

“…Tested against data for eleven consumer durables, the Bass model found exponential growth of initial purchases to a peak, followed by an exponential decay. Subsequent research extended the Bass model to include other dimensions of diffusion as well as economic factors that may influence product growth (Dodson & Muller, 1978;Golder & Tellus, 1998).…”

Dynamic capabilities to match multiple product generations and market rhythm

“…Dynamic marketing capabilities in terms of understanding price-elasticity of demand relationships and key aspects of consumer behavior also help a firm to control its NP readiness rhythm. According to Golder and Tellis (1998) as well as Marsh and Stock (2003), a firm's ability to establish an appropriate product price can have a significant influence on the success of a product introduction. They cite, for example, the ability of Texas Instruments to pursue an aggressive low price strategy with their calculators as leading to their exponential sales growth.…”

Optimal Control over the Process of Innovative Product Diffusion: The Case of Sony Corporation

“…doi:10.14254/2071-789X.2018/11-3/16 1. Literature review Golder and Tellis (1998) offer a model for the distribution of durable goods, based on the concept of accessibility, rather than diffusion. The main limitations of the Bass model (1969) (the marketing variables are not taken into account, the parameters found are not stable, the forecasts are not accurate enough) in the proposed model were eliminated, especially when predicting and sustaining the parameters (Kozlovskyi, et al, 2018).…”