New Product Diffusion with Influentials and Imitators

Abstract

We model the diffusion of innovations in markets with two segments: who are more in touch with new developments and who affect another segment of whose own adoptions do not affect the influentials. This two-segment structure with asymmetric influence is consistent with several theories in sociology and diffusion research, as well as many “viral” or “network” marketing strategies. We have four main results. (1) Diffusion in a mixture of influentials and imitators can exhibit a dip or “chasm” between the early and later parts of the diffusion curve. (2) The proportion of adoptions stemming from influentials need not decrease monotonically, but may first decrease and then increase. (3) Erroneously specifying a mixed-influence model to a mixture process where influentials act independently from each other can generate systematic changes in the parameter values reported in earlier research. (4) Empirical analysis of 33 different data series indicates that the two-segment model fits better than the standard mixed-influence, the Gamma/Shifted Gompertz, and the Weibull-Gamma models, especially in cases where a two-segment structure is likely to exist. Also, the two-segment model fits about as well as the Karmeshu-Goswami mixed-influence model, in which the coefficients of innovation and imitation vary across potential adopters in a continuous fashion.asymmetric influence, diffusion of innovations, innovation, market segments, social contagion, social structure

Market potential dynamics in innovation diffusion: Modelling the synergy between two driving forces

“…Another model recently proposed by Guseo and Guidolin (2009) shows that a slowdown in diffusion emerges as a consequence of the sum of "two densities" i.e., the existence of a "dual-effect" in market evolution; however, the approach adopted in this model radically differs from that of Van den Bulte and Joshi (2007), since such a duality does not come from a separation into segments of adopters, but rather the interpretation of diffusion as composed of two distinct, yet co-evolving processes: communication and adoption. In particular, communication dynamics are seen as determinants of the market potential, whose structure is not fixed, but generated through time as a function of the spread of knowledge about an innovation.…”

“…Following a different path, another work that has recently dealt with the existence of a dual market and the slowdown in diffusion arguably related to it is that of Van den Bulte and Joshi (2007). The authors have developed a two-segment mixture model, to account for the presence of two distinct segments, namely influentials and imitators, whose adoption behaviour is captured by the following hazard functions,…”

“…We have highlighted in Section 1 that some interesting research effort was done in the last decade to represent heterogeneity of agents, by specifying mixture models that take into account different local structures of market responses, due to an assumed latent decomposition of adopters in sub-populations over time (see, for instance, Van den Bulte and Joshi (2007), Karmeshu and Goswami (2001), Muller and Yogev (2006), Goldenberg et al (2002) among others). A recurring assumption of previous mixtures or mixed models is the existence of different local market potentials.…”

“…Some recent literature on innovation diffusion has followed the idea that the market for new products needs to be divided into two major segments, usually termed "visionaries and pragmatists" (see Moore (1991)), "early market and main market" (see Goldenberg et al (2002), Muller and Yogev (2006), Karmeshu and Goswami (2001), Vakratsas and Kolsarici (2008)), "influentials and imitators" (see Van den Bulte and Joshi (2007)). …”

How the Innovation Diffusion Models from the Past can Help us to Explain Marketing in the New Media Era

“…These limits explain why we prefer to look also at agent-based models. A recent work dealing with social contagion is the one by Van den Bulte and Joshi (2007). The authors point out that marketing diffusion models need to assume heterogeneity to study the viral emerging practice.…”