Parsimonious Models of Diffusion of Innovation: Part A: Derivations and Comparisons

Abstract

The pioneering application by Bass of an epidemiological model to the diffusion of a new consumer durable has stimulated considerable interest in the marketing profession. Many subsequent applications of the model have dealt with new product sales forecasting and optimal marketing mix strategies during introduction of a new product. This paper investigates in detail the structure of the model and how it has been used in practice. The concept of the nature of innovativeness is also brought to bear in this analysis. A new generalized model is derived that corrects for systematic biases that have been reported in the applications. The model is analyzed through simulations and is also used on real data.