P.
C. Jha
Anshu
Gupta y
P.
K. Kapur z
Department
of Operational Research
University
of Delhi
Delhi
110 007
India
Innovation
Diffusion model due to Bass has been widely used in the literature and has
found applications in several areas. The model categorizes the consumers into
two categories viz. innovators and imitators. The model is based on simple
assumptions and excludes some real life consumer behavior and market aspects.
Further extension of the model results in complex mathematical form or is
sometimes not possible to solve. This difficulty can be resolved using an
alternative formulation of the model maintaining its flexible structure. In
this paper we propose some extensions of the Bass model using the alternative
formulation. Promotional effort is an important component of marketing mix that
determines the success of a product in the market and should be incorporated in
the diffusion model. The Generalized Bass model (GBM) developed by Bass can be
used to predict the growth of sales incorporating current marketing effect.
Like Bass model GBM is also based on simple assumptions and excludes some real
life consumer behavior and market aspects. Further extension of GBM also
results in complex mathematical form or is sometimes not possible to solve. In
this paper we have derived an alternative solution of the Generalized Bass
model maintaining its flexible structure. We have called current marketing
effect as a measure of promotional efforts. The utility of this alternative
derivation has been highlighted through new models that describe growing market
size and repeat purchasing. The models have been validated on new product sales
data sets cited in literature.
Keywords:
Innovation
diffusion, new product, growing market size, repeat purchasing, promotional efforts.