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Diffusion Forecasts

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Diffusion Forecasts Diffusion Forecasts Diffusion Spontaneous spreading of momentum New product entering the market Forecast Estimate of a condition in the future. – PowerPoint PPT presentation

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Date added: 23 May 2019
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Title: Diffusion Forecasts


1
Diffusion Forecasts
2
Diffusion Forecasts
  • Diffusion
  • Spontaneous spreading of momentum
  • New product entering the market
  • Forecast
  • Estimate of a condition in the future.

3
Diffusion Forecasts
  • Application to Marketing
  • Predict momentum of products/services in the
    future
  • More specifically
  • Flow of new products through a population
  • Predicting the rate of flow

4
Main Diffusion Elements
  • Diffusion of Innovations Theory
  • Bass Diffusion Model

5
Diffusion of Innovation
  • Everett M. Rogers
  • 1962 book
  • Diffusion of Innovations
  • Categorized individuals into adoption groups

6
Diffusion of Innovation
  • Rogers Groups
  • Innovators venturesome, risk takers
  • Early adopters educated, social leaders
  • Early majority deliberate, informal social
    contacts
  • Late majority traditional, lower econ status
  • Laggards fear of debt, friends/neighbors

7
Diffusion of Innovation
  • Diffusion Rate
  • Movement from innovator to laggard
  • Trickle down effect
  • Determined by
  • Nature of product
  • Marketing of product
  • Disease Analogy

8
Everett M. Rogers Increased Adoption
Rate If . . .
  • Small samples
  • Consistent
  • Simplicity
  • Advantage
  • Declining Costs
  • Industrial Product
  • Medical Product
  • Target Market

9
Main Diffusion Elements
  • Diffusion of Innovations Theory
  • Bass Diffusion Model

10
Bass Diffusion Model
  • Frank M. Bass
  • 1969 paper
  • A new product growth for model consumer
    durables
  • Interaction between users vs. potential
  • Mathematical ideas

11
Bass Diffusion Model
  • Classifies adopters into two groups
  • Innovators
  • hear about product
  • Imitators
  • knowing others
  • have adopted

12
Bass Model Formulation
  • Requires three inputs
  • p, the coefficient of innovation
  • q, the coefficient of imitation
  • m, the market potential
  • Equation
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