Bass Diffusion Model Case Study

INTRODUCTION

Diffusion of innovation is explained as a method of market insertion of new products and services, which is driven by social impacts (Mahajan et al. 2010). Diffusion theory found on frame suggested by Rogers (1962) explains the presumption, that there are four parts of diffusion method: innovation with its attributes, communication channels, time and social system. Rogers characterises five portions of possible adopters of innovation, based on their penchant to adopt a particular innovation: innovators, early adopters, early majorities, late majorities and laggards.

The impression that innovation diffusions from innovators to majority public became principal in the diffusion modelling literature since the introduction of Bass growth model (1969)

Bass model is well renowned and universally used for representing the new product adoption curve. Its primary suggestion is that the possibility of adoption of innovation at time t (strictly in case of first time purchase) is affected by two types of influence - internal that indicate to word-of-mouth or interpersonal communication and external influence demonstrated

There have been numerals of experiential findings of blend of price into the Bass model, such as Tsai et al. (2010), Bottomley and Fildes (1998), Bass et al. (1994), etc. The outcomes have recommended that price impacts the adoption rate rather than the market possible and the price influences are predominant particularly in case of expensive durable products (Bottomley - Fildes, 1998). Especially, decreasing prices help imitators to follow innovators to adopt the innovation (Tsai et al., 2010). In the model include price impact, it is suggested to specify the internal influence q as a purpose of price decline, represent