Bass Diffusion Model

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Predicting Innovation Curves. Explanation of Bass Diffusion Model of Frank M. Bass. ('69)

The Bass Diffusion Model on the adoption and diffusion of new products and technologies by Frank M. Bass (A New Product Growth Model for Consumer Durables, 1969, Management Science, 15 , 215-227) and the later extensions of diffusion theory are used for market analysis and demand forecasting of new technologies. The Bass diffusion model is one of the tools to describe, and sometimes predict, the number of purchases for new consumer durable products.
 

Experience from many innovations shows that the spread of a new method or concept in a market can be characterized by the Bass formula:

Parameters of the Bass Diffusion Model

The three parameters of the Bass Diffusion Model to predict Nt (Number of adopters at time t) are:

• m = the market potential; the total number of people who will eventually use the product
• p= the coefficient of innovation (external influence); the likelihood that somebody who is not yet using the product will start using it because of mass media coverage or other external factors
• q= the coefficient of imitation (internal influence); the likelihood that somebody who is not yet using the product will start using it because of "word-of-mouth" or other influence from those already using the product.

See the picture on the right for a typical graphic of the standard bass curve (with the average values of p and q of 0.03 and 0.38, respectively).

Usage of the Bass Diffusion Model

Bass diffusion theory is simple enough to allow a first assessment. There is no immediate need for further complex modeling. However care must be taken as the standard model is only one of the many models of technology diffusion. Many variations on the Bass Diffusion Model have been developed over time, often claiming further precision or applicability for certain circumstances.

The dynamics of the innovation uptake curves, and how the technology or its application diffuse into the market, is a crucial analytic tool when assessing the business case for internal or external investments in new technologies. For early stage investments or internal business cases for new products, it is essential to have some understanding of the likely diffusion of the technology. By not having a mental model to test against reality, the amount of capital, time to market and the window of opportunity can be grossly misjudged. Diffusion of innovation models are important tools for effectively assessing the merits of investing in technologies that are new or novel and do not have prima facie, predictable patterns of user up-take.

Bass Diffusion Forum   How is Bass Curve Model Different from Product Life Cycle I can not find considerable differences in between the Bass Curve and the Product Life Cycle. Please advise......           Calculating and Predicting a Product Life Cycle If we had to determine the life cycle of a product how can it be done. What quantitative variables should we take in consideration for calculating the same and why?...           External / Internal Influence Model Why is the Bass Model also called "external internal influence model"?...           Alternate Bass Model Formula The Bass model can (I think) be written as: New Cust = Innovation * (Population - Customers) + Immitation * Customers + Imitation * (Customers * Customers) / population. It is easy to explain the first two terms in lay terms...           Calculating Nt-1 in Bass | Calculating m, p and q in the Bass Model How do you calculate Nt-1 in the Bass formula?...         Begin a new topic

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Best Practices - Bass Diffusion Premium

Expert Tips - Bass Diffusion Premium   Innovation Pitfalls Harvard Professor R. Moss Kanter describes 4 common innovation mistakes and corresponding remedies (HBR Nov 2006): 1. STRATEGY MISTAKES - Seeking... Usage (application): Avoiding Innovation Traps       Limitations of Bass Diffusion - Despite the sophistication of the Bass Diffusion Model, the resulting data has to be treated with care, as it is mainly driven by the initial set of... Usage (application): Diffusion of new Technology       Social Persuasion: Determining the Potential of Social Influencers Which consumers are best able to influence others in social groups? What characteristics and what factors identify those consumers with the greates... Usage (application): Social Media Marketing, Social Influence, Opinion Leadership       Why Some Technology Revolutions Take Off and Others Don't Back in 1962, Thomas Kuhn wrote “Structure of Scientific Revolutions”, in which he suggested that the entrenched interests in an old paradigm will res... Usage (application): Adoption of New Technologies

Resources - Bass Diffusion Premium On the Bass diffusion theory. 4 Versions On the Bass Diffusion Theory Paper by Philip Hans Franses compares four empirical versions of the Bass Diffusion model. It is shown that some of the regression models imply multi-... Usage (application): Four Versions of BD   Opinion Leadership, Worth-Of-Mouth and Buzz Marketing Presentation with speaking notes about Opinion Leadership, including several related types of marketing. The presentation includes the following secti... Usage (application): Opinion Leadership, Buzz Marketing, Worth-Of-Mouth Communication, Cool Hunting   Extended Bass Diffusion Model Paper by H. Peter Boswijk, Dennis Fok and Philip Hans Franses. To examine cross-country diffusion of new products, marketing researchers have to rely ... Usage (application): Cross-country Diffusion of New Products   Marketing Research: Introduction and Techniques This presentation provides an overview of Marketing research and its techniques, including focus groups. The presentation includes the following secti... Usage (application): Marketing Research, Qualitative Marketing Research Methods, Research Experiments   Product Life Cycle (PLC) versus Bass Diffusion Presentation about the Product Life Cycle model thereby making a comparison with the Bass Diffusion Model. It includes the following sections: 1.... Usage (application): Product Management, Decision Making     News Bass Diffusion         News Diffusion Model         Videos Bass Diffusion         Videos Diffusion Model         Presentations Bass Diffusion         Presentations Diffusion Model         More Bass Diffusion         More Diffusion Model

Compare with the bass diffusion model:  Innovation Adoption Curve (Rogers)  |  Product Life Cycle  |  BCG Matrix  |  ADL Matrix  |  Positioning  |  STRATPORT  |  Profit Pools  |  Marketing Mix  |  Four Trajectories of Industry Change  |  Disruptive Innovation

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