Bass Diffusion Model

Knowledge Center

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.

Forum Forum about Innovation. Start a new topic Share your knowledge or ask a question   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?... 14   1 comments External / Internal Influence Model Why is the Bass Model also called "external internal influence model"?... 10   🔥 NEW Measuring Adoption of Innovation Hi, I just want to know how you can measure the adoption of an innovation like Bitcoins. Which method can you use and which theoretical framework do you need to successfully measure the adoption. Btw,... 4   1 comments 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...... 4   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 i... 3   Calculating Nt-1 in Bass | Calculating m, p and q in the Bass Model How do you calculate Nt-1 in the Bass formula?... 2   7 comments

Expert Tips Advanced insights about Innovation. Here you will find professional advices by experts. Innovation Pitfalls Avoiding Innovation Traps Harvard Professor R. Moss Kanter describes 4 common innovation mistakes and corresponding remedies (HBR Nov 2006): 1. S... Limitations of Bass Diffusion Diffusion of new Technology - Despite the sophistication of the Bass Diffusion Model, the resulting data has to be treated with care, as it is mainl... Social Persuasion: Determining the Potential of Social Influencers Social Media Marketing, Social Influence, Opinion Leadership Which consumers are best able to influence others in social groups? What characteristics and what factors identify those... Why Some Technology Revolutions Take Off and Others Don't Adoption of New Technologies Back in 1962, Thomas Kuhn wrote “Structure of Scientific Revolutions”, in which he suggested that the entrenched interes...

Information Sources Various sources of information regarding Innovation. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops. On the Bass diffusion theory. 4 Versions On the Bass Diffusion Theory Four Versions of BD Paper by Philip Hans Franses compares four empirical versions of the Bass Diffusion model. It is shown that some of the ... Opinion Leadership, Worth-Of-Mouth and Buzz Marketing Opinion Leadership, Buzz Marketing, Worth-Of-Mouth Communication, Cool Hunting Presentation with speaking notes about Opinion Leadership, including several related types of marketing. The presentatio... Extended Bass Diffusion Model Cross-country Diffusion of New Products Paper by H. Peter Boswijk, Dennis Fok and Philip Hans Franses. To examine cross-country diffusion of new products, marke... Marketing Research: Introduction and Techniques Marketing Research, Qualitative Marketing Research Methods, Research Experiments This presentation provides an overview of Marketing research and its techniques, including focus groups. The presentatio... Product Life Cycle (PLC) versus Bass Diffusion Product Management, Decision Making Presentation about the Product Life Cycle model thereby making a comparison with the Bass Diffusion Model. It includes t...

Research Links Automatically jump to further useful sources regarding Innovation. News Videos Presentations   Books Academic More

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

Return to Management Hub: Decision-making & Valuation  |  Finance & Investing  |  Knowledge & Intangibles  |  Marketing & Sales

More Management Methods, Models and Theory