Bass model with explanatory parameters

Abstract

Over the 45 years, the Bass model is widely used in the forecasting of new technology diffusion and for the growth of new products/services. The Bass model has four parameters: market capacity, time when product/service is introduced, coefficient of innovation and coefficient of imitation. Although values of coefficient of innovation and coefficient of imitation describe the process of how new product/service gets adopted as an interaction between users and potential users, their explanatory meaning is not perceptible. The chapter presents the new model based on the Bass model where coefficient of innovation and coefficient of imitation are substituted with explanatory ones: time of sales maximum and time interval needed for product/service to reach the designated penetration level. Obtained model is suitable for the forecasting of new product/service adoption when little or no data are available. In cases of product/service adoption forecasting prior to its launch, all model parameters can be assumed by means of analogy with the existing products/services due to their explanatory features.