Diffusion of Innovations: Modeling, Estimation, and Normative Developments(CEIBS Working Paper, No. 044/2020/MKT, 2020)

Dipak Chand Jain, Trichy Krishnan, Sophie Feng

Research output: Working paper

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Abstract

Understanding the adoption process of a new product and modeling the resulting diffusion pattern over time has been of great interest to both academicians and practitioners for the past 50 years. The keen interest in modeling diffusion of innovations would continue to grow in the new digital economy also, perhaps more vigorously given the increased speed with which information spreads on social media. We are presenting a research manuscript that has three purposes. The first is to give a treatise on the interesting model developments that have happened in modeling diffusion of innovations. Noting that diffusion modeling is one of the strong theory-based quantitative investigations that has evolved in the marketing literature, we explain how theoretical modeling by various researchers has advanced the knowledge on new product sales growth. Second, given that no theoretical model can claim to be valid unless it is supported strongly by empirical data, we discuss in detail the development of estimation procedures as they pertain to offering validation support to the diffusion of innovation models. From the application perspective of diffusion models, we also look at the forecasting implications and normative developments, e.g., optimal marketing mix policies. Third, acknowledging that there have been comprehensive review papers in the diffusion of innovations area, including: Mahajan and Muller (1979), Mahajan and Wind (1986), Mahajan, Muller and Bass (1990), Mahajan, Muller and Bass (1993), Mahajan, Muller and Wind (2000), and the latest one being Meade and Islam (2006). Our objective is not to just do another review article on diffusion models but rather concentrate on emerging areas such as: multigeneration diffusion models, social media related product diffusion, and repeat purchase behavior, to name a few. Our focus is on building strong analytical models with theoretical insights and in-depth empirical analysis. Our work is likely to be more useful for the PhD students and researchers interested in new product adoption and diffusion. We focus our discussion on the following three areas: model formulations, estimation methods and normative implications.
Original languageEnglish
Publication statusPublished - Jan 2021

Source

China Europe International Business School (CEIBS)

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