The role of prices in models of innovation diffusion

✍ Scribed by Paul A. Bottomley; Robert Fildes

• Publisher: John Wiley and Sons
• Year: 1998
• Tongue: English
• Weight: 160 KB
• Volume: 17
• Category: Article
• ISSN: 0277-6693
• DOI: 10.1002/(sici)1099-131x(199812)17:7<539::aid-for684>3.0.co;2-s

✦ Synopsis

When evaluating the launch of a new product or service, forecasts of the diusion path and the eects of the marketing mix are critically important. Currently no uni®ed framework exists to provide guidelines on the inclusion and speci®cation of marketing mix variables into models of innovation diusion. The objective of this research is to examine empirically the role of prices in diusion models, in order to establish whether price can be incorporated eectively into the simpler time-series models. Unlike existing empirical research which examines the models' ®t to historical data, we examine the predictive validity of alternative models. Only if the incorporation of prices improves the predictive performance of diusion models can it be argued that these models have validity. A series of diusion models which include prices are compared against a number of wellaccepted diusion models, including the Bass (1969) model, and more recently developed `¯exible' diusion models. For short data series and long-lead time forecasting, the situation typical of practical situations, price rarely added to the forecasting capability of simpler time-series models.