paper: INNOVATION DIFFUSION AND NEW PRODUCT GROWTH MODELS IN MARKETING

This paper describes product growth model and summarises the state of the art in innovation diffusion models in marketing new product. it concerns about including marketing effects on growth models. the progress of the innovation diffusion models :

1. simple model: first time buyer
basic models of product sale growth:
In modelling the growth of the first-time buyers of a product, the basic diffusion models consider only two segments in the diffusion process: potential market and current market—and two transfer mechanisms to influence the potential customers to adopt the product—mass-media communication and word-of-mouth communication. Furthermore, these models assume a constant total population of potential customers over the entire life of the product.
These models are primarily concerned with modelling nit), the flow of customers from the potential market to the current market.


2. Extended modes:
Extended models try to incorporate other influences in growth model such as marketing and time dependency of previously constant parameters(such as potential market).
this approaches started because basic models dont give useful information about marketing effects.

some attempts to include different parameters:
-In some application external influence is small and marketing strategy changes the model, based on model’s change we can understand the effect
-Constants for external and internal influences should be function of time
-external effect as price
-Sorts of advertising to be included in word of mouth
-Studying the simultaneous growth of related products
-Marketing: is to effect the total number of potential customers
-parameters derived from an empirical analysis of past new product introductions and experience surveys
-not all word of mouth is positive

the problem with most of the extended models is that they mainly miss to incorporate all the parameters at once, repeat or replacement sale.