An examination of new product diffusion in Japan and Taiwan : a thesis presented in partial fulfilment of the requirements of the degree of Master of Business Studies (Hons) at Massey University
The diffusion of new products and services is an important marketing issue given the vast number of new products, brands, and brand extensions being developed and launched every year. Shorter product life cycles mean companies have less time to recoup development costs and optimise elements of the marketing mix. Accordingly, any prior information about the particular innovation or market is essential in aiding decision making. As important is the development of models that can forecast sales and diffusion patterns prior to product launch and during the early stage of the product's life. Furthermore, understanding the diffusion dynamics of different geographic regions is a prerequisite for success in an increasingly global environment that retains many cultural nuances. All of these issues are addressed to some extent in this thesis, but it is the last of these which is the main focus. The Bass diffusion model of new product growth (Bass, 1969) is a mathematical model which focuses on the process by which an innovation is adopted within a social system over time. The original model has three parameters: external influence, p, which represents the impact of factors external to the adopting population such as mass media and advertising; internal influence, q, which includes both verbal and nonverbal interpersonal effects within the adopting population; and the expected total number of adopters or market potential, m. Being inherently non-linear, the model is able to duplicate the s-shaped cumulative adoption curve regularly observed for new products (Dodds, 1973; Sharif and Ramanathan, 1981; Mahajan, Muller and Bass, 1995).
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