NEW PRODUCTION UPTAKE [THE 'BASS DIFFUSION MODEL']

This model describes the process by which new products are taken up amongst a population of potential customers, both by advertising or other marketing efforts, and also by interacting with existing customers or owners of the product. Word-of-mouth is the common term for this interaction, but there need be no active interaction - simply seeing others with the product may be enough to persuade new customers to buy it.

The model runs on the mystrategy® software Download a copy of the Reader or buy a personal licence for mystrategy

Download the mystrategy® model for this example - zipped .msf file

Since there are no existing customers at the outset, some minimum marketing effort is required to start the uptake process. Then, the speed of the word-of-mouth process reflects the frequency with which potential customers and existing customers interact. This will initially be slow, since there are few existing customers, but accelerates as this number rises. However, the process eventually slows down again, as the number of remaining potential cusotmers declines.

The impact on sales volume reflects the characteristics of the product and its use. For consumables, such as food and drink products, cleaning materials and so on, sales are most strongly driven by the population of active customers and the frequency with which they buy the product. For durables, such as TVs or the iPod, sales are initially driven by the uptake rate amongst new customers, but may then be added to when customers replace or upgrade the product. There may also be sales of related products, such as the ink-cartridges for printers, driven by the active customer group. The original description of the model is in Bass F, 1969, A New Product Growth Model for Consumer Durables Management Science 15: 215-227. It has been extensively developed and extended for a wide variety of situations - see for example, Milling P M, 2002, Understanding and Managing Innovation Processes, System Dynamics Review, Volume 18, Issue 1 , Pages 73 - 86.

mystrategy® is a Registered Trademark of Global Strategy Dynamics Ltd