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Bass Model (Bass, 1969)

The Bass model is used to model the diffusion of new products over time. It defines the rate of change in cumulative sales (N(t)) over time based on coefficients for innovation (p) and imitation (q). The generalized Bass model expands on this by including additional terms to account for the impact of factors like price, advertising, and distribution on the diffusion process. Both models result in a differential equation that can be solved to determine the cumulative sales or adoption rate (F(t)) at any given time point.

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52 views2 pages

Bass Model (Bass, 1969)

The Bass model is used to model the diffusion of new products over time. It defines the rate of change in cumulative sales (N(t)) over time based on coefficients for innovation (p) and imitation (q). The generalized Bass model expands on this by including additional terms to account for the impact of factors like price, advertising, and distribution on the diffusion process. Both models result in a differential equation that can be solved to determine the cumulative sales or adoption rate (F(t)) at any given time point.

Uploaded by

harshnvicky123
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Bass model (Bass, 1969):

( 1)
() = [ + ] [ ( 1)]

() = () ( 1)

" ()" ()

( 1)
() ( 1) = [ + ] [ ( 1)]

() ( 1) ( 1) ( 1)
= [ + ] [1 ]

As time goes from t-1 to t, cumulative sales goes from N(t-1) to N(t). For a small
time interval , i.e. as time goes from t-t to t, cumulative sales goes from
N(t-t) to N(t).

() ( ) ( ) ( )
= {[ + ] [1 ]}

()()
Define rate of change =

1 () ( ) 1 ( ) ( )
= {[ + ] [1 ]}

()
As 0, and letting () = , we get the differential equation:

()
= [ + ()][1 ()]

Solving this differential equation with the initial condition F(0)=0, we get:

1 exp[( + )]
() =
1 + exp[( + )]

() = () ( 1) = [() ( 1)]

For statistical purposes: F(t) is a cdf (Cumulative density function).


Generalized Bass Model (Bass, Krishnan and Jain, 1994):

( 1) Pr() Pr( 1)
() = [ + ] [ ( 1)] [1 + 1 ]
Pr( 1)

1 exp[( + ) ]
() = ,
1 + exp[( + ) ]

Pr()
= + 1 { }.
Pr(0)

In general,

Pr() () ()
= + 1 { } + 2 { } + 3 { }.
Pr(0) (0) (0)

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