Quantitative models for development and introduction of new products

Abstract

Most companies recognize that new product is accompanied by high costs and risks. These risks can be controlled through use of sound explicit models for planning and forecasting new product sales. The new product models have been developed for mainly three purposes in marketing: to identify the competitive structure in new product market, to forecast sales, and to evaluate the concepts of new products. Batsell and Polkings model could yield insights into the underlying competitive structure that would suggest relevant attributes and potential tree structures, even though it does not require a priori assumption on the underlying tree structure. Thus, the model is appropriate to identify and test competitive structures in new product market. However, estimation procedure is complex and has a logical problem (for example, there exists a lack of precise relationship between the parameters and the intermediate scales when the number of parameters is smaller than that of observations.). Thus, we addressed this problem with a direct estimation method. An important benefit of the direct method is that it is simpler and easier to apply that the indirect method Batsell and Polking Proposed. Since the Bass model was introduced in marketing filed, its various modified forms have been successfully demonstrated for forecasting innovation diffusion in diverse product/service categories. In real world, however, we commonly observe structure or radical changes in the external factors that can influence on the diffusion process. Thus, we proposed two approaches that make us model the diffusion process under under abrupt changes of the external factors. The merits of the proposed approaches are summarized as follows. First, the proposed approaches make us model the sales renewal and the growth death diffusion processes. Second, the proposed approaches can be used to measure the impact degree of the external factors (e.g., change of goverment policy or change of marketing strate...