Diffusion of Technology Generations: A Model of Adoption and Repeat Sales (Working Paper)
Bass, F., Bass, P. I. (2011)
This paper explores multiple-generation demand dynamics of “fast-tech” products, which we define as durable technological products and technology-based services where repeat purchases are motivated by user-perceived functionality increases that trigger generational transitions. Examples of fast-tech products include: personal computers (PCs), DRAMs, printers and wireless telephone services. In management of fast-tech products, special attention must be paid to the different needs of adopters and repeaters, which may require different product, advertising and distribution-channel strategies. We develop a model of multiple-generation product diffusion in which sales are constructed as the sum of adoption sales and repeat sales thus, for the first time, separately identifying first-time purchases and repeat purchases. The model also identifies (1) the potential market for each generation, (2) total systems in use (subscribers if a service market) by time period and (3) systems-in-use (installed-base) mix by product/service generation for each time period. The model reduces to the basic Bass model (1969) in the case of a single generation. We use two sets of empirical data (eight DRAM generations and nine PC generations) to demonstrate that the model provides an excellent fit to historical data. We also provide support for the Norton-Bass Model by fitting it to these same data.