chapter 3 - Bentham Science

Applications of Spreadsheets in Education The Amazing Power of a Simple Tool, 2011, 159–172 159
CHAPTER 9
Forecasting with Innovation Diffusion Models: An Updated Example
from the Telecommunications Industry 1994-2009
John F. Kros 1,∗ and S. Scott Nadler 2
1 Department of Marketing and Supply Management
East Carolina University, Greenville, North Carolina, USA
2 College of Business
University of Central Arkansas, Conway, Arkansas, USA
∗ Address correspondence to: Dr. John F. Kros, Department of Marketing and Supply Management, College
of Business, East Carolina University, 3121 Harold Bate Building, Greenville, North Carolina 27858, USA;
Tel: (+1) 252-328-6364; E-mail: krosj@ecu.edu
Abstract: Managers have long been concerned about new product development
and the life cycle of these products. Because many products do not sell at constant
levels throughout their lives, product life cycles must be considered when developing
sales forecasts. Innovation diffusion models have successfully been employed to
investigate the rate at which goods and/or services pass through the product life
cycle. This research investigates innovation diffusion models and their relation to
the product life cycle. The model is developed and then tested using modem sales
from 1994–2009. Each successive generation of modem innovation, from 14.4k,
28.8k, 56k, broadband less than 3.6Mbps, to broadband greater than 3.6Mbps, is
examined.
Keywords: innovation diffusion model, forecasting, logistic growth model.
9.1 Introduction
The generation of new product opportunities has been a major area of study in both the academic
and practitioner literature for decades. Products are born, grow to maturity, and are then either
reinvented or die. During this ongoing process some products are cast aside by a changing society
as consumer’s needs and wants change. Business managers are an integral part of this cycle which
is commonly referred to as the product life cycle (PLC) [1].
The PLC is made up of four distinct stages (see Fig. (9.1)). These stages include: introduction,
growth, maturity, and decline.
Mark Lau and Stephen Sugden (Eds)
All rights reserved – c○2011 Bentham Science Publishers Ltd.