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ASSESSMENT OF THE RELATIONSHIP BETWEEN THE INNOVATION LEVEL AND THE PROCESS OF DISTRIBUTING GENERATIONS OF AN INDUSTRIAL PRODUCT
Abstract
This article assesses the relationship between the level of innovation and the process of spreading generations of an industrial product among the consumers on the example of generations of a stationary game console from Sony. This work follows the scientific direction of modeling and forecasting the spread of innovations; it contains the results of the analysis of the dynamics in the change of successive generations of an industrial product. The relevance of the research topic lies in the increased competition between companies engaged in innovative activities. This results in the need to determine the reasonable directions of technical, technological, and market development of the developed innovations in the form of new and improved products. This study uses the mathematical model by F. Bass, supplemented by the provisions of T. Islam and N. Meade on the variability of consumer behavior of different generations. The conducted review of research literature has revealed an insufficient elaboration of the issue of a qualitative and quantitative assessment of the relationship between the rate of spread of generations and the changes made to them. The authors draw hypotheses about the independence of the market potentials of successive generations from each other and the dependence of the level of innovativeness of the next generation of industrial products on technological, consumer and marketing changes. As a set of changes, this article proposes parameters of the purchase price and the cost of operating each generation. The authors have tested the hypothesis on statistical data of generational sales for 1994-2019 using correlation analysis. The results have shown the absence of the influence of the market potentials of successive generations from each other, as well as the presence of a connection and its strength between the level of innovativeness of the next generation and the changes made in the generations. The data obtained can be used for further mathematical formalization of the influence of the level of innovativeness of generations on the process of their distribution.
This article studies the process of spreading generations of industrial products in the competitive market and assessing the influence of the characteristics of generations of products and destabilizing factors on the volume of their sales. The level of innovation and competitiveness of generations is used as characteristics, their definition and mathematical formalization are given. The study uses the generalized model of F. Bass, the provisions of the concept of “multi-product competition” by R. Peterson and V. Mahajan, and the concept of the variability of consumer behavior of different generations by T. Islam and N. Mead. A model of the spreading of generations of industrial products of competing brands in the duopole market is obtained, taking into account destabilizing factors. Based on this model, equations are constructed that establish the relationship between the shares of consumers of competing generations of products. The statistical data on the spreading of generations of video game consoles from Sony and Microsoft in the global and regional markets serve as a basis for approbation. To identify the parameters of the model and determine the presence and closeness of the relationship, correlation-regression analysis and the least squares method are used. These results demonstrate a high level of correlation between the sales volume of each console generation and the characteristics of the console generations. It was found that with an increase in the influence exerted by a competitor, the cumulative market share of the considered generation of the product decreases, and with an increase in the level of innovation of the generation of the product, its level of competitiveness increases. The obtained results of processing the predicted and actual data on the spread of generations demonstrate a significant influence of destabilizing factors on the process of spreading generations. The theoretical significance of the work consists in the development of a model for the distribution of generations of industrial products for a particular case with a duapole market structure. The practical significance lies in obtaining the calculated values of the link between the sales volume of each generation of consoles and their characteristics.
We study how competition impacts innovation (and welfare) when firms compete both in the product market and in innovation development. This relationship is complex and may lead to scenarios in which a lessening of competition increases R&D and consumer welfare in the long run. We provide conditions for when competition increases or decreases industry innovation and welfare. These conditions are based on properties of the product market payoffs. Implications for applied work and policy are discussed.
This paper tries to review innovation diffusion models which are used in market research and diffusion of innovation.
Previous multi-generational product diffusion (MGPD) models were developed based on the diffusion patterns at that time, but may not be adopted in today's cases. By incorporating the effect of customers' forward-looking behaviour, this paper offers a parsimonious and original model that captures the dynamics of MGPD in current high-technology markets. We empirically examine the feasibility of using previous MGPD models and our suggested model to explain the market growth of new products from high-technology industries. The results show that the new model exhibits better curve fitting and forecasting performance than the prior MGPD models in the cases of this study. For marketing researchers, our model and its results suggest customers' forward looking behaviour is perhaps one of the key sales affecting factors that are missing in previous MGPD models in explaining nowadays' cases. For marketing practitioners, this study offers a valuable tool for marketing strategies in high-tech industries.
This study deals with the dynamic sales behavior of successive generations of high-technology products. New technologies diffuse through a population of potential buyers over time. Therefore, diffusion theory models are related to this demand growth. Furthermore, successive generations of a technology compete with earlier ones, and that behavior is the subject of models of technological substitution. Building upon the Bass (Bass, F. M. 1969. A new-product growth model for consumer durables. Management Sci. 15(January) 215--227.) diffusion model, we develop a model which encompasses both diffusion and substitution. We demonstrate the forecasting properties of the model by estimating parameters over part of the data and projecting shipments for later periods.
Existing single-adoption diffusion models assume a static (constant) ceiling on the number of adopters, that is, a constant population of potential adopters, over the entire time frame of the diffusion process. However, for most innovations this assumption is tenuous. Rather, the ceiling, or the potential adopter population is more likely to be dynamic. The present paper relaxes this assumption and presents a dynamic diffusion model. To illustrate the application of this model, data from two innovations are analyzed.
Schmittlein and Mahajan (Schmittlein, D. C., V. Mahajan. 1982. Maximum likelihood estimation for an innovation diffusion model of new product acceptance. (Winter) 57–78.) made an important improvement in the estimation of the Bass (Bass, F. M. 1969. A new product growth model for consumer durables. (January) 215–227.) diffusion model by appropriately aggregating the continuous time model over the time intervals represented by the data. However, by restricting consideration to only sampling errors and ignoring all other errors (such as the effects of excluded marketing variables), their Maximum Likelihood Estimation (MLE) seriously underestimates the standard errors of the estimated parameters. This note uses an additive error term to model sampling and other errors in the Schmittlein and Mahajan formulation. The proposed Nonlinear Least Squares (NLS) approach produces valid standard error estimates. The fit and the predictive validity are roughly comparable for the two approaches. Although the empirical applications reported in this paper are in the context of the Bass diffusion model, the NLS approach is also applicable to other diffusion models for which cumulative adoption can be expressed as an explicit function of time.
The academic literature on the growth acceleration of new products presents a paradox. On the one hand, the diffusion literature
concludes that more recently introduced products show faster diffusion than older ones. On the other hand, technology generation
literature argues that growth rate, at least as measured by diffusion parameters, remains constant across generations. We
resolve this apparent paradox by testing whether growth acceleration occurs across technology generations while controlling
for the passing of time. We check acceleration across 39 distinct technology generations in 12 product markets. The results
show that intergeneration acceleration occurs in time to takeoff but not with respect to diffusion parameters (i.e., p and q). We show that takeoff acceleration is mostly driven by technology vintage (i.e., the passage of time) rather than generational
shifts. Thus, time is a factor that accelerates early growth, but generational shifts do not. This result also holds when
controlling for the effects of market vintage when the market is either business-to-business or business-to-consumer as well
as when the technology is process- or product-based.
KeywordsDiffusion-Acceleration-Technology generations-Takeoff
In many cases of technological development, successive generations of a technology evolve, each more efficient than its predecessor. It has been assumed when modeling and forecasting the adoption of these technologies that the market reaction to each generation was similar. Using the terminology of the Bass model, this similarity is encapsulated in the assumption that the coefficients of innovation and imitation are constant. New data for two and three generations of mobile telephone technology from eleven countries are modeled. The modeling framework used—simultaneous estimation for successive generations using a full information maximum likelihood procedure—demonstrates that, in most cases, the hypothesis of constant coefficients can be rejected. Use of a model with changing coefficients is shown to considerably improve forecasting performance. These results were reinforced by analysis of data for four generations of IBM mainframes.
Diffusion processes of new products and services have become increasingly complex and multifaceted in recent years. Consumers today are exposed to a wide range of influences that include word-of-mouth communications, network externalities, and social signals. Diffusion modeling, the research field in marketing that seeks to understand the spread of innovations throughout their life cycle, has adapted to describe and model these influences.We discuss efforts to model these influences between and across markets and brands. In the context of a single market, we focus on social networks, network externalities, takeoffs and saddles, and technology generations. In the context of cross-markets and brands, we discuss cross-country influences, differences in growth across countries, and effects of competition on growth.On the basis of our review, we suggest that the diffusion framework, if it is to remain a state-of-the-art paradigm for market evolution, must broaden in scope from focusing on interpersonal communications to encompass the following definition: Innovation diffusion is the process of the market penetration of new products and services that is driven by social influences, which include all interdependencies among consumers that affect various market players with or without their explicit knowledge.Although diffusion modeling has been researched extensively for the past 40 years, we believe that this field of study has much more to offer in terms of describing and incorporating current market trends, which include the opening up of markets in emerging economies, web-based services, online social networks, and complex product–service structures.
A shared activity or pursuit can have the effect of bringing about cultural convergence in the form of patterns of behaviour
and consumption. This idea is supported by the Axelrod (1997) thesis, which suggests that cultures are more likely to interact and subsequently converge if they have shared traits: one
of these being the use of technology. This paper seeks to apply such a cultural perspective to the body of published literature
on deviations from the law of one price. Adopting a similar methodology to the popular ‘Big Mac’ index, disparity between
official market exchange rate and the real rate of exchange between two currencies is measured using local prices of video
game consoles. The results of the study suggest that, while a degree of pricing and cultural convergence across broad geographic
areas is observed, many major global currencies are trading at levels that are quite significantly different to that which
is suggested by purchasing power parity (PPP) theory.
Innovation activity as a means of competitiveness
- E V Trusevich
- N A Goncharova
Trusevich E. V., Goncharova N. A. 2014. "Innovation activity as a means
of competitiveness". Modern Technologies. System Analysis. Modeling, vol. 2, no. 42,
pp. 196-202. [In Russian]
A study of current approaches to modeling the diffusion of technologies in high-tech industries
- M G Dubinina
Dubinina M. G. 2015. "A study of current approaches to modeling the diffusion
of technologies in high-tech industries". Proceedings of the Institute of System Analysis
of the Russian Academy of Sciences. Vol. 65, no. 3, pp. 43-54. [In Russian]
Исследование современных подходов к моделированию процессов распространения технологий в наукоемких отраслях
- М Г Дубинина
Дубинина М. Г. Исследование современных подходов к моделированию процессов
распространения технологий в наукоемких отраслях / Дубинина М. Г. // Труды ИСА
РАН. 2015. Т. 65. № 3. С. 43-54.
Инновационная активность как средство обеспечения конкурентоспособности предприятий / Е. В. Трусевич, Н. А. Гончарова // Современные технологии. Системный анализ. Моделирование
- Е В Трусевич
Трусевич Е. В. Инновационная активность как средство обеспечения
конкурентоспособности предприятий / Е. В. Трусевич, Н. А. Гончарова //
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