The Bass Model & Forecasting Product Adoption (Part II)
This is a continuation of the previous post.
Estimating m, p, q
Accuracy of the Bass Model relies heavily upon the modeler’s estimation of m (the market size), p (the “coefficient of innovation” and q (the “coefficient of imitation”). Because determining these values is a rather arduous task, anyone constructing a Bass Model typically looks to analogous products. In the previous post we suggested that the iPod’s analogous products included portable radios, walkmans, and portable CD players. This is quite literally, prediction by analogy, and this is precisely why it fails for the truly novel. (personal note: for the hackers out there, this is a bit like proving a problem is NP-Complete by reducing it to another previously proven NP-Complete problem.)
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