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| Author: | Kalish, S. |
| Title: | A framework for modeling innovation diffusion is introduced |
| Journal: | Management Science
1985 : VOL. 31:12, p.1569-1585 |
| Index terms: | INNOVATION DIFFUSION |
| Language: | eng |
| Abstract: | The adoption of a new product is characterized by two steps: awareness and adoption. Awareness is the stage of being informed about the product search attributes. The process of becoming aware is modeled as a simple 'epidemic' type model, where the information is spread by advertising and word of mouth. Adoption is conditional on awareness and occurs if the perceived risk adjusted value of the product exceeds its selling price. Individuals are risk averse, and willing to pay more for the product as information reduces uncertainty. Optimal control of the diffusion process by pricing and advertising over time is analyzed, and a comparative estimation of the model is presented. |
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