I have many times observed that authors apply a Bass diffusion model to analyse the market diffusion of a product or technology. The level of analysis is product/technology. However, I want to apply this methodology to estimate the total sales rate from a firm (firm level analysis). But, for my purpose, I'm not comfortable with the underlying assumption of the Bass model as it typically refers to analysis at product level. Please can you put your experience and suggestion? Many thanks
Generally NO,
from a formal point of view.
It all depends on how you define the target market. Note that the model assumes that the entire market will purchase the technology. It is logical to assume that the entire market will purchase the given innovation. Unfortunately, it is not known what part of the market will want to buy your product.
The basic question is: what would you like to achieve based on the Bass model?
I have conducted tests for real producers. In fact, at a high level of generality, the diffusion of innovation follows the Bass model. By high level of generality I understand a large group of products.
Howewer, there is one problem. In this model, you need to know the size of the target market. The market means all clients of your company. My experience is that with the Bass model you will forecast when diffusion occurs, but you will not forecast the size of the target market. You need to know it from the sales history.
So, you will know when, but don't know ... how many?
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