Forecasting global adoption of crystal display televisions with modified product diffusion model

Authors:
Bi-Huei Tsai;Yiming Li;Guan-Hua Lee
Affiliations:
Department of Management Science, National Chiao Tung University, Hsinchu 300, Taiwan;Department of Electrical Engineering, National Chiao Tung University, Hsinchu 300, Taiwan and National Nano Device Laboratories, Hsinchu 300, Taiwan;Industrial Economics and Knowledge Center, Industrial Technology Research Institute, Chutung 310, Taiwan
Venue:
Computers and Industrial Engineering
Year:
2010

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Abstract

Liquid crystal display televisions (LCD TVs) embody properties of durable and high-technological products. In this work, we relax the restrictive assumptions of constant internal influence in the conventional growth model for worldwide diffusion of LCD TV innovation. Based upon the price impact on the imitating behaviors, we incorporate price factor into the Bass model to study evolutions of LCD TV market. Effects of innovation, imitation, price elasticity and potential market factors are systematically considered. Two different models, the conventional Bass model and the modified one are thus numerically solved and optimized to estimate the market dynamics of LCD TVs, where the results among the models as well as the collected data in the past decade are compared and validated for the best accuracy. The results of this study exhibit that LCD TV diffusion is mainly driven by consumers' word of mouth and 32-inch LCD TV remains to occupy the largest potential market among various size levels of LCD TVs. Previous LCD TV adopters persuade the potential ones to imitate the former in the TV transaction decisions. In particular, this model illustrates that LCD TV price reduction stimulates such imitating behaviors of successive LCD TV consumers. Due to the significance of the modeled price effect in LCD TV adoptions, the model with considering the effect of price performs better in fitness, prediction capability and parameter stability than the conventional one.