Research On Extending Bass Model Considering The Effects Of Marketing Variables

Since the1960s, with the deepening of research and innovation diffusion theory, the application of diffusion model in forecasting of market size, product diffusion process, caused widespread concern of the domestic and foreign scholars, and there have been all sorts of new innovation diffusion model proposed. Among them, the most famous is BASS model, proposed by Frank.M. BASS in1969, and since then the model has become one of the main research directions diffusion model, and is widely used in the research of diffusion process of automotive, communications, Internet and e-commerce products.When first proposed the BASS diffusion model, in order to facilitate solving differential equations, BASS made a series of assumptions in the diffusion process of products, such as, the biggest potential market unchanged, product proliferation is not affected by the price of other marketing variables, but later with the product diffusion process and the deepening of the diffusion model, the scholars continue to relax the assumption BASS model, each amendment of the assumptions is an improved orientation correction of the BASS model. For example, people gradually realize that marketing factors have a significant impact on product diffusion process, while the base model does not consider these factors. Therefore, Robinson, firstly taken the price into consideration in the BASS model, to study the effect of price in the diffusion process.In the existing improved BASS models, the price variable was introduced into the basic BASS model in different forms. However, adding the price function to the foundation BASS model, increased the number of its variable differential equations, and the form of the equation is more complex, which is more difficult to give the analytical solution. Therefore, given previous studies limited to models with improved price variables, lack of empirical analysis.Thus, the research can facilitate empirical research BASS model with price variables is an important issue to be resolved. To this end, the paper based on the research of BASS model and the extended model as the theoretical basis, through improved BASS model with price functions, proposed BASS model with marketing variables, which is suitable for empirical research, and the model is applied to marketing develop strategies in order to guide the business plan the optimal pricing strategies, best advertising strategies. The main contents of this paper include:Price is an important factor in marketing variables, which has a significant impact on product diffusion process. This is not only because the price can directly affect corporate earnings, but also an important factor in consumer purchase intentions and behavior. Therefore, when using the BASS model to research the diffusion law of products, we need to consider the impact of price and other marketing variables. The paper taken the existing BASS model with marketing variables function as the theoretical basis, and these functions were directly added to the analytical solution of BASS model, Which is facilitate to empirical research of the BASS model with price function. Taking the price function for example, proved that adding the price function to the differential Equations of base BASS model and directly to the analytical solutions are equivalent. The paper used historical data of China Mobile subscribers and the price to do empirical analysis of the improved model. The results show that the improved model proposed in this paper not only can better describe the diffusion process of products, but also it can improve the fitting precision of the diffusion model.Studying the diffusion law of the product is in order to better guide enterprises to develop favorable product marketing, diffusion strategy. The improved BASS model with marketing variables is aims to providing advice and support decision-making in the product’s life cycle. The paper based on the BASS model with prices functions to establish the maximizing profit function, using mathematical model to demonstrating its effectiveness, and to study the optimal solution of price, sensitivity of the parameters, then given the management significance of the optimal solution and parameter changes, and making basis for enterprises to develop product pricing strategies.