Product Diffusion Model With Heterogeneous Consumers

In the highly competitive market environment of modern business,companies need to continuously innovate in order to maintain their competitive advantage.Product diffusion model is an important tool to study the diffusion process of new products in the market.In the study of product diffusion process traditional macro diffusion models often do not consider the individual heterogeneity of consumers,which has certain limitations in the actual market,and there is a lack of research on the diffusion of innovation from individual consumers.In this paper,we propose a new product diffusion model considering the heterogeneity of individual consumers,firstly,we consider the heterogeneity of individual consumers in terms of purchase intention by improving the utility function to describe consumers’ purchase intention,and then we consider the heterogeneity of individual consumers in terms of purchase timing by using a utility-dependent purchase timing function to describe consumers’ purchase timing,and incorporate it into the diffusion model together.The Heterogeneous Diffusion Model(HDM)is then constructed by using a utility-dependent purchase timing function to characterize consumers’ purchase timing and incorporating it into the diffusion model.This paper demonstrates that HDM can derive the traditional product diffusion model(Bass Model)and has similarity with the product diffusion model considering marketing variables(Generalized Bass Model)in dealing with marketing variables.By discretizing the model,parameter estimation and data fitting based on actual market data,and comparing it with the traditional product diffusion model,it is demonstrated that the HDM has higher accuracy and predictive power.The main contribution of this paper is to propose a product diffusion model that considers individual consumer heterogeneity from a microscopic perspective,and to demonstrate that the model can more accurately predict and describe the diffusion of innovative products in real markets,and thus guide firms’ marketing strategies.