A Critical Review of Marketing Research on Diffusion of New Products

Abstract

We critically examine alternate models of the diffusion of new products and the turning points of the diffusion curve. On each of these topics, we focus on the drivers, specifications, and estimation methods researched in the literature. We discover important generalizations about the shape, parameters, and turning points of the diffusion curve and the characteristics of diffusion across early stages of the product life cycle. We point out directions for future research.Because new products affect every aspect of the life of individuals, communities, countries, and economies, the study of the diffusion of innovations is of vital importance. Researchers have studied this topic in various disciplines, including marketing, economics, medicine, agriculture, sociology, anthropology, geography, and technology management. We present a critical review of research on the diffusion of new products primarily in the marketing literature, but also in the economics and geography literature. We use the word product broadly to cover any good, service, idea, or person. We distinguish the term new product from the broader term innovation, which refers to both new product and new method, practice, institution, or social entity. Even though we restrict our review to the marketing literature, which focuses on the diffusion of new products, the implications of our review may hold as well as for the study of the diffusion of innovations in other disciplines. The marketing literature on this topic is vast, dating back at least as early as the publication by Fourt and Woodlock (1960).The term diffusion has been used differently in two groups of literatures. Within economics and most nonmarketing disciplines, diffusion is defined as the spread of an innovation across social groups over time (Brown, 1981;Stoneman, 2002). As such, the phenomenon is separate from the drivers, which can be consumer income, the product's price, word-of-mouth communication, and so on. In marketing and communication, diffusion typically has come to mean the communication of an innovation through the population (Golder and Tellis

Getting a Grip on the Saddle: Chasms or Cycles?

“…Because of this high variation, the point of chasm would vary by product category, though it is likely to be the same across countries. Indeed, prior research has shown that diffusion parameters are unique to particular products (e.g., Chandrasekaran and Tellis 2007;Muller and Yogev 2006). Therefore, for each product, a mean penetration level that reflects early market adoption and late market nonadoption can serve as a proxy for the location of the chasm.…”

Global Takeoff of New Products: Culture, Wealth, or Vanishing Differences?

“…Recently, studies have introduced and validated a new metric to measure how quickly a market adopts a new product,i.e., the takeoff of new products (see Agarwal and Bayus 2002, Chandrasekaran and Tellis 2007, Golder and Tellis 1997, Tellis et al 2003. Takeoff marks the turning point between introduction and growth stages of the product life cycle.…”

A Natural Analogy to the Diffusion of Energy-Efficient Technologies

“…These models do not try to explain why individual decisions are taken within the population. In the pioneering studies of diffusion the use of the logistic equation [2,9] can be seen as a special case of the Bass model [10] which, in turn, is a particular case of models based on the gamma/shifted Gompertz distribution [7]. Moreover, epidemiologic models are similar to population models [5].…”

“…The initial studies (and a good share of the publications) about diffusion of innovations have taken place in the field of agriculture [3]. More recent references [4][5][6][7] provide literature reviews concerning theories of diffusion models. Historically, there have been two major approaches to the diffusion of innovations; those trying to reproduce the patterns of diffusion [8] and those trying to understand the underlying factors that affect decision-making mechanisms determining the market roll-out of innovations.…”