Innovation diffusion modeling considering the time lag between awareness and eventual adoption

Abstract

Purpose Today, a firm’s major concern is to know the way in which an innovation is adopted in the marketplace. The purpose of this paper is to focus on the two-stage nature of diffusion process in which the time lag between people being informed and their act of making final purchase is considered. Design/methodology/approach The paper discusses an approach based on the time lag for modeling awareness and adoption process as two separate and yet connected processes. Varying forms of time lag (constant, deterministic or random) have been considered while modeling the required framework. Furthermore, an equivalence approach has been shown between the present framework and the two well-known and established approaches of infinite queuing theory and hazard rate function. Findings The results are verified on sales data of two different consumer durables and it show good prediction capability of proposed models in capturing the real-life scenario. Further, the equivalence approach helps us to quantify such scenarios which were difficult to be modeled with any one particular approach. Further, the possibility of capturing different market scenarios by studying various distribution functions has been identified. Research limitations/implications The proposed methodology is based on a two-stage adoption process. The same can be extended to a multi-stage adoption process as in today’s competitive environment. “Motivation” is one such factor that is highly important which can be considered in some later studies. In future, the authors wish to study the multi-stage adoption process considering the different forms of time lag function. Practical implications The equivalence approach discussed in the paper can help to cater the possibility of capturing different market scenarios by studying various distribution functions. Originality/value The proposed approach helps to cater the time lag between awareness and adoption process and develop different mean value functions to account for the manner in which sales are happening under different circumstances. The proposed methodical approach can also help decision makers in managing their available resources in a prudent manner.