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Innovation EquityAssessing and Managing the Monetary Value of New Products and Services$
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Elie Ofek, Eitan Muller, and Barak Libai

Print publication date: 2016

Print ISBN-13: 9780226618296

Published to Chicago Scholarship Online: May 2017

DOI: 10.7208/chicago/9780226394145.001.0001

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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 15 October 2021

The Basic Diffusion Pattern of an Innovation

The Basic Diffusion Pattern of an Innovation

(p.13) Chapter One The Basic Diffusion Pattern of an Innovation
Innovation Equity

Elie ofek

Eitan Muller

Barak Libai

University of Chicago Press

This chapter identifies key patterns in the way consumers adopt new products and services over time, and integrates these patterns to formulate the basic diffusion model for an innovation (also known as the Bass Model). Five factors—relative advantage, complexity, trialability, observability, and compatibility—are used to explain differences in the speed of innovation adoption in a given population and to lay the ground for the model’s development. The basic diffusion model combines an innovation’s anticipated long-run market potential with the two fundamental forces driving its adoption: The social force, which reflects the influence of others in the marketplace (for example, through word-of-mouth or peer pressure by past adopters), and the individual force, which reflects drivers independent of others in the social system (for example, firm communications or self-research). Graphical representations, in the form of innovation diffusion curves, are featured to assist in visualizing the model’s implications. To illustrate the principles behind the model the chapter discusses a number of recent innovations, such as the Segway, iPad, iPhone and satellite radio. A numerical Excel-based example is presented in connection with the satellite radio case in order to help crystallize the inner working of the model and its usefulness.

Keywords:   innovation, diffusion, adoption, forecasting, market potential, word of mouth, social force, Everett Rogers, barriers to adoption, Bass model

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