Reference no: EM133441320
You wish to estimate the likely diffusion of a new consumer durable product. You figure out that this new product is likely to follow a similar diffusion pattern as an existing consumer durable product, though the market potential of your new product is likely to be much smaller. The yearly sales (# of units sold in '000) of the existing product since its inception is given in the adjoining table.
Your market research indicates that for the new consumer durable product, the potential industry sales (# of units sold) is 10 million and that the new product will achieve about 43% penetration of the industry. The lifetime expected sales would thus be approximately 4.3 million units (10m x 0.43 = 4.3m).
(a) Estimate the Bass Model (parameters P, Q, and M) using the sales data of the existing consumer durable product [use regression for the estimation].
(b) Plot the actual sales (those given in the table) along with the forecasted sales for the existing consumer durable product.
(c) For the new consumer durable product, use the estimated p, q parameters [from part (a) of the problem] along with your estimate of lifetime expected sales (4.3m units) to forecast the sales pattern of the new product. Plot your forecast.
(d) Predict the magnitude of peak sales for the new consumer durable product.
| Year (t) |
S(t) in '000 |
| 1 |
150 |
| 2 |
400 |
| 3 |
1225 |
| 4 |
1675 |
| 5 |
1700 |
| 6 |
1710 |
| 7 |
1650 |
| 8 |
800 |
| 9 |
50 |
| 10 |
1 |