Explain how gbm uses effective time to account

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Reference no: EM133345384

Case: Dataset "Final_Q2_ColorTV" records the annual sales (in millions) and price levels of Color TV in 1961-1970, the first ten years since its launch. Assume consumers do not repeat purchase. Answer the following questions by estimating the Generalized Bass Model.

Year	Time	Sales	Price
1961	1	0.147	610
1962	2	0.438	566
1963	3	0.747	555
1964	4	1.463	551
1965	5	2.646	560
1966	6	5.118	535
1967	7	5.777	525
1968	8	5.982	521
1969	9	5.962	515
1970	10	4.631	505

a. Explain how GBM uses effective time to account for the impact of prices on the diffusion process of Color TV.

b. Estimate the GBM for Color TV. How many consumers will eventually adopt Color TV according to the result?

c. Predict the total already adoptions for Color TV in 1975. Suppose the price of Color TV is 450 in 1975. [Hint: You need to first calculate the effective time of year 1975 for Color TV.]

Reference no: EM133345384

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