CHATTERJEE, RABIKAR; PHD
UNIVERSITY OF PENNSYLVANIA, 1986
BUSINESS ADMINISTRATION, MARKETING (0338)
The pattern of market penetration of an innovation and the factors underlying
the diffusion process have
been an important subject of study in marketing. This dissertation develops
an analytical model of the
innovation diffusion process in a heterogeneous population, applicable for high-involvement
innovations that are durable in nature. The model employs a Bayesian decision
theoretic framework to
predict timing of adoption at the individual level, incorporating a potential
adopter's preference structure
and the dynamics of uncertain perceptions about the innovation. Individual level
predictions are then
aggregated to yield the penetration curve. In particular, the analytical development
of the model
considers heterogeneity with respect to initial perceptions, attitude toward
risk, susceptibility to
information, and the trade-off between price and performance. The impact of
variability in information
about the innovation's performance is captured by modeling an individual's 'path'
to adoption as a
stochastic process. We develop a parsimonious basis for classifying potential
adopters in terms of their
relative timing of adoption. The aggregate-level diffusion model is very flexible
in its ability to
accommodate a wide variety of possible patterns of diffusion. The model is employed
to investigate the
effects of heterogeneity in the population, the true performance of the innovation,
and the pattern of
information on the rate of diffusion and the shape of the diffusion curve. A
pilot study is conducted to
illustrate an approach to calibrating the model and to provide a preliminary
test of its key implications. The
results provide tentative support for the predictive performance of the model,
and encourage a full-scale
application. The model is next employed to derive normative implications for
promotional policy. It is
shown that, in general, promotional expenditures should decline over time. The
model also provides
guidelines for selective targetting of promotional effort. The extended model
(considering several
non-price attributes) provides a basis for determining the attribute(s) to be
emphasized in the firm's
communication program. Potential managerial applications of the model include
(a) pre-launch prediction
of the penetration curve, (b) segmentation of the potential adopter population,
and (c) planning
communication strategy.
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