Functional Regression: A New Model and Approach for Predicting Market Penetration of New Products

Marketing Science, Vol. 28, No. 1; p. 36, Jan/Feb 2009

41 Pages Posted: 18 Apr 2008 Last revised: 31 Jul 2012

See all articles by Ashish Sood

Ashish Sood

University of California Riverside

Gareth James

University of Southern California - Marshall school of Business

Gerard J. Tellis

University of Southern California - Marshall School of Business, Department of Marketing

Date Written: 2008

Abstract

The Bass (1969) model has been a standard for analyzing and predicting the market penetration of new products. The authors demonstrate the insights to be gained and predictive performance of Functional Data Analysis (FDA), a new class of non-parametric techniques that has shown impressive results within the statistics community, on the market penetration of 760 products drawn from 21 products and 70 countries. The authors propose a new model called Functional Regression and compare its performance to over several models including the Classic Bass model, estimated means, last-observation projection, a meta-Bass model and an augmented meta-Bass model for predicting eight aspects of market penetration. Results a) validate the logic of FDA in integrating information across categories b) show that Functional Regression is superior to the above models and c) product specific effects are more important than country-specific effects when predicting penetration of an evolving new product.

Keywords: Global Market Penetration, Diffusion, Bass Model, Functional Data Analysis, Functional Principal Components, Generalized Additive Models, Functional Clustering, Spline Regression, New Products

Suggested Citation

Sood, Ashish and James, Gareth and Tellis, Gerard J., Functional Regression: A New Model and Approach for Predicting Market Penetration of New Products (2008). Marketing Science, Vol. 28, No. 1; p. 36, Jan/Feb 2009. Available at SSRN: https://ssrn.com/abstract=1121026

Ashish Sood

University of California Riverside ( email )

United States
6782059931 (Phone)

HOME PAGE: http://www.ashishsood.net

Gareth James

University of Southern California - Marshall school of Business ( email )

Marshall School of Business
BRI 401, 3670 Trousdale Parkway
Los Angeles, CA 90089
United States

Gerard J. Tellis (Contact Author)

University of Southern California - Marshall School of Business, Department of Marketing ( email )

Hoffman Hall 701
Los Angeles, CA 90089-0443
United States
213-740-5031 (Phone)
213-740-7828 (Fax)

HOME PAGE: http://gtellis.net

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