Forecasting Hong Kong FAX Installations with a New Product Diffusion Model
Hong Kong Journal of Business Management 12: 37-55
20 Pages Posted: 28 Feb 2015
Date Written: 1994
New product diffusion models have rarely been tested in an East Asian situation, and not on data showing seasonality. This study shows that a basic mixed influence diffusion model fits cumulative FAX line installations in Hong Kong quite well. Results indicate that Hong Kong businesses are somewhat less innovative but substantially more imitative than typical in Western applications. Simple use of multiplicative monthly indices allows good fit to monthly installations. These descriptive results are obtained after considerable data is available, and the product is well into the product life cycle. If product managers had needed to make decisions on FAXs early in the product life cycle, the model would have given very poor forecasts. By looking at the pattern of change in model parameters over the early part of the data, though, more reliable estimates can be obtained, resulting in better forecasts.
Keywords: new product diffusion models; parameter estimation; FAX; Hong Kong
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