Published by MBA Skool Team, Last Updated: May 21, 2012
What is Bass Diffusion Model?
Developed by Frank Bass, it describes the process of how new products and services move in the market or get adopted by consumers as an interaction between present customers (who have already adopted) and potential customers. The basic assumptions behind the complete model is that the adopters of a product are influenced by two channels-
b. Word of Mouth publicity by those who are or have already used the product
The probability of new adaptors using the products is given by the equation as-
P (t) =p + q/M (N (t))
Where, M is the market potential, p is the coefficient of advertising affect, q is the coefficient of imitation and N (t) is the cumulative number of existing users (adapters) of the product.
This model works on the theory that for any new product in the market, advertising affects the most in bringing in new customers but that is true only up to a certain point. After that, it’s the word of mouth which plays the role of enticing potential customers to start trying and adapting the product.
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