A Study on New Product Demand Forecasting Based on Bass Diffusion Model

A forecasting model of new product demand has been developed and applied to forecast new vehicle demand in Malaysia. Since the publication of the Bass model in 1969, innovation of new diffusion theory has sparked considerable research among marketing science scholars, operational researchers and mathematicians. This study considers the Bass Model for forecasting the diffusion of new products or an innovation in the Malaysian society. The objective of the proposed model is to represent the level of spread on new products among a given set of society in terms of a simple mathematical function that elapsed since the introduction of new products. With limited amount of data available for new products, a robust Bass model was developed to forecast the sales volume. A procedure of the proposed diffusion model was designed and the parameters were estimated. Results obtained by applying the proposed model and numerical calculation show that the proposed Bass diffusion model is robust and effective for forecasting demand of new products. This study concludes that the newly developed bass diffusion of demand function has significantly contributed for forecasting the diffusion of new products.