Beyond Diusion: An Aordability Model of the Growth of New Consumer Durables

A ®rm's ability to compete in new product markets is vital to its pro®tability and long-term survival. Therefore, it is important to understand the development and growth of these markets. Following a pioneering study by Bass (1969), di€usion models have traditionally provided this understanding in marketing. The great appeal of the Bass model is that it is a simple one that ®ts the data very well and provides parameters that have an intuitive behavioural interpretation. The model su€ers from three wellknown limitations: (1) it does not include marketing variables that could in ̄uence new product di€usion and sales; (2) the model's parameters are unstable; and (3) the model's forecasts are inaccurate before the sales peak and especially prior to the point of in ̄ection. Subsequent research has made progress especially in extending the Bass model to include marketing variables. However, the extensions have come at the cost of simplicity: the new models are far more complex than the simple Bass model. We propose an alternate simple model of new product growth for consumer durables, based on the concept of a€ordability rather than on di€usion. We compare this model with the di€usion model in terms of ®t, stability and validity of parameters, and forecasting ability. The alternate model is a little inferior to the di€usion model in ®t, but superior in terms of the stability and validity of parameters and forecasting ability. We discuss the limitations and implications of our model. # 1998 John Wiley & Sons, Ltd.