Statistical model for the diffusion of innovation and its applications

A well-known statistical model -the Bass new product di .usion model is intro- duced to describe the di .usion of an innovation.The basic assumption of the model is that the timing of a consumer s initial purchase is related to the number of pre- vious buyers.We also introduce two methods of estimating the model s parameters: the ordinary least square (OLS)method and nonlinear least square (NLS)method. We then apply this model to several consumer products data.We obtain the statis- tically signi .cant estimates for the model s parameters,and good predictions of the sales peak and the timing of the peak.We also perform a long range forecast for the sales of ATM cash card.