Year: 2007
Type: article
Abstract: We study the diffusion of a product in two customer segments where the acceptance level in one segment affects the diffusion rate not only in that same segment, but also in the other. The inter-segment influence can be positive or negative, i.e., the acceptance level of the product in one segment can reinforce or impede its diffusion in the other. The model set-up also applies to the diffusion of two products, with independent market potential, in a single population. Since the diffusion system we study does not have a closed-form solution, we use phase plane analysis to identify the equilibrium points of the joint diffusion process and to characterize their stability properties. Further, we provide a means to identify the regions with different convergence behavior, i.e., to identify boundaries for regions within which all trajectories converge to a particular equilibrium point. For the cases of asymmetric influence (+/-) and mutually impeding influence (-/-), we also provide conditions under which both products can achieve full market potential in equilibrium. Finally, we provide managerial insights into the effectiveness of two strategies in the context of asymmetric (+/-) interaction between two customer segments: (1) “seeding, ” i.e., using free samples to support the launch of a product in one segment being harmed by the adoption in the other, and (2) “demand control, ” i.e., purposely limiting market potential for the customer
Language: English
Field: Decision Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2808205254