Question

Assume you are the marketing manager of a large electronic equipment manufacturing firm. It is the Spring of the year 2004. Your firm has pioneered an electronic book reader that mimics the reading experience on paper and the test-market results have indicated that the new product will be well received. However, as it is a completely new product on the market, the firm is unsure of adoption rates. You are in charge of a large geographical region in Asia and a third-party market research firm has indicated that the total market size is likely to be 280 million. The task of developing a reliable forecast now rests on your shoulders and you decide to put the learnings from your NPD class to work. As you do not have previous sales information to forecast, you decide to use a bass model based prediction by analogy.

There are two analogous products with their respective precalculated coefficients of innovation (p) and imitation (q). However, you decide to rate the products based on three factors using experts on a 10-point scale in order to use a weighted average technique to determine the final p and q to use. The following table shows the relevant numbers.

		Criteria Weights	0.4	0.3	0.3
	p	q	Market Structure	Product Similarity	Demographic Similarity
Analog P1	.019	.421	5	8	9
Analog P2	.022	.321	9	5	3

Given the information you have, what is the final coefficient of innovation you’d use to compute forecasts using the Bass model by analogy?

What is the final coefficient of imitation you’d use to compute forecasts using the Bass model by analogy?

Using those p and q suggested by the weighted average technique, and market size = 280 million, what will be your forecast of new product adoption for the first year (2004)?

What will be your sales forecast in millions for the year 2006 (third year from launch assuming the same parameters as in previous question)

When will the cumulative sales exceed 50 million units?

In the year 2006, how much of the total annual sales in millions can be attributed to the effect of imitation instead of innovation?

Answer 1