An Application of the Bass Model in Long-Term New Product Forecasting

Bass 1 has developed a model of first-purchaser activity which seems to portray accurately the growth patterns for a large number of new products, such as durables, in which repeat purchasing is not a major factor in early years of the product life cycle 1, 2. The Bass model implies sales growth to a peak and then decline, and provides a framework for guessing the longterm sales behavior of a product based on early sales data. One of the advantages of the Bass model is that it permits a forecast of the timing of a turndown in sales during a period in which sales are growing rapidly, where naive forecasting models tend to project indefinite sales growth at rapid rates. Thus Bass in 1966 accurately predicted that a sales peak would occur in 1968 for color television set sales at 6.7 million units, while the industry was building plant capacity for 14 million picture tubes. The overly optimistic industry projections resulted in rather severe economic dislocations which might have been avoided. In this article the framework of the Bass model is used to develop a long-term forecast of cable television adoption.