Investigating New Product Diffusion Across Products and Countries

Investigating New Product Diffusion Across Products and Countries

Debabrata Talukdar • K. Sudhir • Andrew Ainslie

School of Management, SUNY at Buffalo, Buffalo, New York 14260 School of Management, Yale University, New Haven, Connecticut 06520 The Anderson School at UCLA, Los Angeles, California 90095 dtalukda@acsu.buffalo.edu • sk389@mail.som.yale.edu • andrew.ainslie@anderson.ucla.edu

Abstract

As firms jockey to position themselves in emerging markets, firms need to evaluate the relative attractiveness of market expansion in different countries. Since the attractiveness of a market is a function of the eventual market potential and the speed at which the product diffuses through the market, a better understanding of the determinants of market potential and diffusion speed across different countries is of particular relevance to firms deliberating their market expansion strategies. Despite a recent spurt in research on multinational diffusion, there exist significant gaps in the literature. First, existing studies tend to limit their analysis to industrialized countries, thus reducing the ability to generalize the insights to many emerging markets. Second, these studies tend to focus on the coefficients of external and internal influence in the Bass diffusion model but do not analyze the determinants of market potential. Third, the choice of variables that affect the parameters of the Bass diffusion model has been rather limited. In this paper, we seek to address these gaps in the literature. To address the scope issue, we assembled a novel dataset that captures the diffusion of 6 products in 31 developed and developing countries from Europe, Asia, and North and South America. The set of countries in our dataset encompasses 60% of the world population and includes such emerging economies as China, India, Brazil, and Thailand. This should provide us with a stronger basis to make empirical generalizations about the diffusion process. For firms seeking to expand into...