Forecasting the Adoption of E-Books

Report: Forecasting the Adoption of E-books

Similar to any other innovative technological product, it is a difficult task to forecast the future demand for e-books before its launch has even happened. The Bass Model offers a lot of help with regard to solving this problem and as it is a widely used tool for this type of circumstance, it would only seem natural for it to be used in order to try to forecast the adoption of e-books throughout the years.

For this particular case, there are certain shortcomings of the Bass Model that need to be assessed. It has to be remembered that the Bass Model assumes that a particular consumer can only adopt a product once, or at least it only takes into account the first time a person started using a good or service. This would not necessarily be a problem if the purpose of the study was to investigate the adoption of e-readers, for instance, because since they are more durable goods (at least more durable than e-books), the results would not as biased. However, when investigating e-books, it is clear that a good percentage of consumers that would eventually come to adopt the product would follow up with consistent repurchases, since each e-book offers as much as each paper book does and each CD. Since the main concern of this report is to investigate the size of the e-book market in the long run as well as the shape of the adoption process, it focuses more on amount of potential customers that the market can attract as opposed to how many e-books each acquired customers will actually come to purchase. Therefore, even though it is certainly important to mention the assumption, it does not necessarily harm the results of the Bass Model.

The Bass model goes as follows:

St=p+qmNt-1m-Nt-1

The first important step is to estimate the three important parametres in the model, p, q and m. M is the potential total market size in the long run. This is difficult to simply determine for technology products like e-books, although...