Forecasting the Diffusion of anInnovation Prior to Launch

Companies that want to grow face a fundamental dilemma: They can only increasetheir current base of sales substantially if they introduce really new products into themarket. However, the risk of a market failure also increases with the degree of innovativenessof the product (Booz, Allen & Hamilton Inc. 1982). Really new products arethose which are defined as being not only new to the company but also new to themarket (Garcia and Calantone 2002). In this case, the pioneer has to develop the wholemarket and cannot draw inferences from experiences which another competitor hasalready made. Hence, the pioneer has to forecast the development of the new categoryin the market. Of course, future entrants may take away market share from the pioneer.In any case, the first and most important task for a pioneer is to forecast the diffusionof his innovative product category (Thomas 1985)...