Multi-generational innovation diffusion modelling: a two dimensional approach

Majority of the consumer durables have multiple technological generations. High technology product comes in new generation where a new innovation offers a significant improvement in performance or benefits over the previous generation. New innovation in the market does not immediately replace the previous one that it intends to substitute, but starts to compete with it. This creates a sequence of parallel diffusions of the existing generational products in the market. In this paper, we develop a two-dimensional multigenerational innovation diffusion model which combines the adoption time of technological diffusion and price of the technology product. The proposed model helps in studying the marketing dynamics of the products which comes in generations. Technological adoptions and the role of the other dimensions are explicitly taken into consideration using Cobb-Douglas function. Empirical implications of the proposed model have been validated on data collected from DRAM (Semiconductor Industry DRAM shipments of six generations) in two plans.