Bass Forecasting Model

What you put in... What you get out...
  • Market potential for new products
  • Historical sales data OR selection of analogous products
  • Advertising and pricing plan
  • Sales/adoption rate forecast for new product
  • Sensitivity of sales forecast to marketing activities
  • Ability to link to revenue and profit projections
 

The Bass diffusion model is used to forecast the sales of a new product or service that has no close competitors. It can be used to forecast the long-term sales pattern of a product when one of the following is true:

  • The product has recently been introduced and sales have been observed for a few time periods.
  • The product has not yet been introduced, but it resembles another product in the market whose sales history is known.

The model helps to predict:

  • the number of customers in the target segment that will eventually adopt the new product or service.
  • when they will adopt it.
bsss forecasting model

The Marketing Engineering for Excel software includes both the Bass model and the Generalized Bass model. The Bass model assumes that the sales rate for the product is not affected by marketing mix variables while the Generalized Bass model assumes that the product sales rate in the target segment is affected by the level of advertising for the new product, and by the price of the new product.

Both models include three parameters to describe the two factors which affect product diffusion in the market and the market growth

  • p - the coefficient of innovation (or coefficient of external influence)
  • q - the coefficient of imitation (or coefficient of internal influence)
  • r - market growth (as a function of existing market size)

The Generalized Bass model includes three more parameters:

  • s - the market price elasticity, or how much a change in price affects the total market potential
  • v - the advertising coefficient, which affects the strength of the effect of changes in advertising levels in product diffusion
  • w - the price coefficient, which affects the strength of the effect of changes in price in product diffusion

Associated Videos

The following video(s) are archived recordings of previous webinars discussing the Bass Forecasting model. These videos are intended for instructor viewing only as many times they discuss actual business case solutions.

Videos are only available for Registered Instructors

Technical Note - Bass Forecasting Model

The Bass Forecasting model technical note is a supplement to the material provided in the Principles of Marketing Engineering. This note provides additional analytic background to the model and may be freely distributed to your students.

Bass-Model-Technical-Note-thumb

To view other technical notes, please visit our Technical Notes page.

Business Cases - Bass Forecasting Model

The following business cases are available to demonstrate the Bass Forecasting Model using Marketing Engineering for Excel software:

  1. Ford Hybrid Car Case - Using the Bass Forecasting model with historical sales and estimated market shares, students must estimate a 10 year forecast for Ford hybrid car sales in the US.
  2. Zenith High Definition TV - Using the Bass Forecasting model, students must determine what does a 10-15 year projection of sales for HDTV in the US look like under different scenarios. This business case is a Harvard Business Case and must be purchased separately.