Modeling seasonal effects in the Bass Forecasting Diffusion Model

• Published in: Technological forecasting & social change Vol. 88; pp. 251 - 264
• Main Author: Fernández-Durán, J.J.
• Format: Journal Article
• Language: English
• Published: New York Elsevier Inc 01.10.2014; Elsevier Science Ltd
• Subjects: Decision making models; Electronics industry; Forecasting; Forecasting techniques; Nonnegative trigonometric series; Product introduction; Random variables; Sales; Seasonal effects; Studies; Seasonal effects; Forecasting; Nonnegative trigonometric series
• ISSN: 0040-1625; 1873-5509
• DOI: 10.1016/j.techfore.2014.07.004

The Bass Forecasting Diffusion Model is one of the most used models to forecast the sales of a new product. It is based on the idea that the probability of an initial sale is a function of the number of previous buyers. Almost all products exhibit seasonality in their sales patterns and these seasonal effects can be influential in forecasting the weekly/monthly/quarterly sales of a new product, which can also be relevant to making different decisions concerning production and advertising. The objective of this paper is to estimate these seasonal effects using a new family of distributions for circular random variables based on nonnegative trigonometric sums and to use this family of circular distributions to define a seasonal Bass model. Additionally, comparisons in terms of one-step-ahead forecasts between the Bass model and the proposed seasonal Bass model for products such as iPods, DVD players, and Wii Play video game are included.