Predicting the diffusion of LCD TVs by incorporating price in the extended Gompertz model

Bi-Huei Tsai

Technological Forecasting and Social Change, 2013, vol. 80, issue 1, 106-131

Abstract: In addition to reflecting how price decline stimulates consumption behavior, an effective diffusion model of liquid crystal display televisions (LCD TVs) featured by coexistence of multi-generational LCD TVs could also forecast accurately LCD TV sales under a market segmentation framework. As technological advances have led to a substantial decline in the price of LCD TVs, the diffusive prediction of LCD TVs based on prior conventional models, which neglect how price affects the LCD diffusions, must be biased. Based on anchoring and adjustment theory, this work develops extended Gompertz models that incorporate the consumers’ comparison of the initial prices with the later reduced prices to analyze the purchasing decisions of consumers for various sized LCD TVs from psychological perspectives. The effective ranges of market penetration rate are located under which the estimated parameters conform to the theoretical assumptions of product diffusion. Their forecasting accuracy is examined by further comparing prediction errors of the conventional Gompertz model and the extended Gompertz model. Empirical results indicate a significantly positive correlation between price reduction and LCD TV sales. Additionally, the market penetration rate is higher for smaller-sized LCD TVs than for larger-sized ones, implying that smaller-sized LCD TVs have reached market saturation, while larger-sized LCD TVs still have remaining market potential. Furthermore, the comparison results demonstrate that the effectiveness of the extended Gompertz model in predicting future shipment orbits of LCD TVs is superior to that of the conventional Gompertz model, since the extended model incorporates price factors.

Keywords: Gompertz equation; Price elasticity; Nonlinear least square; Market penetration; Anchoring (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0040162512001758
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:80:y:2013:i:1:p:106-131

DOI: 10.1016/j.techfore.2012.07.006

Access Statistics for this article

Technological Forecasting and Social Change is currently edited by Fred Phillips

More articles in Technological Forecasting and Social Change from Elsevier
Bibliographic data for series maintained by Catherine Liu ().