New Car Demand Modeling and Forecasting Using Bass Diffusion Model

Abstract

Forecasting model of new product demand has been developed and applied to forecast new vehicle demand in Malaysia. Since the publication of the Bass model in 1969, innovation of new diffusion theory has sparked considerable research among marketing science scholars, operational researchers and mathematicians. The building of Bass diffusion model for forecasting new product within the Malaysian society is presented in this study. The proposed model represents the spread level of new Proton car among a given set of the society in terms of a simple mathematical function that elapsed since the introduction of the new car. With the limited amount of data available for the new car, a robust Bass model was developed to forecast the sales volume. A procedure of the proposed diffusion model was designed and the parameters were estimated. Results obtained by applying the proposed model and numerical calculation shows that the proposed diffusion model is robust and effective for forecasting demand of new Proton car. The proposed diffusion model is shown to forecast more effectively and accurately even with insufficient previous data on the new product.