Forecasting the rate of adoption of new products © Vince Daly & Kingston University, October 2009 This work is licenced under a Creative Commons Licence.Creative.

Forecasting the rate of adoption of new products

© Vince Daly & Kingston University, October 2009This work is licenced under a Creative Commons Licence.

Early adopte

rs

Take off

Mass adopti

on

Slow down

The S-curve shape reflects the stages of market development.

).(1

1t

t

eSP

S: market saturation level (i.e. max possible sales) = 100 in this examplePt: penetration of market at time t

tPS

P

t

t .ln

Can be changed by ‘logistic’ transformation to

The S-curve has a complicated formula but a change of variables produces a simple linear equivalent.

The non-linear S-curve

Its linear transformation

MSc student T. Vrionis gathered the OECD data for % penetration of this market

t 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000P 1.49 1.91 2.39 3.29 5.19 8.25 12.38 18.62 28.57 45.05 61.86

Ln[P/(100-P)] -4.19 -3.94 -3.71 -3.38 -2.91 -2.41 -1.96 -1.47 -0.92 -0.20 0.48

EXCEL’s TREND function can be used to fit a linear trend to the transformed data by the OLS method, and also to extrapolate this trend.

The logistic transformation can then be reversed for a graph that shows observed and extrapolated market penetration.

DATA:

Saturation Levels Vary By Segment Saturation Levels Vary By Segment

0%

5%

10%

15%

20%

25%

30%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Clothing Computer Software Event ticketing

ADVENTIS PLC have used S-Curve calculations as a basis for forecasting development of various M-commerce markets

© Adventis PLC, 2001

Extract from presentation to IBC conference Forecasting the Telecoms Market , London 2001