S-Space College of Engineering/Engineering Practice School (공과대학/대학원) Dept. of Industrial Engineering (산업공학과) Journal Papers (저널논문_산업공학과)
Forecasting future demand for large-screen television sets using conjoint analysis with diffusion model
- Lee, Jongsu; Cho, Youngsang; Lee, Jeong-Dong; Lee, Chul-Yong
- Issue Date
- Technol. Forecast. Soc. 73 (2006) 362-376
- The methodological framework proposed in this paper addresses two limitations of the basic Bass
diffusion model: that it does not reflect competition among products nor does it forecast demand for
products that do not exist in the marketplace. The model consists of four steps. First, to investigate
consumer preferences for product attributes, we use conjoint analysis to estimate the utility function of
consumers. Next we estimate the dynamic price function of each competing product to reflect technological
changes and the evolving market environment. Then we derive dynamic utility function by combining the
static utility function and the price function. Finally, we forecast the sales of each product using estimated
market share and sales data for each period, which are derived from the dynamic utility function and from
the Bass diffusion model, respectively.
We apply this model to South Koreas market for large-screen televisions. The results show that (1) consumers
are sensitive to picture resolution and cost and (2) in the near future, should the market see the introduction of
liquid crystal display (LCD) TVs with screens larger than 50 inches, the high resolution and steep price drop of
LCD will lead LCD TVs to capture a larger market share than TVs with other display types. Finally, our results
show that TVs with 40-inch screens are preferred over TVs with larger screens.
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