Deterministic and Stochastic Models of New Product Adoption

Abstract

Participants of the market retain their good position on the market by developing new and modern products. Valid estimation of the demand can help manufacturers to develop the output strategy and dealers to find the proper product selection policy. Long-term forecasts can support production by deterministic mathematical models above all but unexpected and random effect come to the front in the case of bringing in the good. Stochastic mathematical models are available for short-term forecast in the latter case. In this paper, we analyse an example from food industry after a short summary of different models. The time series of monthly data of a company has been processed and a study was made about the sale rate of a kind of new spiced alcoholic drink in time. We applied the well known deterministic new product diffusion model of Bass and the stochastic models of autoregressive and moving average processes which are widely applied for modelling the strongly fluctuating time series of rates and stock market in our research.