A utility-based dynamic model used to predict abnormalities in diffusion over time

We model the diffusion of new products and assert that their adoption is motivated by the utility level customers enjoy from a product. The products we consider have attributes that change with the number of users. We incorporate two factors: market growth due to improved utility and improved utility due to market growth. This leads to a dynamic model that is able to provide new insights into adopters’ characteristics and is able to predict abnormalities in diffusion, such as decline in sales during take-off. A comparison of the proposed approach with appropriate benchmarks shows that our model includes previous results as ‘special cases’, and provides new insights into other situations.