Managers have long been concerned about new product development
and the life cycle of these products. Because many products do not sell at constant
levels throughout their lives, product life cycles must be considered when developing
sales forecasts. Innovation diffusion models have successfully been employed to
investigate the rate at which goods and/or services pass through the product life
cycle. This research investigates innovation diffusion models and their relation to
the product life cycle. The model is developed and then tested using modem sales
from 1994–2009. Each successive generation of modem innovation, from 14.4k,
28.8k, 56k, broadband less than 3.6Mbps, to broadband greater than 3.6Mbps, is
examined.
Keywords: innovation diffusion model, forecasting, logistic growth model
