Transient Bimodality and Catastrophic Jumps in Innovation Diffusion

A new phenomenon in innovation diffusion that exhibits a transient bimodality familiar in physical sciences is predicted in this paper for the first time on the basis of an extended Bass model. This accounts for the population heterogeneity, with the parameters characterizing the ldquoword of mouthrdquo and ldquomass mediardquo processes as random. A theoretical framework based on a nonlinear random differential equation is thus introduced to develop a stochastic model for new product diffusion with parametric uncertainty. The analytical investigation of the model establishes the existence of transient bimodality, which manifests through a cusp catastrophe. Illustrations based on analytical and simulation studies are presented. Empirical validation of the proposed model based on well-known data sets where the Bass model is known to fit very well has been carried out.