The First Purchase: Models of Innovation

Abstract

New products are seldom really new. Yet modellers of adoption processes have largely ignored the effects of existing buying habits on first trial of a product. A standard renewal process model is shown to fit data on cumulative shoppers at a new store, in conjunction with lognormal buying frequency assumptions. The penetration curves so derived lie close to the widely used modified exponential, which therefore obtains a rationale. Such curves represent the normal rise in penetration, as a proportion of shoppers enter the market in accordance with their regular cycle of repurchase. Most products are bought in this way. Few are really new, in a sense defined and discussed. Yet model builders have persistently used the framework of adoption processes, ignoring the influence of a repurchase cycle. They have instead assumed that new product adoption is “driven” by forces such as weight of advertising. From the position of a devil's advocate, it is arguable that these assumptions are misguided. Marketing mix variables are not sufficient or adequate to explain the growth rate of products which are not genuine innovations.