A diffusion model for service products

Xiaohui Shi, Pattarin Chumnumpan, Kiran Fernandes
2014 Journal of Services Marketing  
Despite the fast growth of the service sector, the existing literature has dedicated little effort to modeling the market growth of service products. We develop a diffusion model that can be used to understand and forecast the market growth of service products in a competitive environment. We propose a choice-type diffusion model that links the issues of service product utility, customers' choice preference, customer switching behavior, and the market growth of service products. We employ the
more » ... rket data of one online product and we assess the performance of the proposed model using this case. The results demonstrate the model's good fitting and forecasting performance. Specifically, the proposed model has better performance than the benchmarks we choose from the existing literature. This study shows that market growth of service products can have different diffusion patterns with that of durable goods, which is evidence of the needs for specific models for service diffusion. Further, this study demonstrates the important role of customer switching in service diffusion. Also for marketing practitioners, this study provides an explanation and forecasting tool for the market growth of service products, which can be used for marketing planning in service industry.
doi:10.1108/jsm-11-2012-0224 fatcat:xzgfjxe7ufacdcike727zqbi6m