New product diffusion in the Baltic states

Abstract

Innovation diffusion theory has been a subject of considerable research among marketing management and consumer behaviour for the last four decades. The best-known first-purchase diffusion model is the Bass model, where potential adopters are divided into two groups: innovators and imitators. There are many empirical studies where the parameters of the model have been estimated for different countries for several products. Due to the fact that the values of these parameters depend on a country (wealth, trade) and its cultural effect, it is useful to apply this model in those countries that have not yet been investigated. The purpose of this paper is to estimate the coefficients of innovation and imitation in the Baltic States in order to compare the consumer behaviour in these countries and to examine the similarities and differences between the Baltic States and other European countries. To accomplish this objective a time-series of telecommunication services are used. The estimation results can be used to forecast the diffusion pattern for analogous products and are useful to firms, which operate in the Baltic market or have such plans.