Dynamics Of Innovation Diffusion With Two Step Decision Process

The paper discusses the dynamics of innovation diffusion among heterogeneous consumers. We assume that customers’ decision making process is divided into two steps: testing the innovation and later potential adopting. Such a model setup is designed to imitate the mobile applications market. An innovation provider, to some extent, can control the innovation diffusion by two parameters: product quality and marketing activity. Using the multi-agent approach we identify factors influencing the saturation level and the speed of innovation adaptation in the artificial population. The results show that the expected level of innovation adoption among customer’s friends and relative product quality and marketing campaign intensity are crucial factors explaining them. It has to be stressed that the product quality is more important for innovation saturation level and marketing campaign has bigger influence on the speed of diffusion. The topology of social network between customers is found important, but within investigated parameter range it has lover impact on innovation diffusion dynamics than the above mentioned factors