Forecasting Substitution and Competition among Previous and New products using Choice-based Diffusion Model with Switching Cost (Forecasting Substitution and Competition among Previous and New products using Choice-based Diffusion Model with Switching Cost)

서지정보

· 발행기관 : 한국마케팅과학회
· 수록지 정보 : Journal of Global Scholars of Marketing Science(마케팅과학연구) / 18권 / 2호 / 207 ~ 234페이지
· 저자명 : 고대영, 황준석, 오현석, 이종수

초록

In this study, we attempt to propose a choice-based diffusion model with switching
cost, which can be used to forecast the dynamic substitution and competition among
previous and new products at both individual-level and aggregate level, especially when
market data for new products is insufficient. Additionally, we apply the proposed model
to the empirical case of substitution and competition among Analog Cable TV that
represents previous fixed charged broadcasting service and Digital Cable TV and Internet
Protocol TV (IPTV) that are new ones, verify the validities of our proposed model, and
finally derive related empirical implications.
For empirical application, we obtained data from survey conducted as follows. Survey
was administered by Dongseo Research to 1,000 adults aging from 20 to 60 living in
Seoul, Korea, in May of 2007, under the title of 'Demand analysis of next generation
fixed interactive broadcasting services'. Conjoint survey modified as follows, was used.
First, as the traditional approach in conjoint analysis, we extracted 16 hypothetical
alternative cards from the orthogonal design using important attributes and levels of next
generation interactive broadcasting services which were determined by previous literature
review and experts' comments. Again, we divided 16 conjoint cards into 4 groups, and
thus composed 4 choice sets with 4 alternatives each. Therefore, each respondent faces 4 different hypothetical choice situations. In addition to this, we added two ways of
modification. First, we asked the respondents to include the status-quo broadcasting
services they subscribe to, as another alternative in each choice set. As a result,
respondents choose the most preferred alternative among 5 alternatives consisting of 1
alternative with current subscription and 4 hypothetical alternatives in 4 choice sets.
Modification of traditional conjoint survey in this way enabled us to estimate the factors
related to switching cost or switching threshold in addition to the effects of attributes.
Also, by using both revealed preference data(1 alternative with current subscription) and
stated preference data (4 hypothetical alternatives), additional advantages in terms of the
estimation properties and more conservative and realistic forecast, can be achieved.
Second, we asked the respondents to choose the most preferred alternative while
considering their expected adoption timing or switching timing. Respondents are asked to
report their expected adoption or switching timing among 14 half-year points after the
introduction of next generation broadcasting services. As a result, for each respondent, 14
observations with 5 alternatives for each period, are obtained, which results in panel-type
data. Finally, this panel-type data consisting of 4*14*1000=56000 observations is used for
estimation of the individual-level consumer adoption model.
From the results obtained by empirical application, in case of forecasting the demand of
new products without considering existence of previous product(s) and(or) switching cost
factors, it is found that overestimated speed of diffusion at introductory stage or distorted
predictions can be obtained, and as such, validities of our proposed model in which both
existence of previous products and switching cost factors are properly considered, are
verified. Also, it is found that proposed model can produce flexible patterns of market
evolution depending on the degree of the effects of consumer preferences for the
attributes of the alternatives on individual-level state transition, rather than following
S-shaped curve assumed a priori.
Empirically, it is found that in various scenarios with diverse combinations of prices,
IPTV is more likely to take advantageous positions over Digital Cable TV in obtaining
subscribers. Meanwhile, despite inferiorities in many technological attributes, Analog Cable
TV, which is regarded as previous product in our analysis, is likely to be substituted by
new services gradually rather than abruptly thanks to the advantage in low service
charge and existence of high switching cost in fixed charged broadcasting service market.

영어초록

In this study, we attempt to propose a choice-based diffusion model with switching
cost, which can be used to forecast the dynamic substitution and competition among
previous and new products at both individual-level and aggregate level, especially when
market data for new products is insufficient. Additionally, we apply the proposed model
to the empirical case of substitution and competition among Analog Cable TV that
represents previous fixed charged broadcasting service and Digital Cable TV and Internet
Protocol TV (IPTV) that are new ones, verify the validities of our proposed model, and
finally derive related empirical implications.
For empirical application, we obtained data from survey conducted as follows. Survey
was administered by Dongseo Research to 1,000 adults aging from 20 to 60 living in
Seoul, Korea, in May of 2007, under the title of 'Demand analysis of next generation
fixed interactive broadcasting services'. Conjoint survey modified as follows, was used.
First, as the traditional approach in conjoint analysis, we extracted 16 hypothetical
alternative cards from the orthogonal design using important attributes and levels of next
generation interactive broadcasting services which were determined by previous literature
review and experts' comments. Again, we divided 16 conjoint cards into 4 groups, and
thus composed 4 choice sets with 4 alternatives each. Therefore, each respondent faces 4 different hypothetical choice situations. In addition to this, we added two ways of
modification. First, we asked the respondents to include the status-quo broadcasting
services they subscribe to, as another alternative in each choice set. As a result,
respondents choose the most preferred alternative among 5 alternatives consisting of 1
alternative with current subscription and 4 hypothetical alternatives in 4 choice sets.
Modification of traditional conjoint survey in this way enabled us to estimate the factors
related to switching cost or switching threshold in addition to the effects of attributes.
Also, by using both revealed preference data(1 alternative with current subscription) and
stated preference data (4 hypothetical alternatives), additional advantages in terms of the
estimation properties and more conservative and realistic forecast, can be achieved.
Second, we asked the respondents to choose the most preferred alternative while
considering their expected adoption timing or switching timing. Respondents are asked to
report their expected adoption or switching timing among 14 half-year points after the
introduction of next generation broadcasting services. As a result, for each respondent, 14
observations with 5 alternatives for each period, are obtained, which results in panel-type
data. Finally, this panel-type data consisting of 4*14*1000=56000 observations is used for
estimation of the individual-level consumer adoption model.
From the results obtained by empirical application, in case of forecasting the demand of
new products without considering existence of previous product(s) and(or) switching cost
factors, it is found that overestimated speed of diffusion at introductory stage or distorted
predictions can be obtained, and as such, validities of our proposed model in which both
existence of previous products and switching cost factors are properly considered, are
verified. Also, it is found that proposed model can produce flexible patterns of market
evolution depending on the degree of the effects of consumer preferences for the
attributes of the alternatives on individual-level state transition, rather than following
S-shaped curve assumed a priori.
Empirically, it is found that in various scenarios with diverse combinations of prices,
IPTV is more likely to take advantageous positions over Digital Cable TV in obtaining
subscribers. Meanwhile, despite inferiorities in many technological attributes, Analog Cable
TV, which is regarded as previous product in our analysis, is likely to be substituted by
new services gradually rather than abruptly thanks to the advantage in low service
charge and existence of high switching cost in fixed charged broadcasting service market.

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