Mathematical modelling and simulation of product-innovation diffusion

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As online social platforms become increasingly important to advertising activities, customer engagement, and lead generation, online marketing is becoming an increasingly important component of marketing strategy of many businesses. Product innovation (specifically the launch of new products) is especially important for technology and software products because network effects are a significant barrier to adopting new technology products. As a result, many businesses that have outstanding products fail at the launch stage due to poor strategy and understanding of the psychological components driving new product adoption. Although there is a wide academic literature on the diffusion of new products in the marketplace, its mathematical intensity, retrospective focus, and highly theoretical nature make it difficult for businesses to operationalize the results. Empirical findings show that businesses are not making optimal decisions with regards to pricing and advertising, two of the major tools they have at their disposal to increase the chance of a successful new product launch. Accurate mathematical modelling and simulation allow for the testing of multiple hypotheses and scenarios and thus generally reduce the risk associated with implementing a given strategy. The research proposed in this project is to build models of product innovation and diffusion in order to better understand how to optimize the launch of new technology products. Simulations will be performed using agent-based modelling with state-of-the-art constructs for social networks and explicit consideration of consumer heterogeneity and the complex dynamics of social processes that shape diffusion. The predictions of the simulations will be validated using data from real networks and empirical results from the diffusion of real innovations. The industrial partner, Asmoteknologies, will be able to use this research to advise clients on their launch strategies and development of new technology products, thus expanding the scope and adding significant value to its consultative services.