Multi-Firms’ Product Innovation Diffusion Engineering Model in Dynamical Competition

Abstract

A continuing stream of new product development engineering is essential to ensure long-term companies’ health. The new product development process is the interactive effects among different companies’ engineering and marketing departments. At the final step of the commercialization, successful diffusion of innovations plays a key role in a dynamic competitive environment, needing the corporation of internal and external engineers, marketing people and right diffusion strategy making. The previous research build one-dimensional, two-dimensional, and three-dimensional product diffusion model of competing product in one market, which is conflict with the reality thus limit the application. This paper establishes a general mathematical model on multi-firms’ competition, extending three-dimensional model to multi-dimensional competition systems in a dynamical environment. The model assumes that there are many firms in the product life cycle and they are in an intense competition. Based on this new model, we demonstrate various diffusion strategies for firms of different size. The research result is consistent with Bass’ model. However, this paper set up a bridge by linking the micro-firms level with the macro-industry level in one product innovation engineering diffusion process. The theoretical discussion and managerial implications are provided at the end of the paper.