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Innovation evolution and category diffusion

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Understanding the drivers of market development and evolution, especially those that are under the control of managers, is an important input into marketing decision-making. To date, research on the drivers of category diffusion has typically focused on price, advertising, and/or distribution (often in isolation). Although innovation characteristics are at the heart of diffusion theory, research has not investigated the influence of changes in an innovation over time on its diffusion. The objective of this research is to test how the evolution in product variety created by the evolution of features and attributes contributes to category diffusion. Drawing on prior research into diffusion processes and consumer choice processes, the authors develop hypotheses for how product variety influences category diffusion over time and test them using data from a consumer durables category. They specify a diffusion model in which the diffusion rate varies as a function of product variety. Their results support the role of the variety of product offerings in terms of features in determining category diffusion and hence help managers increase their understanding of the drivers of category diffusion.

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