The Elbow Patch
Episode 1 - The Decision Science tool kit - Diffusion Models
Timestamps: 0:00:10 Introduction 0:01:20 What is diffusion modeling 0:02:25 History of diffusion models 0:04:03 Intuitive Explanation 0:06:37 How can we use diffusion models If you are a decision scientist or marketing professional working in an innovative company, you probably have been in a situation where you have been asked to forecast the speed of adoption of a product or technology. Instead of having to go through a ton of data, this video shares a framework that only requires your own company’s product sales data, and what’s better is that this is a modeling approach you can explain to a high school student. The video talks through diffusion models, its history, intuitive analogies, and three ways in which the model can be implemented. First - we can obviously plot the adoption curve with just our own product sales data. The bass model gives us some standard assumptions we can start with. As time passes and we have more data, we can estimate the coefficient values and adjust our model. The second thing we can do is calculate an estimate when the product will achieve maximum sales or essentially achieve saturation in the market. This is probably a good time to introduce an upgrade or even a totally new product. Finally, given the type of adopter, we can also focus our marketing efforts appropriately on direct marketing vs other organic tactics like referrals and social media.