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A Forecasting Model Incorporating Replacement Purchase: Mobile Handsets in South Korea's Market

Author

Listed:
  • Jongsu Lee
  • Chul-Yong Lee

    (Technology Management, Economics and Policy Program(TEMEP), Seoul National University)

Abstract

The paper introduces a replacement forecasting model that operates at the brand level and overcomes limitations of existing models. The model (1) consists of a diffusion model and a time series model; (2) separately identifies the diffusion of first-time purchases and that of replacement purchases; (3) reflects brands¡¯ competitive factors affecting product diffusion; and (4) characterizes consumers¡¯ different replacement cycles.The model is applied to South Korea¡¯s mobile handset market. The model performs well in terms of its fit and forecasting when compared with other forecasting models incorporating replacement and repeat purchases. The usefulness of the model stems from its ability to describe complicated environments and its flexibility in including multiple factors that drive diffusion in the regression analysis.

Suggested Citation

  • Jongsu Lee & Chul-Yong Lee, 2009. "A Forecasting Model Incorporating Replacement Purchase: Mobile Handsets in South Korea's Market," TEMEP Discussion Papers 200904, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Apr 2009.
    • Handle: RePEc:snv:dp2009:200904
    as

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    References listed on IDEAS

    as
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    Keywords

    Replacement; Diffusion model; Mobile handset market;
    All these keywords.

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