Classroom Companion: Business

B
0
/N
T
10
/T
50
T
10
 for T
50
 = 5 years
0.001
0.67
3 years and 4 months
0.005
0.58
2 years and 11 months
0.01
0.52
2 years and 7 months
0.02
0.44
2 years and 2 months
0.04
0.31
1 year and 6 months
18.2 · Bass Diffusion Model

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18
There are two strategic dilemmas in a market with only imitators:
5
As previously discussed, the market will not start growing unless there are some 
initial customers. The problem for the supplier is, then, to establish an initial 
pool of customers so that the growth process will start.
5
Even with an initial pool of customers, the growth rate may initially be so slow 
that the supplier will terminate the service before it takes off.
Facebook is an example of a service in which there are very few innovators, since 
the reason to use the service is to interact socially with other users; that is, p ≈ 0 for 
Facebook. The service was launched at the campus of Harvard University, build-
ing up a small initial user group among students. It took about 5 years (from 2003 
to 2008) before the market share really started to increase and Facebook started to 
become a dominating social networking service (Roberts, 
2017
). Other social net-
working services, such as LinkedIn, also grew slowly initially.
18.3 
 Model for Markets with Competition and Churning
.
Figure 
18.5
 shows a model for the competition between two suppliers—Supplier 
1 and Supplier 2—offering the same service; for example, mobile communications. 
The model consists of three customer states: potential customers, customers of 
Supplier 1, and customers of Supplier 2. Furthermore, the model consists of four 
flows:
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2
4
6
8
10
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16
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