Sustaining the position as a market leader or challenging the leader, the corporation should decide properly the date of entering new product market. Especially when he competes with rivals in the saturated product market, the introduction of an technologically advanced product which can replace the old one is a very important marketing strategy for the company.
We first analyze the various theories about the diffusion and substitution of demands. In analyzing the theories, we discussed Bass's diffusion model and other extention models which explains the diffusion of demands as a result of external influence, innovative factors, and internal influence, imitative factors, within social system. But they do not analyze the difference of influence between generation shift of products, and then assume that purchasers always have the same level of attributes indifferent to the product changes. Second, we analyze the choice theory which can incorporate marketing variables, price and advertising.
We set a multigeneration substitution model explaining the shift of demands from black&white television receiver to color television receiver in Korea, and diagnose the results. From this we introduce the new multigeneration substitution model for the forecasting the demand of digital television receiver from the year of 2001.
