Marketing variables in macro-level diffusion models

Macro-level diffusion models are developed for capturing the typical market sales pattern of a new product when it goes through the subsequent stages of the product life cycle. These models are commonly criticized for the implicit consideration of the effects of marketing variables (such as price and advertising) on the diffusion process. Explicit inclusion of marketing variables in diffusion models does not only provide a better description of reality but also has important managerial implications: potentially it may provide directions for how to alter the diffusion process by manipulation of the marketing variables. Robinson and Lakhani (1975) were the first to include marketing variables in a diffusion model. Since their paper, a considerable number of studies in this area has appeared in the literature. In this study we review this body of research and classify the studies according to the way the marketing instruments affect the diffusion process. We distinguish between studies that accommodate marketing effects via external, internal and mixed influence, and/or via potential market size. We conclude that questions on which marketing variables to include, where and how to include them in the diffusion model are now answered for some specific situations. However, it is still not viable to formulate generalizations on the effect of marketing variables on the diffusion process.