|John Sterman model
This model is in the True package
New product adoption model: article by John Sterman
- tools for learning in a complex world, California management review, Vol 43 no 1, Summer 2001
As an illustration of the use of system dynamics, imagine an organisation that plans to introduce an innovative new durable consumer product. The organisation needs to understand the possible market dynamics in order to design marketing and production plans.
There are two feedback loops in this diagram:
- the positive reinforcement (labeled R) loop on the right indicates that the more people have already adopted the new product, the stronger the word-of-mouth impact. There will be more references to the product, more demonstrations, and more reviews. This positive feedback should generate sales that continue to grow.
- the second feedback loop on the left is negative reinforcement (or "balancing" and hence labeled B). Clearly growth can not continue forever, because as more and more people adopt, there remain fewer and fewer potential adopters.
Both feedback loops act simultaneously, but at different times they may have different strengths. Thus one would expect growing sales in the initial years, and then declining sales in the later years
Order of the equations in each step, for step (or years) 1 to 15:
-1) flow Probability = Potential adopters / ( Potential adopters + Adopters )
-2) flow Imitators =q * Adopters * Probalility (with q = 0.4)
-3) flow Innovators = p * Potential adopters (with p = 0.03)
-4.0) flow New adopters = Innovators + Imitators
-4.1) stock Potential adopters -= New adopters
-4.2) stock Adopters += New adopters
Stocks and flows values for years = 0 to 15: