A Multi-generation Product Diffusion Model with Social Media Effects -Accerelating Effect of Social Media on Leapfrogs and Switches by the iPhone 6 Battery Problem 2016-2017-

This paper proposes a multi-generational model that captures the direct and indirect effects of social media on product diffusion. Direct effects appear in the adoption rate function as covariates, and indirect effects are imbedded in hierarchical models connecting diffusion parameters to successive generations. Unlike previous multi-generational diffusion models, ours forecasts sales of new-generation products before launch using social media as the leading indicator and a hierarchical model connecting successive diffusion parameters. Empirical results show our model forecasts more precisely and reveals how social media influenced sales of smartphones, particularly leapfrogging and switching to other generations and competing products, as Apple contended with defective batteries in the iPhone 6 during 2016-2017.