Forecasting the market penetration of new technologies using a combination of economic cost and diffusion models

Forecasting market penetration is an essential step in the development, assessment, and commercialization of new technologies. Among the many forecasting approaches available are the economic cost model and the diffusion model. Separately, each of these approaches has been used in many applications of market penetration forecasting. In this article, A. P. S. Teotia and P. S. Raju briefly review these two approaches and then describe a methodology for forecasting market penetration using both of these approaches sequentially. They illustrate this approach with an example of market penetration forecasting for energy-efficient electric motors. A combination approach, which incorporates the strengths of two or more approaches, may be superior in many instances to the use of any one approach alone.