Growth Dynamics in New Markets

CAPTURING CUSTOMER DYNAMICS DRIVEN BY DIFFUSION

2.1 Introduction

In this chapter, you will work out the fundamental causal structure of your business case. The core is the mechanism of product and service diffusion in the customer population in Plutonia. You will investigate the relevant factors underlying this diffusion as well as the relationships between them. The steps you undertake to formulate and analyse the diffusion of the service in the business environment will provide you with a new perspective on the system’s general dynamics.

In particular, you will learn that the diffusion of your telecommunication service is propelled mainly by word‐of‐mouth diffusion dynamics, i.e. Current customers of your mobile phone service are seen by Potential customers or they talk about your services to their peers and, thereby, promote your offering. You will discover how several factors influence the speed of this word‐of‐mouth diffusion.

Customers are – together with other factors – an important resource for your business. In this book, they are represented as a resource stock that will change according to the decisions you take over time. You will also develop a first simulation model with the fundamental causal structure of word‐of‐mouth dynamics and perform simulation experiments to explore possible behaviours of this resource stock. This all will support you in making decisions that are grounded in information about likely behaviours driven by the system’s structure.

2.2 ...