'''Some of the terms used in the model are:'''<br>
:'''N(t):''' Total or cumulative number of consumers who have already adopted the new product through period t.<br>[[Image:'''N(tbass-1):''' Cumulative number of adopters for the new product through the previous time period (i.e., t – 1).<br>:'''S(t):''' Number of new adopters for the product during the time period t and can be expressed as N(t) – N(t – 1)terms.<br>jpg|center|600px]]
'''Three key parameters used in the Bass Diffusion Model are:'''<br>
:'''m:''' Total market size, a terminal value of total adopters that will not exceed.<br>[[Image:'''p:''' Coefficient of innovation, represents the probability that an innovator will adopt at time t.<br>:'''q:''' Coefficient of imitation, represents the probability that an imitator will adopt at time t, through ‘word of mouth’ or ‘social contagion’ that result from interpersonal communications between adopters and nonbass-adopters parameters.<br>jpg|center|600px]]
'''Some of the formulas used are:'''<BR>
S(t) = a + b N(t –1) + c (N(t – 1))²<br>
Parameters a, b, and c are estimated via Non-Linear regression or using any other statistical software package,
The parameters m, p, and q are then determined by:<br>
# m = (−b ± (b² – 4ac)½)/2c<br>
# p = a/m<br>
# q = –mc<br>
[[Image:bass-formulas.jpg|center|600px]] '''Basic equation of Bass Model:Equations'''<br>S(t) = [p + (q/m) N(t – 1)] [m – N(t – 1)]<br>
'''Incorporating Marketing Mix variables:'''<br>S(t) = [p + (q/m) N(t – 1)] [m – N(t – 1)Image:bass-equations.jpg|center|600px] * Z(t)<br>:Where Z(t)= 1 + α[P(t) – P(t – 1)]/P(t – 1)<br>
* '''α''' is a coefficient that indicates the percentage increase in the speed of diffusion that results from a 1% decrease in price
* '''P(t)'''- price in period t
'''Adoption curve for new product are generally called S-curves because of their shape.'''