To read this content please select one of the options below:

Can search engine data improve accuracy of demand forecasting for new products? Evidence from automotive market

Dongha Kim (Department of Statistics, Seoul National University, Seoul, Republic of Korea)
JongRoul Woo (Institute for Data, Systems, and Society, Massachusetts Institute of Technology, Cambridge, Massachusetts, USA)
Jungwoo Shin (Department of Industrial and Management Systems Engineering, Kyung Hee University, Yongin, Republic of Korea)
Jongsu Lee (Technology Management, Economics and Policy Program, Seoul National University, Seoul, Republic of Korea)
Yongdai Kim (Department of Statistics, Seoul National University, Seoul, Republic of Korea)

Industrial Management & Data Systems

ISSN: 0263-5577

Article publication date: 31 May 2019

Issue publication date: 13 June 2019

1050

Abstract

Purpose

The purpose of this paper is to analyze the relationship between new product diffusion and consumer internet search patterns using big data and to investigate whether such data can be used in forecasting new product diffusion.

Design/methodology/approach

This research proposes a new product diffusion model based on the Bass diffusion model by incorporating consumer internet search behavior. Actual data from search engine queries and new vehicle sales for each vehicle class and region are used to estimate the proposed model. Statistical analyses are used to interpret the estimated results, and the prediction performance of the proposed method is compared with other methods to validate the usefulness of data for internet search engine queries in forecasting new product diffusion.

Findings

The estimated coefficients of the proposed model provide a clear interpretation of the relationship between new product diffusion and internet search volume. In 83.62 percent of 218 cases, analyzing the internet search pattern data are significant to explain new product diffusion and that internet search volume helps to predict new product diffusion. Therefore, marketing that seeks to increase internet search volume could positively affect vehicle sales. In addition, the demand forecasting performance of the proposed diffusion model is superior to those of other models for both long-term and short-term predictions.

Research limitations/implications

As search queries have only been available since 2004, comparisons with data from earlier years are not possible. The proposed model can be extended using other big data from additional sources.

Originality/value

This research directly demonstrates the relationship between new product diffusion and consumer internet search pattern and investigates whether internet search queries can be used to forecast new product diffusion by product type and region. Based on the estimated results, increasing internet search volume could positively affect vehicle sales across product types and regions. Because the proposed model had the best prediction power compared with the other considered models for all cases with large margins, it can be successfully utilized in forecasting demand for new products.

Keywords

Acknowledgements

This work was supported by the National Research Foundation of Korea Grant funded by the Korean Government (NRF-2017R1C1B5074293), and the Korea Institute for Advancement of Technology (KIAT) grant funded by the Korea Government (MOTIE: Ministry of Trade Industry and Energy) (Advanced Training Program for Smart Factory, No. N0002429). This work was also supported by Korea Environment Industry & Technology Institute (KEITI) through Climate Change Correspondence Program, funded by Korea Ministry of Environment (MOE) (2014001300001).

Citation

Kim, D., Woo, J., Shin, J., Lee, J. and Kim, Y. (2019), "Can search engine data improve accuracy of demand forecasting for new products? Evidence from automotive market", Industrial Management & Data Systems, Vol. 119 No. 5, pp. 1089-1103. https://doi.org/10.1108/IMDS-08-2018-0347

Publisher

:

Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

Related articles