Substitution analysis

This method is also known as Fisher-Pry analysis. It "is a mathematical technique used to project the rate of market adoption of technically superior new technologies and, when appropriate, to project the loss of market share by old technologies. The technique is based on the fact that the adoption of such new technologies normally follows a pattern known by mathematicians as the "Logistic Curve." This adoption pattern is defined by two parameters. One of these parameters determines the time at which adoption begins, and the other determines the rate at which adoption will occur. Substitution models can be used to give otherwise general scenarios a quantitative aspect; in other words, these methods can be used to develop logical extrapolations for scenario baselines. Strengths and Weaknesses. Given the required data, these methods are quite simple to use and are supported by many historical examples. The models are deterministic, and extrapolative. The Fisher/Pry equation used to forecast a market takeover by a newly introduced product suffers from a number of restrictions. Among these are: 1. The consideration of only two-element substitutions; that is, one item substituting for a second; 2. The assumption that, once the substitution starts, it will proceed unidirectionally to the final level of saturation/displacement. A significant amount of historical data must be available from the early stages of the substitution in order to make the Fisher-Pry projections of the remainder of the substitution. In real life: Substitutions usually involve more than two items. A substitution may reverse itself over time in response to external changes. As with all extrapolative techniques the assumption that forces at work in the past will continue to be at work in the future is implicit and will be challenged by new developments.