Incorporating Social Impact on New Product Adoption in Choice Modeling: A Case Study in Green Vehicles Available to Purchase

While discrete choice analysis is prevalent in capturing consumers’ preferences and describing their choice behaviors in product design, the traditional choice modeling approach assumes that each individual makes independent decisions, without considering the social impact. However, empirical studies show that choice is social — influenced by many factors beyond engineering performance of a product and consumer attributes. To alleviate this limitation, we propose a new choice modeling framework to capture the dynamic influence from social network on consumer adoption of new products. By introducing the social influence attributes into the choice utility function, the social network simulation is integrated with the traditional discrete choice analysis in a three-stage process. Our study shows the need for considering social impact in forecasting new product adoption. Using hybrid electric vehicle as an example, our work illustrates the procedure of social network construction, social influence evaluation, and choice model estimation based on data from National Household Travel Survey. Our study also demonstrates several interesting findings on the dynamic nature of new technology adoption and how social network may influence consumers’ “green attitude” in hybrid electric vehicle adoption.