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This chapter focuses on the implications of competition for innovation equity. When multiple firms introduce innovations in the same space several customer dynamics emerge. First, as new customers continue entering the category some past adopters may switch brands, a process called churn, and others may leave the category altogether, a process called disadoption. Attrition is the sum of churn and disadoption and is linked to the rentention rate used in assessing customer lifetime value. Second, two types of social adoption forces arise: when existing customers of one brand influence prospects to adopt that same brand we call this a within-brand force and when they influence prospects to adopt a competing brand we call this a cross-brand force. A competitive diffusion model is developed that captures these effects. The model accommodates a host of market phenomena: faster initial growth rates of entrants relative to incumbents; fallout from standards wars; effectiveness of seeding programs for customer base growth; and piracy that benefits the original producer. Two examples demonstrate how to apply the model to assess the monetary value of competitive moves: improving the product/service (adding Howard Stern to Sirius Satellite Radio), and executing a price cut (by a Belgian mobile service provider).

This concluding chapter serves as a review of the material covered throughout the book and addresses issues often encountered when implementing the various concepts in practice and in different business settings. The presentation takes on a “Frequently Answered Questions” (FAQ) format, i.e., it outlines each issue as a question readers may be wondering about and then provides a comprehensive answer to it. FAQs are organized as follows: those pertaining to the diffusion of innovations, those dealing with customer lifetime value (CLV), and those related to the innovation equity framework. Examples of diffusion FAQs include: Can I use the various diffusion models covered in the book for any type of innovation? I am ultimately interested in running the analysis for my specific brand; should I start with assessing diffusion at the category level or go directly to the brand level? Is the social force always positive? Examples of CLV FAQs include: How can I obtain reasonable estimates for the CLV parameters? Are some of the CLV parameters likely to change over time? If so, how? The chapter ends with a check list that delineates the key steps to follow, and important issues to be aware of, when crafting innovation equity assessments.