Technical Note—Signaling Product Quality Through a Trial Period

Autor:	Shouqiang Wang, Gülru F. Özkan-Seely
Rok vydání:	2018
Předmět:	Ex-ante 05 social sciences Technical note Management Science and Operations Research Trial Length Profit (economics) Computer Science Applications Product trial 0502 economics and business 050211 marketing Price signal Business 050207 economics Industrial organization
Zdroj:	Operations Research. 66:301-312
ISSN:	1526-5463 0030-364X
DOI:	10.1287/opre.2017.1675
Popis:	It has become a ubiquitous practice for firms that sell new products, such as software, to offer consumers time-locked product trial periods free of charge. We identify trial length as a nuanced signaling instrument, which, together with the price signal, a firm can use to communicate proprietary information about its product quality. We show that a high-quality firm offers a longer trial period and sets a higher price, and is rewarded with a higher profit, relative to its low-quality counterpart. Our finding extends to cases where the firm faces ex ante heterogeneous consumers or when the firm competes with an incumbent product. The electronic companion is available at https://doi.org/10.1287/opre.2017.1675 .
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::0f15b5172fc36fb2a2df00d679236b93 https://doi.org/10.1287/opre.2017.1675 Zobrazit plný text záznamu Plný text ve formátu PDF