Product Introduction Strategies under Sequential Innovation for Durable Goods with Network Effects
| Autor: | Ngan N. Chau, Ramarao Desiraju |
|---|---|
| Rok vydání: | 2016 |
| Předmět: |
Mathematical optimization
05 social sciences Durable good Management Science and Operations Research Industrial and Manufacturing Engineering Backward compatibility Management of Technology and Innovation 0502 economics and business Compatibility (mechanics) Economics 050211 marketing Profitability index Operations management 050207 economics Network effect Parametric statistics |
| Zdroj: | Production and Operations Management. 26:320-340 |
| ISSN: | 1059-1478 |
| DOI: | 10.1111/poms.12649 |
| Popis: | When network effects are important and technology is rapidly improved, this paper explores the relative optimality of five product introduction strategies of a durable goods manufacturer: (1) replacement, (2) skipping, (3) a delayed line, (4) shelving, and (5) line-extension. Using a two-period analytical model, we show how the type of compatibility—either full or backward compatibility—and the magnitude of the network effect influence the manufacturer's preference for the above strategies. Our analysis reveals that only the strategies (1)-(3) above can be optimal; and the optimal strategy varies with network strength. Further, the type of compatibility can dramatically change the profitability under each optimal strategy; for instance, while backward compatibility can increase the profitability of replacement under certain conditions, it always reduces the profitability of a delayed line. We also illustrate that if compatibility were a choice, although backward compatibility may be observed widely in practice, the parametric region for its optimality is relatively more restricted than that of full compatibility. This article is protected by copyright. All rights reserved. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
|
Plný text