Timing decisions of new product preannouncement and launch with competition
We develop a game-theoretic model to study the timing of new product preannouncement and launch under competition. We derive firms' optimal timing choices and conducted a numerical analysis to evaluate the role of various factors. Our analytical and numerical results showed that anticipated competitor's timing choices are the most significant factors. A firm should not preannounce early unless the preannouncement is effective in creating pent-up demands. However, the preannouncement and launch should be rushed if the quality or profit margin of the new product is high, and postponed if the market share of the existing product is high. The market leader should preannounce earlier in a simultaneous game than in a sequential game, but the opposite for the market follower. Data collected from the microprocessor industry validated our model.
Year of publication: |
2011
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Authors: | Su, Meng ; Rao, Vithala R. |
Published in: |
International Journal of Production Economics. - Elsevier, ISSN 0925-5273. - Vol. 129.2011, 1, p. 51-64
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Publisher: |
Elsevier |
Keywords: | New product preannouncement Firm competition Pent-up demand Competitive strategy |
Saved in:
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