Racing to market leadership: Product launch and upgrade decisions Academic Article

abstract

• Firms might not launch a next generation product as soon as a more efficient technology or a better product design is ready. We use a stylized model to analyze firms' product launch and upgrade decisions in an incumbent-vs-entrant setting. We find that large profit margins from the next generation product alone do not provide the entrant sufficient incentives to launch the next generation product, although small profit margins will deter the entrant from joining the competition. If the entrant intends to enter the market at an earlier time, it should consider process improvements that lower the firm's launch costs of the current generation product. In addition, the incumbent must respond strategically to the entrant's arrival. In particular, when anticipating a late arrival of the entrant, the incumbent should upgrade to the next generation earlier. The incumbent also has a cost advantage in the race to launch the next generation product. 2009 Elsevier B.V. All rights reserved.

authors

• Li, Ying (Laura)

published proceedings

• INTERNATIONAL JOURNAL OF PRODUCTION ECONOMICS

author list (cited authors)

• Li, Y., & Jin, Y. H.

citation count

• 9

complete list of authors

• Li, Ying||Jin, Yanhong H

publication date

• June 2009

publisher

• Elsevier  Publisher

published in

• International Journal of Production Economics  Journal

keywords

• Incumbent-vs-entrant
• Market Leadership
• Marketing
• Product Launch
• Product Upgrade

Digital Object Identifier (DOI)

• 10.1016/j.ijpe.2009.03.004

start page

• 284

end page

• 297

volume

• 119

issue

• 2

URL

• http://dx.doi.org/10.1016/j.ijpe.2009.03.004