Optimal Strategies for Introducing a New Technological Product
Abstract
This study presents analytical frameworks to provide firms with effective strategies that can be adopted when they plan to release a new technological product (e.g., TV sets, video players, cameras, video games, etc.). Specifically, focusing on technology products, the current study recommends optimal pricing strategies for new products, introduces a multigeneration sales model developed to capture evolving sales trends across multiple product generations, outlines an optimal market entry timing strategy for a new product generation in a product line, and provides an effective marketing strategy to promote sales of a new product by offering an optimal number of free products to users.
The dissertation includes three essays. The first essay (Chapter 2) provides a modeling scheme to examine the optimal pricing strategy for a new technology product. Specifically, the first essay investigates when the widely-used price-skimming strategy should be the go-to pricing strategy. The contribution in the second essay (Chapter 3) is twofold. First, a multigeneration sales model for technological products is developed. The proposed multigeneration sales model takes into account within-generation repeat purchases as well as initial purchases and cross-generation upgrades. Next, based on the proposed sales model, a framework to derive optimal market entry timing for a new product generation is developed. The third essay (Chapter 4) examines the marketing strategy of offering free products for a new technological product. The proposed modeling framework encompasses scenarios under which: (i) the firm offers free products before product launch, (ii) the firm immediately releases the product and offers free products upon the product launch and in parallel with the sales, and (iii) the firm offers free products before product launch and simultaneously with the sales after the launch.
In summary, this study significantly contributes to the field of management science by providing comprehensive analytical frameworks developed to address the challenges of introducing a new technological product to the market. These challenges include estimating sales trends in product lines composed of successive generations, finding the optimal market entry timing strategies for new generations, finding the optimal pricing strategies, and promoting sales by offering free products to the target market.