Timing decisions of new product preannouncement and launch with competition |
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| Authors: | Meng Su Vithala R Rao |
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| Institution: | 1. School of Management, University of Science and Technology of China, 96 Jinzhai Road, Hefei 230026, Anhui Province, PR China;2. Naveen Jindal School of Management, University of Texas at Dallas, Richardson, TX 75080, USA;3. School of Management, Hefei University of Technology, Hefei 230026, Anhui Province, PR China;1. School of Management, Xi’an Jiaotong University, The State Key Lab for Manufacturing Systems Engineering, The Key Lab of the Ministry of Education for Process Control & Efficiency Engineering, Xi’an 710049, China;2. Department of Management Sciences, College of Business, City University of Hong Kong, Kowloon, Hong Kong;3. College of Economics, Shenzhen University, Shenzhen 518060, China;4. International Business School, Shaanxi Normal University, Xi’an 710062, China;5. Department of Marketing, College of Business, City University of Hong Kong, Kowloon, Hong Kong;1. Lazaridis School of Business and Economics, Wilfrid Laurier University, 64 University Ave W, Waterloo, ON N2L 3C7, Canada;2. Ivey Business School, Western University, 1255 Western Rd, London, ON N6G 0N1, Canada;3. Coordinated Innovation Center for Computable Modeling in Management Science, Tianjin University of Finance and Economics, 25 Zhujiang Rd, Hexi District, Hexi, Tianjin 300222, China;1. Chair of Production Management, University of Mannheim, Germany;2. College of Administrative Sciences and Economics, Koç University, Istanbul, Turkey |
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| Abstract: | 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. |
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