Journal
INTERNATIONAL JOURNAL OF PRODUCTION ECONOMICS
Volume 129, Issue 1, Pages 51-64Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.ijpe.2010.09.001
Keywords
New product preannouncement; Firm competition; Pent-up demand; Competitive strategy
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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. (C) 2010 Elsevier B.V. All rights reserved.
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