Single firm product diffusion model for single-function and fusion products |
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Authors: | Yuwen Chen |
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Institution: | a College of Business Administration, University of Rhode Island Kingston, RI 02881, USA b Department of Information Systems & Operations Management, Warrington College of Business Administration, University of Florida, P.O. Box 117169, Gainesville, FL 32611-7169, USA |
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Abstract: | The prosperity of multifunction products (also referred to as fusion products) has changed the landscape of the marketplace for several electronics products. To illustrate, as fusion products gain popularity in cellular phones and office machines, we observe that single-function products (e.g., stand-alone PDAs and stand-alone scanners) gradually disappear from the market as they are supplanted by fusion products. This paper presents a product diffusion model that captures the diffusion transition from two distinct single-function products into one fusion product. We investigate the optimal launch time of the fusion product under various conditions and conduct a numerical analysis to demonstrate the dynamics among the three products. Similar to previous multi-generation single product diffusion models, we find that the planning horizon, the products’ relative profit margin, and substitution effects are important to the launch time decision. However, there are several unique factors that warrant special consideration when a firm introduces a fusion product to the market: the firm’s competitive role, buyer consolidation of purchases to a multi-function product, the fusion technology and the age of current single-function products. |
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Keywords: | Manufacturing Marketing Technology management Multifunction products Fusion products Product diffusion |
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