Manufacturer Product Line Decisions In Growing Consumer Technology Markets: A Case of Digital Cameras

The objective of this dissertation is to deepen our understanding of competitive and demand drivers of manufacturer new product introductions in consumer technology markets. Researchers in economics and marketing commonly view differentiated products as combinations of attributes that are located in multi-attribute space. In first study presented in Chapter 2 of this dissertation, I conform to this common view of products as multi-attribute bundles and, therefore, carefully construct both a multi-attribute product space, as well as, and even more importantly, product clusters within this multi-attribute product space. I focus on the early stages of US Digital Cameras category: 1998-2000). Operationalizing and classifying all existing products in the category, as well as each new product introduction: when it occurs), on a common space of objective product attributes allows us to: 1) explicitly understand whether a given introduction is an incremental innovation or a radical innovation, and: 2) whether it is an introduction in to a cluster where the firm already has a strong presence or not etc. Further, it allows us to understand whether the new product introduction decisions of a firm are influenced by relative cluster characteristics which, in turn, are influenced by competitors\u27 new product introductions in the different clusters etc. In the Chapter 2 of this dissertation I focus on two specific new product introduction decisions of digital camera manufacturers: timing and positioning. Additional insights are obtained from empirically estimating a pricing model using the same product cluster conceptual framework. In Chapter 3, I study new product preannouncements, which have become commonplace in manufacturers product strategy in consumer technology markets. Here I undertake a detailed empirical analysis of the demand effects of product preannouncements within the digital cameras category. I estimate a new product adoption model using monthly data on product-level availability, sales and prices across hundreds of digital cameras that were introduced over a period of 4 years. I study the effects of the incidence and timing of a product preannouncement on demand for the preannounced product: i.e., digital camera model), as well as demand for its competitors. In doing this, I implicitly accommodate the impact of product preannouncements for individual products on category-level demand growth. Using a detailed model-based accounting of preannouncement effects, I separate the effects of a preannouncement on: 1) innovation and word-of-mouth components underlying demand for the preannounced product, and: 2) consumer preferences for preannounced product attributes. I demonstrate the managerial implications of the estimated preannouncement effects using a numerical experiment

A planning solution for forecasting product sales with cannibalization

Predicting sales using cannibalization effects is a current major challenge. Several approaches deal with the estimation of cannibalization of new product launches or promotion effects but how to account for it when predicting future sales is still missing. For this reason, we aim to fill this gap by proposing a new framework based on time series causality as a method to identify potential candidates of causality. To attain such an objective, we use two state-of-art gradient boosting based algorithms, namely Extream gradient Boosting (XGBoost) and Light Gradient Boosting Machine (LGBM ), as well as two Multi-step forecasting strategies. We show that the cannibalization approach together with Recursive forecasting provides more accurate forecasts respect to established benchmark models

FIRM’S WILLINGNESS TO CANNIBALIZE ON BRAND LOYALTY WITH CUSTOMER SATISFACTION AS MODERATING VARIABLE

The purpose of this research paper is to investigate the influenceof a firm’s willingness to cannibalize on consumer brand loyalty, withcustomer satisfaction as a moderating variable. The subjects of thisstudy are cell phone consumers. The sample was surveyed with thehelp of a structured questionnaire. A total of 600 questionnaireswere distributed from which only 475 questionnaires were returnedwhile only 450 questionnaires turned out to be fit for analysis. Resultssuggest that there is a significant positive effect of ‘firm’s willingnessto cannibalize’ and ‘customer satisfaction’ on brand loyalty. Thepresumed moderator – customer satisfaction, however has only aslight positive effect on the relationship between firm’s willingness tocannibalize (predictor) and brand loyalty (outcome variable). Ascompared to other cell phone brands, Nokia and Samsung implementmore cannibalizing techniques, i.e. they are more willing to sacrificemarket share of old products to launch new products as a step towardsgreater satisfaction and enhancing brand loyalty of their customersand strengthen their overall market share

Leapfrogging: Time of Entry and Firm Productivity

We develop a model in which ex ante identical firms make endogenous entry and technology adoption decisions. We show that this model is capable of matching the stylized facts in which entry and adoption are dispersed over time and that, in many industries, it is the newest firms which are the most likely to exhibit high productivity growth and adopt new innovations (i.e., leapfrogging). We then derive the characteristics of those industries where such leapfrogging is likely to occur and show that leapfrogging can induce reverse preemption (i.e., forward-looking incumbent firms delaying entry and adoption due to leapfrogging behavior). As an application, we demonstrate how, in an industry conducive to leapfrogging, research subsidies can actually reduce short-run consumer welfare by discouraging firms from entering the market with a basic technology

The social lives of products: Analyzing product demography for management theory and practice

Despite the centrality of products in many strategic and managerial theoretical frameworks, little is known systematically about how and why specific products come and go from markets. We argue that narrowing this gap will likely enhance management theory, and we propose that research on product demography—the social lives of products—is a promising way to proceed. For organizing various theoretical ideas used in prior studies, we offer a classification framework. It defines four broad theoretical perspectives on product demography: market rationality, firm rationality, organizational bounded rationality, and institutional rationality. We also outline an approach to product demography that studies empirically the rates of product launch, growth, and withdrawal using stochastic models and data on all products ever appearing in bounded industrial domains. Finally, we discuss the challenges presented by such a fragmented approach to research on product demography and propose a generic research program intended to avoid stagnation

Public gains from entrepreneurial research: Inferences about the economic value of public support of the Small Business Innovation Research program.

This article presents a systematic analysis of the net economic benefits associated with the Small Business Innovation Research (SBIR) program. We offer a derivation of producer and consumer surplus to estimate economic benefits. Fundamental to the implementation of these models is a specific value of the elasticity of demand, but in its absence we estimate what its value would be when the benefit-to-cost ratio associated with public support of the SBIR program equals unity. We infer from these calculations, and from general knowledge about the ability of SBIR-funded firms to exploit their monopoly position, that the SBIR program likely generates positive net economic benefits to society

An orthodox journey towards electrification where sustainability is the centerpiece: the rise and fall of omnia

The presented report relates the personal journey of an active participant of the executive team of a Business in Practice Simulation, through a comprehensive review of the collective cross functional decision making. This report is a reflection on the critical incidents encountered during the course of the program and all the learnings and skills we have gained from them both on a personal and professional level. It comprises a detailed examination and a critical analysis of the different functions required for the management of an automotive manufacturing company in a rapidly changing environment where sustainability is the main concern

Detection and Measurement of Sales Cannibalization in Information Technology Markets

Characteristic features of Information Technology (IT), such as its intrinsic modularity and distinctive cost structure, incentivize IT vendors to implement growth strategies based on launching variants of a basic offering. These variants are by design substitutable to some degree and may contend for the same customers instead of winning new ones from competitors or from an expansion of the market. They may thus generate intra-organizational sales diversion – i.e., sales cannibalization. The occurrence of cannibalization between two offerings must be verified (the detection problem) and quantified (the measurement problem), before the offering with cannibalistic potential is introduced into the market (ex-ante estimation) and/or afterwards (ex-post estimation). In IT markets, both detection and measurement of cannibalization are challenging. The dynamics of technological innovation featured in these markets may namely alter, hide, or confound cannibalization effects. To address these research problems, we elaborated novel methodologies for the detection and measurement of cannibalization in IT markets and applied them to four exemplary case studies. We employed both quantitative and qualitative methodologies, thus implementing a mixed-method multi- case research design. The first case study focuses on product cannibalization in the context of continuous product innovation. We investigated demand interrelationships among Apple handheld devices by means of econometric models with exogenous structural breaks (i.e., whose date of occurrence is given a priori). In particular, we estimated how sales of the iPod line of portable music players were affected by new-product launches within the iPod line itself and by the introduction of iPhone smartphones and iPad tablets. We could find evidence of expansion in total line revenues, driven by iPod line extensions, and inter- categorical cannibalization, due to iPhones and iPads Mini. The second empirical application tackles platform cannibalization, when a platform provider becomes complementor of an innovative third party platform thus competing with its own proprietary one. We ascertained whether the diffusion of GPS-enabled smartphones and navigation apps affected sales of portable navigation devices. Using a unit-root test with endogenous breaks (i.e., whose date of occurrence is estimated), we identified a negative shift in the sales of the two leaders in the navigation market and dated it at the third quarter of 2008, when the iOS and Android mobile ecosystems were introduced. Later launches of their own navigation apps did not significantly affect these manufacturers’ sales further. The third case study addresses channel cannibalization. We explored the channel adoption decision of organizational buyers of business software applications, in light of the rising popularity of online sales channels in consumer markets. We constructed a qualitative channel adoption model which takes into account the relevant drivers and barriers of channel adoption, their interdependences, and the buying process phases. Our findings suggest that, in the enterprise software market, online channels will not cannibalize offline ones unless some typical characteristics of enterprise software applications change. The fourth case study deals with business model cannibalization – the organizational decision to cannibalize an existent business model for a more innovative one. We examined the transition of two enterprise software vendors from on-premise to on-demand software delivery. Relying on a mixed- method research approach, built on the quantitative and qualitative methodologies from the previous case studies, we identified the transition milestones and assessed their impact on financial performances. The cannibalization between on-premise and on-demand is also the scenario for an illustrative simulation study of the cannibalization