Product Innovation of an Incumbent Firm:A Dynamic Analysis

In case of a product innovation firms start producing a new product. While doing so, such a firm should decide what to do with its existing product after the firm has innovated. Essentially it can choose between replacing the established product by the new one, or keep on producing the established product so that it produces two products at the same time. The aim of this paper is to design a theoretical framework to analyze this problem. Due to technological progress the quality of the newest available technology, and thus the quality of the innovative product that can be produced by this technology, increases over time. The implication is that a later innovation enables the firm to produce a better innovative product. So, typically the firm faces the tradeoff between innovating fast, which boosts its profits soon but only by a small amount, or innovating later, which leads to a larger payoff increase. The drawback here is that the firm is stuck with producing the established product for a longer time. We fund that a highly uncertain economic environment makes the firm delay abolishing the old product market. But if the innovative market is more volatile, the firm enters the market sooner, provided it will be active on the old market, at least for some time. Moreover, the smaller the initial demand for the innovative product market, the better the quality of the innovative product needs to be for the product innovation to be optimal

Optimal technology adoption when the arrival rate of new technologies changes

Our paper contributes to the literature of technology adoption. In most of these models it is assumed that the intensity rate of new arrivals is constant. We extend this approach by assuming that after the last technology jump the intensity of a new arrival can change. Right after the arrival of a new technology the intensity equals a specific value that switches if no new technology arrival has taken place within a certain period after the last technology arrival. We look at different scenarios, dependent on whether the firm is threatened by a drop in the arrival rate after a certain time period or expects the rate to rise. We analyze the effect of a mean preserving spread of the time between two consecutive arrivals on the optimal investment timing and show that larger variance can accelerate investment in case the arrival rate rises while it can decelerate investment in case the arrival rate drops. We find that firms often adopt a new technology a time lag after its introduction, which is a phenomenon frequently observed in practice. Regarding a firm’s technology releasing strategy we explain why additional uncertainty can stimulate customers’ buying behavior. The optimal adoption timing changes significantly, depending on whether the arrival rate is assumed to change or be constant over time. Adding uncertainty about the length of the time period after which the arrival intensity changes, we find that increasing uncertainty accelerates investment, a result that is opposite to the standard real options theory

Effective Marketing Strategies to Reach Mobile Users

Reaching users on mobile devices has never been more critical for retailers given the ubiquitous use of mobile devices. U.S. consumers who shop online are using personal computers less and mobile devices more when doing so. The purpose of this single case study was to explore mobile device marketing strategies used by retail marketing leaders to reach mobile users effectively. Rogers\u27s diffusion of innovation theory provided the conceptual framework for the study. Participants included a purposeful sample of 8 marketing managers employed by a Fortune 1000 retail organization in the Pacific Northwest. Data collected via in-person, semistructured interviews and a review of the marketing plan documents were thematically analyzed and methodically triangulated. There were 11 themes that emerged from the interviews and marketing plan document review. The results indicated that mobile marketing managers could focus their efforts on 3 of the 11 themes to reach mobile users. The 3 primary themes included getting close to their customers to learn about customers\u27 preferences, gathering and using big data in an intelligent way, and tailoring experiences by sending messages and offers at times when users are most likely to transact. Results from this study may foster positive social change by increasing profits within the organization as a result of more effective mobile device marketing strategies. The profits retailers generate through effective mobile device marketing strategies could allow them to provide additional community support through charitable donations and provide additional support through the creation of new positions within the community