Using extensive dynamic product lines for listening in on evolving demand

As companies rush into opening markets in Eastern Europe and elsewhere, and as suppliers everywhere introduce new products in existing markets, they need to decide which and how many versions of the product to offer at the time of market entry and how to change the product line over time. Given the heterogeneity of consumer preferences, the relative newness of the product in the market and/or the consumer's ability to choose from a variety of different versions, and the possibility of complex evolution of demand, traditional market research may not be a reliable guide to product-line design and management. A solution provided by Anirudh Dhebar is to use the product line itself to listen in on evolving demand. For the listening to be effective, the product line must be extensive and dynamic, and it must be based on a systematic experimentation process conducive to learning. The author warns that the product line should not be too extensive or too dynamic; that may inhibit learning and hurt market evolution.

Information technology and product policy: 'Smart' products

Increasingly, information technology (IT) is incorporated in products to make them 'smart' - to provide the user with improved information about and control over performance, greater automation, and enhanced features, functions, and capabilities. These product improvements - and one hopes the consumer sees them as improvements - are made possible by the programing capabilities of microprocessors and other electronic devices, which expand the set of benefit-enhancing attributes that can be designed into a product and make it easier and cheaper to change, add, or drop a growing set of attributes. This article outlines three major productpolicy concerns stemming from the new-found design facility, flexibility, and economy: getting the product and product line 'right', managing the speed and nature of product change, and establishing product-use standards. A central message that emerges is the need for a new system of checks and balances to restrain the product supplier from piling on the features, too fast and with dysfunctional disruptions in product-use standards. The message should be of interest to a broad set of organizational functions: product design and development, product and marketing management, and IT management.

Durable-Goods Monopolists, Rational Consumers, and Improving Products

We consider the case of a monopolist supplying an improving durable product to a population that is heterogeneous in its valuation of product quality. In a two-period framework, we show that if consumers expect the product to improve in “present-value” terms, then intertemporal discrimination might result in the first-period marginal consumer being left with zero surplus and some higher-end consumers postponing purchase. The resulting trajectories for quality and price do not constitute a subgame-perfect equilibrium. One of our conclusions is that the logic of profit maximization in the context of rational consumer choice imposes a demand-side constraint on the rate of product improvement. We also emphasize the disequilibrium consequences of improving a product so rapidly that high-end consumers are tempted to wait for a future new-and-improved version. Finally, the formulation adopted in the paper may be useful to understand observed differences in product improvement rates in different markets.product policy, product improvement, pricing research, Game theory

New-and-improved high-tech products : speeding producer, meet the balking consumer

"August 1995."Cover title

Information technology and product policy (A) : "smart" products

Cover title."August 1995.

Information technology and product policy (B) : information products

Cover title."August 1995.