Competitive Entry of Information Goods Under Quality Uncertainty
| العنوان: | Competitive Entry of Information Goods Under Quality Uncertainty |
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| المؤلفون: | Minqiang Li, Yong Tan, Guofang Nan, Zan Zhang |
| المصدر: | Management Science. 68:2869-2888 |
| بيانات النشر: | Institute for Operations Research and the Management Sciences (INFORMS), 2022. |
| سنة النشر: | 2022 |
| مصطلحات موضوعية: | business.industry, Strategy and Management, media_common.quotation_subject, 05 social sciences, Management Science and Operations Research, Competitive advantage, Vertical differentiation, 0502 economics and business, New product development, 050211 marketing, Information good, Quality (business), Business, Product (category theory), 050207 economics, Industrial organization, media_common |
| الوصف: | When confronted with a new product, consumers often find it difficult to predict how it will perform, and such uncertainty reduces consumers’ willingness to adopt the product. In this paper, we consider a market whereby consumers decide when and which product to buy, given that they know the product quality of the incumbent but are uncertain about that of the entrant. We investigate how consumer uncertainty about product quality affects firms’ behavior-based pricing and customer acquisition and retention dynamics. Using a two-period vertical model, we find that, under high-end encroachment, an increase in consumer uncertainty reduces the entrant’s profit and hurts the incumbent’s profit when the quality differential between the products is relatively small, whereas, under low-end encroachment, increasing uncertainty not only benefits the incumbent but also can favor the entrant. An important implication for entrants is that the marketing activities, which aim to reduce consumer uncertainty about product functionalities, may fail to improve profitability. We also find that the entrant lowers the price for uninformed customers and raises the price for repeat buyers under high-end encroachment but lowers the price for all customers under low-end encroachment. We further examine the subsidy strategy and show that, when the entrant’s product has a significant quality advantage and consumer uncertainty is high but not very high, the optimal strategy for the entrant is to acquire all consumers who do not buy from the incumbent by providing subsidies and to drop the low-valuation customers by means of a high price after their uncertainty is resolved. This paper was accepted by Anandhi Bharadwaj, information systems. |
| تدمد: | 1526-5501 0025-1909 |
| URL الوصول: | https://explore.openaire.eu/search/publication?articleId=doi_________::b63319624fc82c42c795c10f6abd613b https://doi.org/10.1287/mnsc.2021.3978 |
| رقم الأكسشن: | edsair.doi...........b63319624fc82c42c795c10f6abd613b |
| قاعدة البيانات: | OpenAIRE |
| تدمد: | 15265501 00251909 |
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