Pricing, or time-to-market? Product introduction for quality differentiated products with delayed network effects

Kong, Junjun; Yang, Feng; Jin, Minyue

doi:10.1016/j.cie.2022.108070

Cited by 10 publications

(5 citation statements)

References 41 publications

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“…Pu et al (2019) examine the impact of product quality differentiation on firms' distribution strategies. Kong et al (2022) analyze the influence of delayed network effects on the launch decision of two quality-differentiated information goods. Li et al (2020) explore the sourcing strategy of the original equipment manufacturer in quality competition.…”

Section: Literature Reviewmentioning

confidence: 99%

Quality differentiation and channel structure on online platforms

Zhang,

Nie,

Luo

2024

Manage Decis Econ

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We examine how quality differentiation affects a manufacturer's channel strategy when selling through an offline retailer and a platform. The manufacturer can choose to distribute high‐ or low‐quality products online/offline via agency or reselling channels. We demonstrate that agency selling (reselling) is optimal when the commission rate is low (otherwise). Moreover, the manufacturer chooses to sell high‐quality (low‐quality) goods online if the cost difference between the two quality levels is low (high). Interestingly, as the quality difference increases, the manufacturer is more likely to offer high‐quality goods online. The platform and the retailer cannot benefit from the manufacturer's decisions simultaneously.

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Section: Literature Reviewmentioning

confidence: 99%

Quality differentiation and channel structure on online platforms

Zhang,

Nie,

Luo

2024

Manage Decis Econ

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“…The study finds that the price of the digital content has a great effect on the price of the digital device. References [7][8][9][10][11] incorporate network effects into the pricing models of digital products. They find that the network effects play a key role in firms' offering decisions.…”

Section: Digital Product Pricingmentioning

confidence: 99%

Whether to Add a Digital Product into Subscription Service?

Zhang,

Zhang

2024

JTAER

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Digital products companies are increasingly adopting subscription pricing, but consumers who pay the subscription service may not be able to access all digital products sold on the sales platform. This paper explores the question of why some digital products are not in the subscription service of the sales platform. To address this problem, we develop an analytical model to examine two strategies of the firm. One is that the firm does not add the new product into the subscription service, the other is that the firm adds the new product into the subscription service. By comparing the profits under two sets, we find the condition under which the firm should add the new digital product into the subscription service. The results show that if the percentage of existing subscribers is below a certain threshold, and the subscription price is over a certain threshold, it is better for the firm to add the new product into the subscription service. We also analyze how the main variables affect the firm’s profit and the piracy rate. Our research provides useful insights for firms in choosing pricing schemes for the newly released product and offers advice for policymakers on controlling the piracy rate of digital products industry.

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“…NE has more obvious influence on dominant supply chain members (Shen et al, 2022). The intensity of the delayed network effect and quality differential affect product marketing strategies (Kong et al, 2022).…”

Section: Literature Reviewmentioning

confidence: 99%

“…After investigating more than 200 large‐scale industries, Deloitte found that many industrial products exhibit NE, especially information communication products and electronic communication products (Liu, 2016). NE is essentially a demand‐side scale economy, which means that the utility of consumers increases as more consumers purchase the same or compatible products (services) (Katz & Shapiro, 1985; Kong et al, 2022). Obviously, NE can influence purchasing decisions made by consumers by influencing their expectations of the market scale of products (Shen et al, 2022).…”

Section: Introductionmentioning

confidence: 99%

The manufacturer's quality‐improvement decisions and evolutionary stable strategy of retailers' marketing objectives under network externality

Sun,

Yi,

Yang

et al. 2023

Manage Decis Econ

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To analyze the influence of network externality (NE) and bargaining power of retailers on the quality‐improvement decisions of the manufacturer, evolutionary stable strategy (ESS) of retailers' marketing objectives, and profits of retailers and the manufacturer, we developed an evolutionary game model of supply chain composed of a monopoly manufacturer and one population of retailers under NE. We found that the retailers' ESS is influenced by both NE and product quality‐improvement levels. With the improvement of NE or product quality‐improvement levels, the marketing objectives of retailers will experience three evolutionary stable states: profit maximization, coexistence of profit maximization and revenue maximization, and revenue maximization. The product quality‐improvement levels and retailers' profits do not necessarily improve with the increase of NE, which depend on the retailers' ESS, but the manufacturer's profits always benefit from NE. When retailers' bargaining power reaches a certain level, it can influence the ESS of retailers' marketing objectives. Interestingly, the retailers' bargaining power does not necessarily enhance their own profits; it is related to the ESS of retailers' marketing objectives but consistently reduces the manufacturer's profits.

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Pricing, or time-to-market? Product introduction for quality differentiated products with delayed network effects

Cited by 10 publications

References 41 publications

Quality differentiation and channel structure on online platforms

Quality differentiation and channel structure on online platforms

Whether to Add a Digital Product into Subscription Service?

The manufacturer's quality‐improvement decisions and evolutionary stable strategy of retailers' marketing objectives under network externality

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