Cost–benefit model for multi-generational high-technology products to compare sequential innovation strategy with quality strategy

Abstract

In the rapidly changing high-tech industry, firms that produce multi-generational products struggle to consistently introduce new products that are superior in innovativeness. However, developing innovative products in a short time sequence period is likely to cause quality problems. Therefore, considering time and resource constraints, two kinds of strategies are commonly employed: sequential innovation strategy, sequentially introducing a new generation of technology product at every launch interval, ensuring timely innovativeness but with relatively uncertain quality, or quality strategy, intermittently introducing a new generation of products, together with a derivative model between generations to enhance the quality. In this study, we propose a framework for a cost–benefit analysis that compares these two strategies by considering competition between firms within a generation as well as that within a firm across multiple generations (i.e., cannibalization) throughout the launch cycle of high-tech products. We apply our proposed framework to the smartphone market and conduct a sensitivity analysis. The results are expected to contribute to strategic decision-making related to the introduction of multi-generational technology products.

Consequences of Multigenerational Services Adoption Behavior: Global Client Engagement

“…Prior research has explored various factors influencing the diffusion process, including forward-looking behavior (Shi, Fernandes, and Chumnumpan 2014), customer satisfaction with prior generations (Bansal, Anand, and Aggrawal 2021), adoption speed (Kapur, Panwar, and Singh 2019;Stremersch, Muller, and Peres 2010), and price and consumer behavior (Tsai 2013). Kim, Jee, and Sohn (2021) examine firms' decision whether to launch multiple generations of products under a regular schedule but with uncertain quality or to launch intermittently but with assured quality. The size and speed of improvements in performance and functionality also vary across generations (Sood and Tellis 2005).…”

Multigenerational product innovation process in electronic information industry: a qualitative study

“…Multigenerational product innovation is defined as the development of multiple generations of new products on the basis of improving the functions or technologies of existing products (Jiang et al , 2022; Chen et al , 2021; Hann et al , 2016), which highlights the improvements or extensions of existing products to innovate successive or subsequent products and emphasizes more on linkage and continuity between two generations of products (Chen et al , 2021; Bornemann et al , 2020). By leveraging the existing knowledge or technology for next-generational products in the multigenerational product innovation process, enterprises can obtain cost benefits, accelerate product innovation, enhance their capabilities to resist risks, satisfy the different needs of customer segments and maintain advantages in the industry evolution process (Kim et al , 2021; Chen et al , 2021; Bornemann et al , 2020).…”

“…Knowledge integration has always been a core component of any new product development process and enables firms to develop core technologies (Tsai et al, 2015;Salunke et al, 2019). Hence, this perspective helps us better understand the multigenerational product innovation process that firms need not only to keep pace with the rapidly changing marketplace but also to accumulate continuous competitive advantages (Bhatia et al, 2020;Kim et al, 2021). We adopted the multi-case study qualitative research method to answer the above-mentioned question because this method has been arguably the most appropriate in exploring "how" questions (Eisenhardt and Graebner, 2007;Gehman et al, 2018;Urbinati et al, 2020).…”

“…This type of innovation is called multigenerational innovation, which refers to the functional or technological substitution of earlier product generations by newer ones to achieve successive generational product innovation (Mehra et al , 2022; Chen et al , 2021). Introducing multigenerational product innovation can not only benefit enterprises by maximizing profits and lowering costs because of customers’ preference for purchasing a new product if its value exceeds that of the current product (Jiang et al , 2022; Kim et al , 2021) but also helps firms maintain competitive advantages in the industry evolution via continuous innovation (Chen et al , 2021).…”

“…Knowledge integration has always been a core component of any new product development process and enables firms to develop core technologies (Tsai et al , 2015; Salunke et al , 2019). Hence, this perspective helps us better understand the multigenerational product innovation process that firms need not only to keep pace with the rapidly changing marketplace but also to accumulate continuous competitive advantages (Bhatia et al , 2020; Kim et al , 2021).…”