New Product Pricing in Quality Sensitive Markets

Abstract

This paper considers the problem of pricing a new product in a market having competing products of different qualities and market penetration levels, as measured by the cumulative number of units sold. Each customer type selects his optimal product based on maximizing consumer surplus. Pricing policies for a new product are determined for the seller based on cumulative profit maximization without discounting. An example is solved in detail for two demand function forms.pricing, new product entry, quality differentiation

Economic determination of specification levels and allocation priorities of semiconductor products

“…levels can also be determined for the producer as an output of the profit maximization process. Our approach is based on the premise that there are numerous potential customers with heterogeneous preferences with respect to quality levels (see, for example, Smith, 1986), where several (more than one) quality levels are acceptable to potential customers. Under this assumption, we construct a product line of priority classes defined in terms of product spec.…”

“…The characterizations of customers and quality levels closely follow those in Smith (1986). The customer heterogeneity is represented by a customer's type index t E [0, I].…”

“…In order for there to be successful market segmentation, a certain monotonicity condition on utility functions has been a standard assumption in the literature dealing with product line type pricing (see, for example, Smith, 1986). A set of such monotonicity conditions that our model satisfies (it can be easily verified) is as follows: for i = 1, ... , M, (EUi(th) -EUi+ I(th)) -(EUi(tk) -EU i + I(tk)) > 0 for 1 ;:::: th > tk > 0,…”

Introduction of Software Products and Services Through Public 'Beta' Launches

“…hardware and software). Some other papers that focus on interesting aspects of the new product adoption process are by Souza, Bayus, and Wagner (2004), Song (2003), Smith (1986), Golder and Tellis (1997), Bridges, Yim, and Briesch (1995), Narasimhan (1989) and Lee and Connor (2003).…”

Problemas de alocação e precificação de itens

“…Se os preços forem altos, então alguns consumidores não irão querer (ou não poderão) comprar os produtos, e se os preços forem baixos, então a empresa poderá obter um lucro baixo. Esseé um problema vastamente estudado, com modelos diferentes para situações diferentes e uma grande diversidade de abordagens [OSW84,OSW87,Sen82,Smi86].…”