Analysis of dynamic pricing scenarios for multiple-generation product lines
Authored by Nil Kilicay-Ergin, Chun-yu Lin, Gul E Okudan
Date Published: 2015
DOI: 10.1007/s11518-015-5264-2
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Abstract
In technology-intensive markets, it is a common strategy for companies
to develop long-term multiple generation product lines instead of
releasing consecutive single products. Even though this strategy is more
profitable than sequentially introducing single product generations, it
can also result in inter-product line cannibalization. Cannibalization
of multiple-generation product lines is a complex problem that needs to
be taken into account at the early product line planning stage in order
to sustain long-term profitability. In this paper, we propose an
agent-based model that can simulate the potential cannibalization
scenarios within a multiple-generation product line. We view a
multiple-generation product line (MGPL) as complex adaptive system where
each product generation in the MGPL adjusts its sales price over time
based on the shifts in the market demand. The proposed model provides
insights into how various pricing strategies impact the overall
lifecycle profitability of MGPL and can be used to assist companies in
developing appropriate dynamic pricing strategies at the early product
line planning stages.
Tags
Supply chain
Decision-Making
diffusion
systems
Model
Research-and-development
Successive generations
Cannibalization
Substitution