Resumen de New product launches: competition, sustainability and consumer choice
Xabier Antonio Barriola Salgueiro
New product development has been analyzed in detail over the past years. However, the implication of environmental and social practices has been overlooked. In this dissertation, the focus is on how product releases are connected to social and environmental phenomena.
In the second chapter, we build an analytical model where consumers decide to replace their products as a function of product launches, and firms optimize product features. pricing, and inlroduction times. We use an optimal control framework to derive the consumer's optimal time to change products. We then analyze the firm's problem both for the monopoly, using dynamic programming, and under competition, characterizing the subgame-perfect equilibrium of the firms' dynamic launch game. We find that the firm's problem for the monopoly is fundamentally different from that of competition: a monopoly internalizes inter- product cannibalization. As a result, it sets efficient launch decisions at optimality, while competition results in an oversupply of new products.
In the third chapter, we analyze the relationship between competition and new product releases in the U.S. brewing industry. We usc a detailed retail scanner data scc that covers 1,107 stores located across 32 markccs over 4 years. After calculating the Herfindahl-Hirscbmann Index as a measure for market concencration and using the merger between SABMiller and Molson Coors as an instrument to predict future market structure, we show that there is an inverted-U relationship between market concentration and new product re- leases. We confirm the theoretical notion that wben a market goes from a monopoly to an oligopoly, the number of items offered by each finn increases. However, the key finding is that there is a point in which the number of new products released by each firm decreases. lo other words, firms lose the incentive to release new products when the market is highly concentrated or highly competitive. In the former, neck-and-neck firms are in control of the market and are demotivated to release new items. In the Iauer, laggards decide to release fe,ver new products because they will probably fail to recover launch costs.
Finally, in the fourth chapter, we develop a model that considers the acquisition and usage of durable goods. We use a dynamic programming model where a consumer manages an assortment of goods. Every period she bas to decide which one to use and she has the option of adding and removing items. We find that the value function is increasing and concave, and under certain conditions submodular. This finding suggests that having more items in the assortment reduces the oeed for additional purchases. Moreover. we show that utility is maximized when decay is smaller and tba1 the number of product purchases increases if decay rises. Finally, we demonstrate that when utility is uncertain, the optimal choice is to have more items to increase the probability of obtaining high utility from the chosen item.
Overall, this dissertation connects the field of new product development with sustainable operations and consumer choice to answer a range of research questions, with the main goal of understanding bow ftrms and consumers can work together to release and consume products in a more sustainable way.
