Optimal Sales Schemes for Network Goods
Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
Standard
Optimal Sales Schemes for Network Goods. / Parakhonyak, Alexei; Vikander, Nick.
I: Management Science, Bind 65, Nr. 2, 2019, s. 819-841.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
Harvard
APA
Vancouver
Author
Bibtex
}
RIS
TY - JOUR
T1 - Optimal Sales Schemes for Network Goods
AU - Parakhonyak, Alexei
AU - Vikander, Nick
PY - 2019
Y1 - 2019
N2 - This paper considers a monopolist’s product-launch strategy in the presence of network effects, focusing on how to exploit these effects to the maximum possible extent. In our formal framework, the firm sets a price for its product and chooses a sales scheme, which effectively determines how consumers can learn from each other about the product’s popularity. Our results on the profitability of different schemes provide insights on a variety of managerial issues that are of practical relevance for product launch. Specifically, to best exploit network effects, our results suggest releasing preorder and sales information to consumers. They also suggest taking a sequential approach to multimarket product launch, launching first in smaller markets before larger ones. Moreover, they identify possible benefits of promoting prerelease consumer communication, and they support the idea of targeting independent-minded consumers, so they can serve as opinion leaders for those who follow.
AB - This paper considers a monopolist’s product-launch strategy in the presence of network effects, focusing on how to exploit these effects to the maximum possible extent. In our formal framework, the firm sets a price for its product and chooses a sales scheme, which effectively determines how consumers can learn from each other about the product’s popularity. Our results on the profitability of different schemes provide insights on a variety of managerial issues that are of practical relevance for product launch. Specifically, to best exploit network effects, our results suggest releasing preorder and sales information to consumers. They also suggest taking a sequential approach to multimarket product launch, launching first in smaller markets before larger ones. Moreover, they identify possible benefits of promoting prerelease consumer communication, and they support the idea of targeting independent-minded consumers, so they can serve as opinion leaders for those who follow.
KW - Faculty of Social Sciences
KW - product launch
KW - network effects
KW - sequencing of sales
U2 - 10.1287/mnsc.2017.2972
DO - 10.1287/mnsc.2017.2972
M3 - Journal article
VL - 65
SP - 819
EP - 841
JO - Management Science
JF - Management Science
SN - 0025-1909
IS - 2
ER -
ID: 202239030