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Product Entry Timing in Dual Distribution Channels: The Case of the Movie Industry

Author

Listed:
  • Prasad Ashutosh

    (The University of Texas at Dallas, aprasad@utdallas.edu)

  • Bronnenberg Bart

    (The University of California, Los Angeles, bart.bronnenberg@anderson.ucla.edu)

  • Mahajan Vijay

    (UT Austin, vijay.mahajan@mccombs.utexas.edu)

Abstract

In many durable goods industries, firms continuously offer new products to customers and market them in different versions through different channel of distribution. This paper examines the issue of when to introduce the product into the different channels. The determinants of entry time include the discounting of future profits, the foresight of the firm, customers' expectations, and the possibility of cannibalization. Of special interest is the effect of customers' expectations about the timing of sequential entries. Specifically, it is shown here that profits decline if firms ignore the role of customer expectations. We discuss how our results can be used to get insights into the workings of the US motion picture industry, which is characterized by sequential introduction of movies first into theaters followed by home video. Finally, a closed form solution for an optimal sequential timing policy is provided.

Suggested Citation

  • Prasad Ashutosh & Bronnenberg Bart & Mahajan Vijay, 2004. "Product Entry Timing in Dual Distribution Channels: The Case of the Movie Industry," Review of Marketing Science, De Gruyter, vol. 2(1), pages 1-20, March.
    • Handle: RePEc:bpj:revmkt:v:2:y:2004:i:1:p:20:n:3
    DOI: 10.2202/1546-5616.1008
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    Citations

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    Cited by:

    1. Cleeren, K. & Dekimpe, M.G. & Verboven, F., 2005. "Intra- and Inter-Channel Competition in Local-Service Sectors," ERIM Report Series Research in Management ERS-2005-018-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    2. Randy Nelson & Patrick Rutherford, 2010. "The impact of early DVD release on box office revenues," Applied Economics Letters, Taylor & Francis Journals, vol. 17(7), pages 689-693.
    3. Chiou, Lesley, 2008. "The timing of movie releases: Evidence from the home video industry," International Journal of Industrial Organization, Elsevier, vol. 26(5), pages 1059-1073, September.
    4. Yan, Tingting & Dooley, Kevin J., 2010. "Entry timing in a secondary market: When to trade?," International Journal of Production Economics, Elsevier, vol. 124(1), pages 62-74, March.

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