IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v214y2011i2p232-245.html
   My bibliography  Save this article

Single firm product diffusion model for single-function and fusion products

Author

Listed:
  • Chen, Yuwen
  • Carrillo, Janice E.

Abstract

The prosperity of multifunction products (also referred to as fusion products) has changed the landscape of the marketplace for several electronics products. To illustrate, as fusion products gain popularity in cellular phones and office machines, we observe that single-function products (e.g., stand-alone PDAs and stand-alone scanners) gradually disappear from the market as they are supplanted by fusion products. This paper presents a product diffusion model that captures the diffusion transition from two distinct single-function products into one fusion product. We investigate the optimal launch time of the fusion product under various conditions and conduct a numerical analysis to demonstrate the dynamics among the three products. Similar to previous multi-generation single product diffusion models, we find that the planning horizon, the products' relative profit margin, and substitution effects are important to the launch time decision. However, there are several unique factors that warrant special consideration when a firm introduces a fusion product to the market: the firm's competitive role, buyer consolidation of purchases to a multi-function product, the fusion technology and the age of current single-function products.

Suggested Citation

  • Chen, Yuwen & Carrillo, Janice E., 2011. "Single firm product diffusion model for single-function and fusion products," European Journal of Operational Research, Elsevier, vol. 214(2), pages 232-245, October.
    • Handle: RePEc:eee:ejores:v:214:y:2011:i:2:p:232-245
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221711003742
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. John A. Norton & Frank M. Bass, 1987. "A Diffusion Theory Model of Adoption and Substitution for Successive Generations of High-Technology Products," Management Science, INFORMS, vol. 33(9), pages 1069-1086, September.
    2. Carrillo, Janice E. & Franza, Richard M., 2006. "Investing in product development and production capabilities: The crucial linkage between time-to-market and ramp-up time," European Journal of Operational Research, Elsevier, vol. 171(2), pages 536-556, June.
    3. Barry L. Bayus, 1998. "An Analysis of Product Lifetimes in a Technologically Dynamic Industry," Management Science, INFORMS, vol. 44(6), pages 763-775, June.
    4. Frank M. Bass & Trichy V. Krishnan & Dipak C. Jain, 1994. "Why the Bass Model Fits without Decision Variables," Marketing Science, INFORMS, vol. 13(3), pages 203-223.
    5. Glen M. Schmidt & Evan L. Porteus, 2000. "Sustaining Technology Leadership Can Require Both Cost Competence and Innovative Competence," Manufacturing & Service Operations Management, INFORMS, vol. 2(1), pages 1-18, March.
    6. Frank M. Bass, 1969. "A New Product Growth for Model Consumer Durables," Management Science, INFORMS, vol. 15(5), pages 215-227, January.
    7. Debabrata Talukdar & K. Sudhir & Andrew Ainslie, 2002. "Investigating New Product Diffusion Across Products and Countries," Marketing Science, INFORMS, vol. 21(1), pages 97-114, February.
    8. Christophe Van den Bulte & Gary L. Lilien, 1997. "Bias and Systematic Change in the Parameter Estimates of Macro-Level Diffusion Models," Marketing Science, INFORMS, vol. 16(4), pages 338-353.
    9. Dipak Jain & Vijay Mahajan & Eitan Muller, 1991. "Innovation Diffusion in the Presence of Supply Restrictions," Marketing Science, INFORMS, vol. 10(1), pages 83-90.
    10. Christophe Van den Bulte, 2000. "New Product Diffusion Acceleration: Measurement and Analysis," Marketing Science, INFORMS, vol. 19(4), pages 366-380, June.
    11. Leslie Olin Morgan & Ruskin M. Morgan & William L. Moore, 2001. "Quality and Time-to-Market Trade-offs when There Are Multiple Product Generations," Manufacturing & Service Operations Management, INFORMS, vol. 3(2), pages 89-104, June.
    12. Teck-Hua Ho & Sergei Savin & Christian Terwiesch, 2002. "Managing Demand and Sales Dynamics in New Product Diffusion Under Supply Constraint," Management Science, INFORMS, vol. 48(2), pages 187-206, February.
    13. Lynn O. Wilson & John A. Norton, 1989. "Optimal Entry Timing for a Product Line Extension," Marketing Science, INFORMS, vol. 8(1), pages 1-17.
    14. Morris A. Cohen & Jehoshua Eliasberg & Teck-Hua Ho, 1996. "New Product Development: The Performance and Time-to-Market Tradeoff," Management Science, INFORMS, vol. 42(2), pages 173-186, February.
    15. Kornish, Laura J., 2006. "Technology choice and timing with positive network effects," European Journal of Operational Research, Elsevier, vol. 173(1), pages 268-282, August.
    16. Albert C. Bemmaor & Janghyuk Lee, 2002. "The Impact of Heterogeneity and Ill-Conditioning on Diffusion Model Parameter Estimates," Marketing Science, INFORMS, vol. 21(2), pages 209-220, November.
    17. Druehl, Cheryl T. & Schmidt, Glen M. & Souza, Gilvan C., 2009. "The optimal pace of product updates," European Journal of Operational Research, Elsevier, vol. 192(2), pages 621-633, January.
    18. Namwoon Kim & Dae Ryun Chang & Allan D. Shocker, 2000. "Modeling Intercategory and Generational Dynamics for A Growing Information Technology Industry," Management Science, INFORMS, vol. 46(4), pages 496-512, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Meade, Nigel & Islam, Towhidul, 2006. "Modelling and forecasting the diffusion of innovation - A 25-year review," International Journal of Forecasting, Elsevier, vol. 22(3), pages 519-545.
    2. Peres, Renana & Muller, Eitan & Mahajan, Vijay, 2010. "Innovation diffusion and new product growth models: A critical review and research directions," International Journal of Research in Marketing, Elsevier, vol. 27(2), pages 91-106.
    3. Bayrak, Busra & Guray, Busra & Uzunlar, Nilsu & Nadar, Emre, 2024. "Diffusion control in closed-loop supply chains: Successive product generations," International Journal of Production Economics, Elsevier, vol. 268(C).
    4. Krishnan, Trichy V. & Feng, Shanfei & Jain, Dipak C., 2023. "Peak sales time prediction in new product sales: Can a product manager rely on it?," Journal of Business Research, Elsevier, vol. 165(C).
    5. Samuel Sale, R. & Mesak, Hani I. & Inman, R. Anthony, 2017. "A dynamic marketing-operations interface model of new product updates," European Journal of Operational Research, Elsevier, vol. 257(1), pages 233-242.
    6. Peters, Kay & Albers, Sönke & Kumar, V., 2008. "Is there more to international Diffusion than Culture? An investigation on the Role of Marketing and Industry Variables," EconStor Preprints 27678, ZBW - Leibniz Information Centre for Economics.
    7. Liao, Shuangqing & Seifert, Ralf W., 2015. "On the optimal frequency of multiple generation product introductions," European Journal of Operational Research, Elsevier, vol. 245(3), pages 805-814.
    8. Franses, Ph.H.B.F. & Hernández-Mireles, C., 2006. "When Should Nintendo Launch its Wii? Insights From a Bivariate Successive Generation Model," ERIM Report Series Research in Management ERS-2006-032-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.
    9. Hernández-Mireles, C. & Franses, Ph.H.B.F., 2010. "The Launch Timing of New and Dominant Multigeneration Technologies," ERIM Report Series Research in Management ERS-2010-022-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.
    10. Zhiling Guo & Jianqing Chen, 2018. "Multigeneration Product Diffusion in the Presence of Strategic Consumers," Information Systems Research, INFORMS, vol. 29(1), pages 206-224, March.
    11. Saurabh Panwar & P. K. Kapur & Ompal Singh, 2021. "Predicting diffusion dynamics and launch time strategy for mobile telecommunication services: an empirical analysis," Information Technology and Management, Springer, vol. 22(1), pages 33-51, March.
    12. Shi, Xiaohui & Li, Feng & Bigdeli, Ali Ziaee, 2016. "An examination of NPD models in the context of business models," Journal of Business Research, Elsevier, vol. 69(7), pages 2541-2550.
    13. Sanjeev Dewan & Dale Ganley & Kenneth L. Kraemer, 2010. "Complementarities in the Diffusion of Personal Computers and the Internet: Implications for the Global Digital Divide," Information Systems Research, INFORMS, vol. 21(4), pages 925-940, December.
    14. Elmar Kiesling & Markus Günther & Christian Stummer & Lea Wakolbinger, 2012. "Agent-based simulation of innovation diffusion: a review," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 20(2), pages 183-230, June.
    15. Franses, Ph.H.B.F., 2009. "Forecasting Sales," Econometric Institute Research Papers EI 2009-29, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    16. Michelle M.H. Şeref & Janice E. Carrillo & Arda Yenipazarli, 2016. "Multi-generation pricing and timing decisions in new product development," International Journal of Production Research, Taylor & Francis Journals, vol. 54(7), pages 1919-1937, April.
    17. Barnes, Belinda & Southwell, Darren & Bruce, Sarah & Woodhams, Felicity, 2014. "Additionality, common practice and incentive schemes for the uptake of innovations," Technological Forecasting and Social Change, Elsevier, vol. 89(C), pages 43-61.
    18. Zhengrui Jiang & Dipak C. Jain, 2012. "A Generalized Norton-Bass Model for Multigeneration Diffusion," Management Science, INFORMS, vol. 58(10), pages 1887-1897, October.
    19. Hongmin Li & Dieter Armbruster & Karl G. Kempf, 2013. "A Population-Growth Model for Multiple Generations of Technology Products," Manufacturing & Service Operations Management, INFORMS, vol. 15(3), pages 343-360, July.
    20. Druehl, Cheryl T. & Schmidt, Glen M. & Souza, Gilvan C., 2009. "The optimal pace of product updates," European Journal of Operational Research, Elsevier, vol. 192(2), pages 621-633, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:214:y:2011:i:2:p:232-245. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.