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Application developers’ product offering strategies in multi-platform markets

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  • Chen, Yuwen
  • Ni, John
  • Yu, Degan

Abstract

Mobile application (app) developers usually face challenges in product offering decisions. Our research develops an analytical framework to address a product offering problem that app developers face when introducing paid or free apps in a two-platform market. We provide optimal conditions and platform decisions for each strategy (in single and two platforms) by providing a framework for offering either a paid or a free app. When offering a paid app, we identify platforms’ willingness-to-pays, user densities, and platform-specific app-launching costs as key factors that determine platform selection strategy; if a free app is considered, users’ disutility sensitivity to advertisement is an extra factor for app developers to consider. The developer's intrinsic capability and the app's nature form the quality upper bound for the app. When the quality upper bound is low and users are less sensitive to advertisement, these apps are often offered free in the app market. We find that if users’ disutility sensitivities to advertisements are small, introducing a free app is preferable to a paid app.

Suggested Citation

  • Chen, Yuwen & Ni, John & Yu, Degan, 2019. "Application developers’ product offering strategies in multi-platform markets," European Journal of Operational Research, Elsevier, vol. 273(1), pages 320-333.
    • Handle: RePEc:eee:ejores:v:273:y:2019:i:1:p:320-333
    DOI: 10.1016/j.ejor.2018.07.049
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    Cited by:

    1. Haoyu Liu & Shulin Liu, 2019. "Considering In-App Advertising Mode, Platform-App Channel Coordination by a Sustainable Cooperative Advertising Mechanism," Sustainability, MDPI, vol. 12(1), pages 1-28, December.
    2. Davazdahemami, Behrooz & Kalgotra, Pankush & Zolbanin, Hamed M. & Delen, Dursun, 2023. "A developer-oriented recommender model for the app store: A predictive network analytics approach," Journal of Business Research, Elsevier, vol. 158(C).
    3. Haoyu Liu & Shulin Liu, 2020. "Research on Advertising and Quality of Paid Apps, Considering the Effects of Reference Price and Goodwill," Mathematics, MDPI, vol. 8(5), pages 1-23, May.
    4. Chernonog, Tatyana & Levy, Priel, 2023. "Co-creation of mobile app quality in a two-platform supply chain when platforms are asymmetric," European Journal of Operational Research, Elsevier, vol. 308(1), pages 183-200.
    5. Xia, Lulu & Li, Kai & Fu, Hong, 2024. "Bargaining in mobile app supply chain considering members’ fairness concern attitudes," International Journal of Production Economics, Elsevier, vol. 270(C).

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