Don’t Hurry, Be Happy! The Bright Side of Late Product Release

Mushegh Harutyunyan () and Chakravarthi Narasimhan ()
Additional contact information
Mushegh Harutyunyan: Department of Analytics, Operations and Marketing, Imperial College Business School, Imperial College London, London SW7 2AZ, United Kingdom
Chakravarthi Narasimhan: Olin Business School, Washington University in St. Louis, St. Louis, Missouri 63130

Marketing Science, 2024, vol. 43, issue 6, 1188-1203

Abstract: When a firm releases its product later than its competitor, the firm loses sales because many consumers prefer to buy the competitor’s product rather than wait for the firm’s product release. Therefore, in the absence of any late-mover advantages, conventional wisdom suggests that competing firms will release their products as soon as possible to avoid losing customers if they were to enter later. However, when the market evolves over time and consumers are forward-looking, we demonstrate that this intuition fails and propose a new explanation for why a firm may strategically release its product later than its competitor. Namely, a firm’s late entry can help alleviate price competition due to some consumers’ decisions to wait for the firm’s product release instead of buying a currently available product. We show that in markets where the growth rate is sufficiently high and differentiation between firms is not too low, the firm’s profit gain from alleviated price competition dominates its profit loss from reduced sales, making the firm better off by releasing its product later than the competitor. Surprisingly, when the fraction of consumers who enter the market relatively early increases, the firm may have even greater incentives to release its product late. Finally, we consider markets where firms are differentiated both horizontally and vertically, with one firm having a higher quality (or stronger brand image) than its competitor. We find that high level of vertical differentiation will induce both high- and low-quality firms to rush to the market, releasing their products in the early period. However, when vertical differentiation is moderately high, the high-quality firm may choose to release late, whereas the low-quality firm will prefer to release its product early.

Keywords: market entry; entry timing; late entry; competitive strategy; pricing (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/mksc.2023.0393 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:43:y:2024:i:6:p:1188-1203

Access Statistics for this article

More articles in Marketing Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().