Cost–benefit model for multi-generational high-technology products to compare sequential innovation strategy with quality strategy

Hyoung Jun Kim, Su Jung Jee and So Young Sohn

PLOS ONE, 2021, vol. 16, issue 4, 1-17

Abstract: In the rapidly changing high-tech industry, firms that produce multi-generational products struggle to consistently introduce new products that are superior in innovativeness. However, developing innovative products in a short time sequence period is likely to cause quality problems. Therefore, considering time and resource constraints, two kinds of strategies are commonly employed: sequential innovation strategy, sequentially introducing a new generation of technology product at every launch interval, ensuring timely innovativeness but with relatively uncertain quality, or quality strategy, intermittently introducing a new generation of products, together with a derivative model between generations to enhance the quality. In this study, we propose a framework for a cost–benefit analysis that compares these two strategies by considering competition between firms within a generation as well as that within a firm across multiple generations (i.e., cannibalization) throughout the launch cycle of high-tech products. We apply our proposed framework to the smartphone market and conduct a sensitivity analysis. The results are expected to contribute to strategic decision-making related to the introduction of multi-generational technology products.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0249124

DOI: 10.1371/journal.pone.0249124

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