Entry-Level Products with Consumer Learning

Johnson Justin P ()
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Johnson Justin P: Cornell

The B.E. Journal of Economic Analysis & Policy, 2005, vol. 4, issue 1, 1-31

Abstract: Dynamic motivations for the use of product line extensions in the form of entry-level products are considered. When consumers are uncertain of their valuations for products, and their purchasing power evolves over time, firms competing in a lucrative luxury market may try to influence the future buying decisions of young consumers. Offering entry-level products allows young consumers to experiment and thereby make better future decisions. Despite this efficiency, so providing information to consumers need not benefit a firm. The dynamic motivations for offensive product introductions differ discretely from defensive introductions.

Keywords: Entry-Level Products; Learning (search for similar items in EconPapers)
Date: 2005
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DOI: 10.2202/1538-0645.1434

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