Research on Time to Market and Pricing of Platform Products in a Competitive Environment

Lei Zhou, Yue Qi () and Xinshang You ()
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Lei Zhou: School of Economics and Management, Hebei University of Science and Technology, Shijiazhuang 050018, China
Yue Qi: School of Economics and Management, Hebei University of Science and Technology, Shijiazhuang 050018, China
Xinshang You: School of Economics and Management, Hebei University of Science and Technology, Shijiazhuang 050018, China

Sustainability, 2023, vol. 15, issue 7, 1-19

Abstract: Platforms are gradually becoming important business organization models, and platforms with bilateral market characteristics such as payment platforms and online shopping platforms are gradually penetrating people’s lives. Freemium content mostly exists in particular platforms such as online video platforms, etc. Platforms need to balance upstream and downstream markets when formulating strategies. This paper is the first to explore the time-to-market and pricing strategies of products in bilateral markets. By connecting upstream and downstream markets through cross-network externalities, we construct a system dynamics model of the problem, simulate the diffusion process of new product launches, and solve the problem of the optimal time to market and optimal pricing of the product. The simulation analyzes the effects of different parameters on the optimal time-to-market and pricing strategies, and comparing the diffusion in a unilateral market, we find that in a competitive market environment, the time-to-market and pricing of products are influenced by exogenous variables such as network externalities, and firms can promote their products more efficiently by changing the marketing mix strategy of platform product benefits and quality reputation. Meanwhile, the results obtained by considering bilateral markets when developing strategies for platform-based companies can lead to higher returns.

Keywords: pricing strategies; freemium models; new product diffusion; system dynamics; cross-network externalities (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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