LOW-END AND HIGH-END ENCROACHMENT STRATEGIES FOR NEW PRODUCTS

Glen M. Schmidt ()
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Glen M. Schmidt: The McDonough School of Business, Georgetown University, Washington, DC, 20057, USA

International Journal of Innovation Management (ijim), 2004, vol. 08, issue 02, 167-191

Abstract: Successful new products typically encroach in some fashion on an existing market, impacting prices, sales, and profits for the old product(s). We present a framework in which encroachment takes one of two forms, either high-end or low-end. High-end encroachment is exemplified by Intel's Pentium III, which encroached on the Pentium II by first catering to high-end customers before diffusing to the low end to fully displace the Pentium II. Low-end encroachment is illustrated by disk drives with smaller form factors, which first catered to low-end customers desiring lower-cost, but eventually diffused upward to the high end. Our low-end encroachment framework may help clarify how a disruptive innovation impacts the market, in terms of sales prices, volumes, and profits. Similarly, our high-end encroachment results may lend insight into the market impact of a sustaining technology.

Keywords: Diffusion; encroachment; disruptive technology; strategy; new product development (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (3)

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DOI: 10.1142/S1363919604000988

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