Dynamic Pricing for New Products Using a Utility-Based Generalization of the Bass Diffusion Model

The Bass Model (BM) has an excellent track record in the realm of new product sales forecasting. However, its use for optimal dynamic pricing or advertising is relatively limited because the Generalized Bass Model (GBM), which extends the BM to handle marketing variables, uses only percentage changes in marketing variables, rather than their actual values. This restricts the GBM’s prescriptive use, for example, to derive the optimal price path for a new product, conditional on an assumed launch price, but not the launch price itself. In this paper, we employ a utility-based extension of the BM, which can yield normative prescriptions regarding both the introductory price and the price path after launch, for the new product. We offer two versions of this utility-based diffusion model, namely, the Bass-Gumbel Diffusion Model (BGDM) and the Bass-Logit Diffusion Model (BLDM), the latter of which has been previously used. We show that both the BGDM and BLDM handily outperform the GBM in forecasting new product sales using empirical data from four product categories. We discuss how to estimate the BGDM and BLDM in the absence of past sales data. We compare the optimal pricing policy of the BLDM with the GBM and derive optimal pricing policies that are implied by the BLDM under various ranges of model parameters. We illustrate a dynamic pricing approach that allows managers to derive optimal marketing policies in a computationally convenient manner and extend this approach to a competitive, multiproduct case. This paper was accepted by Gui Liberali for the Management Science Special Issue on Data-Driven Prescriptive Analytics.

A new fuzzy multi-criteria decision-making approach for risk assessment of competitors’ cooperation in new product development projects

Purpose This study aims to identify and accurately assess the risk factors of competitors’ cooperation in the NPD project. Design/methodology/approach New product development (NPD) is essential to the survival of companies and surpassing other competitors. A key prerequisite for the success of an NPD project is the timing of new product delivery to the market. The main challenge faced by many project managers is the delay in execution and completion phases due to the complex nature and uncertainty of these projects. Rival companies' cooperation reduces the time spent on an NPD project which is an excellent way to reduce the risk of losing the market, but it increases other risk factors. Findings Based on the results, the security and confidentiality of innovation, the competitors attracting human resources and the company’s brand credibility factors were ranked higher than other factors and should be predicted and managed before cooperating with competitors. Originality/value This paper proposed a new model to assess risk factors in cooperation with rival companies in NPD projects. This model takes into account new parameters, for example, negative and positive risks, negative and positive passable risks and risk-based multi-objective optimization by ratio analysis plus full multiplicative form methodology for the rival companies cooperation in NPD projects. To evaluate the efficiency of the proposed model, a real case of the R&D unit of Iran Khodro Company was studied.

Strategic Supplier Selection's Effects on Buyer Competitive Performance in Matching Domains: Is Supplier Integration Effective at Mediating Relationships?

The purpose of this research is to determine whether strategic supplier selection based on supplier capability in new product development, supplier quality, and supplier cost directly or indirectly improves the buyer's competitive performance capabilities in the matched domains of buyer product innovation, buyer quality, and buyer competitive pricing. The resource-based view of the firm is used to frame the direct effects of strategic supplier selection, arguing that a buyer's ability to select a supplier with resources and expertise in a specified domain should improve the buyer's performance capability in the "matched" domain (but not necessarily in "unmatched" domains). Two supplier integration techniques are considered as potential mediators, assuming indirect pathways. The research hypotheses examine both direct and indirect impacts for each of the matched domains, but do not assume cross-domain interactions. For instance, supplier selection for new product development capability should have an effect on buyer product innovation (in matched domains), but not always on buyer quality capability (unmatched domains). While the direct impacts of strategic supplier selection on buyer performance are supported in each matched domain, the indirect effects via supplier integration are not substantial for the matched domains. Strategic supplier selection is identified as a viable source of competitive advantage in the resource-based view. By contrast, supplier development and supplier partnership do not provide additional performance benefits in a particular domain over and beyond those obtained from strategic supplier selection in that domain; rather, it is the type of the resources selected that determines competitive advantage.

Open Challenges and Research Roadmap: Visual Representations aiding Organizational Leadership in Decision Making for New Product Development at the Early Innovation Stage

Innovation is a cornerstone for an organization’s survival and success in the global competitive landscape in the VUCA world. The New Product Development (NPD) process is a crucial part of the portfolio and Innovation Management (IM) process. The leadership of an organization has a disproportionate impact on the outcome of innovation activities. Their involvement in IM and NPD is critical for success, considering they make strategic decisions to allocate resources for business growth. The leadership team demands a holistic picture of ideas before making decisions at early stages. The leadership challenge in decision making is that they have a limited time to make decisions by understanding many related aspects and insights quickly. The visual approaches have been vital in management practices to understand the situation and aid in decision-making by supporting cognitive processes. The fundamental problem in using visual representation is hidden expectations of leadership teams to represent needed elements to aid in strategic decision-making by leadership at the early stage of innovation. Also, the configuration of elements and interplay is another issue. The core challenge lies in understanding the effectiveness of currently used visual representations and then improving them by identifying needed elements and their configuration and placement in the visual representation. The paper takes literature review, expert interviews, and brainstorming approaches to distill the challenges to the concrete research questions and objectives. Providing solutions to the open research questions and challenges can significantly enhance the quality and speed of innovation-related decision-making.

Open Challenges and Research Roadmap: Visual Representations aiding Organizational Leadership in Decision Making for New Product Development at the Early Innovation Stage

Innovation is a cornerstone for an organization’s survival and success in the global competitive landscape in the VUCA world. The New Product Development (NPD) process is a crucial part of the portfolio and Innovation Management (IM) process. The leadership of an organization has a disproportionate impact on the outcome of innovation activities. Their involvement in IM and NPD is critical for success, considering they make strategic decisions to allocate resources for business growth. The leadership team demands a holistic picture of ideas before making decisions at early stages. The leadership challenge in decision making is that they have a limited time to make decisions by understanding many related aspects and insights quickly. The visual approaches have been vital in management practices to understand the situation and aid in decision-making by supporting cognitive processes. The fundamental problem in using visual representation is hidden expectations of leadership teams to represent needed elements to aid in strategic decision-making by leadership at the early stage of innovation. Also, the configuration of elements and interplay is another issue. The core challenge lies in understanding the effectiveness of currently used visual representations and then improving them by identifying needed elements and their configuration and placement in the visual representation. The paper takes literature review, expert interviews, and brainstorming approaches to distill the challenges to the concrete research questions and objectives. Providing solutions to the open research questions and challenges can significantly enhance the quality and speed of innovation-related decision-making.