Seminar

Department of Systems Engineering and Engineering Management
The Chinese University of Hong Kong

Title: Product Rollover Strategies and Innovation Rate in the Presence of Strategic Customers

Speaker: Ms. Chao LIANG
               School of Management
               University of Texas at Dallas

Date: Feb. 24th, 2012 (Friday)

Time: 11:00a.m. - 12:00noon

Venue:  Room 513
             William M.W. Mong Engineering Building
             (Engineering Building Complex Phase 2)
             CUHK

Abstract:

Frequent product introductions emphasize the importance of product rollover strategies. With single rollover, when a new product is introduced, the old product is phased out from the market. With dual rollover, the old product remains in the market together with the new product. In the first part, we study the interaction between product rollover strategies and strategic customers' purchase behavior. We find that single rollover is more valuable when the innovation of the new product is low and the number of strategic customers is high. Interestingly and counter to intuition, the firm may suffer from a high value disposal option for the old product.

In the second part, we investigate the impact of strategic customer behavior and rollover strategies on product innovation rate. We analyze a firm's optimal innovation rate and profit in four settings: when customers are myopic or strategic and when single rollover or dual rollover is adopted for product transitions over time. We show that when customers are myopic, single rollover hurts a firm's profit but accelerates the innovation process and the innovation rate and profit cannot be increased simultaneously with any rollover strategy. In contrast, when customers are strategic, the firm can provide a more innovative product while earning a higher profit by adopting the appropriate rollover strategy. This underscores the importance of choosing an appropriate rollover strategy when selling to strategic customers. Surprisingly, we find that the strategic waiting behavior speeds up the innovation process.

Biography:

Chao LIANG is a PhD. Candidate in Naveen Jindal School of Management at the University of Texas at Dallas. Her dissertation focuses on the interaction among product rollover strategies, innovation and strategic customer behavior. She is also interested in how to use transshipment to share the inventory in the online and physical channels. Her papers are under revision with Management Science and Manufacturing and Service Operations Management, as well as under second-round review with Production and Operations Management.

************************* ALL ARE WELCOME ************************
Host: Prof. Duan Li

Tel: (852) 3943-8316/8323

Email: dli@se.cuhk.edu.hk

Enquiries:Prof. Nan Chen or Prof. Sean X. Zhou
                Department of Systems Engineering and Engineering Management
                CUHK

Website: http://www.se.cuhk.edu.hk/~seem5201

Email: seem5201@se.cuhk.edu.hk

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