Essays on the impact of new product introductions on market dynamics
Hariharan, Vijay Ganesh
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New product introduction is a key marketing strategy used by firms to protect and hopefully boost their revenues and profits. New product introductions usually trigger various shifts in market dynamics. Manufacturers of new products control the marketing mix by pricing and advertising new products. Competitors could respond by promoting their existing products, or by introducing new products. And finally, consumers can react by either switching their purchases among the existing products or to new products. This dissertation aims at significantly deepening our current understanding of several key facets of the impact of new product introductions on market dynamics. The first part focuses on analytically deriving dynamic optimal marketing mix strategies under various market diffusion dynamics for discontinuous new products. In the rest of the dissertation, we empirically analyze the dynamic effects of various types of continuous new products introduced in the consumer packaged goods (CPG) industry. Specifically, the first essay focuses on deriving dynamic optimal marketing mix strategies for new products introduced in a market with two distinct consumer segments – “influentials” and “imitators”. The market evolution of demand is modeled through an empirically established diffusion function. In the second essay, we investigate aggregate spillover effects and extension success due to three types of brand development strategies – brand extensions, line extensions and cobranded extensions. We also examine the category and market factors that moderate those effects. In the third essay, we analyze the impacts of the introduction of line extensions, which are the most common form of new product introductions in the CPG industry. Specifically, we detect and investigate the shifts in category dynamics due to the introduction of four types of line extensions – novel national brand, novel store brand, imitative national brand and imitative store brand.