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Market Uncertainty and Dynamic New Product Launch Strategies: A System Dynamics Model

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Title: Market Uncertainty and Dynamic New Product Launch Strategies: A System Dynamics Model
Author(s): Cui, Anna Shaojie; Zhao, Meng; Ravichandran, T.
Subject(s): product launch market uncertainty
Abstract: New products are intrinsically associated with high level of market uncertainty, and product launches often fail because launch strategies formulated based upon prelaunch forecasts cannot accurately capture actual market conditions. While research generally recognizes the importance of flexibility in new product launch, it has rarely examined the dynamic adjustments after initial launch, largely due to the limitation of conventional methodologies in modeling dynamic feedbacks and interactions. This study develops a system dynamics model of new product launch that formalizes the adjustments of launch scale according to actual market conditions and the dynamic interactions among launch scale and various tactical elements of product launch, including advertising, distribution, pricing, manufacturing, and inventory management. This study makes a first attempt to bring systems dynamic modeling to new product launch research and illustrates a new approach to examine dynamic feedbacks in the new product launch process. The model developed in this study illustrates why and how dynamic approaches outperform static ones, and reveals important insights of the behavior of dynamic product launch strategies. The model can be used as a "flight simulator" in managerial training to help new product managers understand the dynamic interactions among different elements of new product launch.
Issue Date: 2011-08
Publisher: Institute of Electrical and Electronics Engineers
Citation Info: Cui, A. S., Zhao, M., & Ravichandran, T. 2011. Market Uncertainty and Dynamic New Product Launch Strategies: A System Dynamics Model. IEEE Transactions on Engineering Management, 58(3): 530-550. DOI: 10.1109/TEM.2010.2100822.
Type: Article
Description: © 2011 IEEE. Personal use of this material is permitted. Permission from IEEE must be obtained for all other users, including reprinting/ republishing this material for advertising or promotional purposes, creating new collective works for resale or redistribution to servers or lists, or reuse of any copyrighted components of this work in other works. DOI: 10.1109/TEM.2010.2100822
ISSN: 0018-9391DOI: 10.1109/TEM.2010.2100822
Date Available in INDIGO: 2012-08-20

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