Optimal timing of product launch with minimal effect of cannibalization

• Main Author: Heng, Owyong.
• Other Authors: School of Mechanical and Aerospace Engineering
• Format: Final Year Project
• Language: English
• Published: 2010
• Subjects: DRNTU::Engineering::Manufacturing::Product engineering
• Online Access: http://hdl.handle.net/10356/40291
• Institution: Nanyang Technological University

A close examination of previous studies has shown that over the years, many researchers have realized the fact that the timing at which a firm launches a new or upgraded product is a vital but intricate decision for the firm. Hence, for this reason, many researchers have analyzed and come out with models to help the firms to determine their optimal timing of product launch. However, among all these models, there is one thing in common, and that is they do not take the effect of cannibalization into consideration. Thus this project will take the analysis a step further and aims to help the firms to locate their optimal timing of product launch with minimal effect of cannibalization. This is in condition that the firms are technologically ready to launch the new or upgraded product. To simulate a broad array of environments, this project examines the common cases the firms might find themselves to be in and developed a model for each individual case. The fundamental logic behind all these models is eventually to locate the point of balance between the marginal cost and the marginal revenue. With the above mentioned objective in mind, this project has thus find out that when the effect of cannibalization are taken into consideration, the optimal timing of product launch for both the incumbent and the entrant is delayed as compared to the case when the effect of cannibalization is not taken into consideration. Furthermore, when the quantitative disparity metric between the product that is going to be launched and a product of comparable functions from the same firm is high, it will push forward the optimal timing of product launch with minimal effect of cannibalization.