Product Upgrades with Stochastic Technology Advancement, Product Failure, and Brand Commitment
研究了在随机技术进步背景下，品牌承诺和产品失败风险如何影响耐用品企业的升级时机，发现最优策略基于潜在需求阈值，而非技术差距，并探讨了临时降价的作用。
Brand commitment and the risk of product failure play an important role in the timing of upgrades for a durable product in the presence of stochastic technology advancements. Higher brand commitment makes a firm less vulnerable to sales erosion in an incumbent product due to a technology lag. However, the firm is more susceptible to profit loss from the risk of a failed product. We show that under these circumstances, a firm's optimal upgrade strategy is characterized by a threshold policy based on the level of pent‐up demand for their next generation product. Contrary to previous research, we find that a threshold policy based on technology may be suboptimal, since the risk of product failure is nonmonotonic in terms of the technology lag. We extend the model to determine whether a firm should offer a temporary price reduction and show that price promotions can be used to mitigate the risk of lost sales associated with a risky product upgrade. We perform numerical experiments to examine the impact of brand commitment under different market scenarios related to the stochastic dynamics of technology advancements. The implications of the findings are discussed in the context of the smartphone industry.