Reference quality-based competitive market structure for innovation driven markets

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Innovation-driven durable goods markets see substantial changes in quality and available choice sets and subsequent changes of the reference quality in the market over time. Considering the multi-attribute characteristics of these goods, it is important for businesses to identify attribute-specific competitive landscapes and develop competitive innovation strategies at the product attribute level. Therefore, this paper proposes a reference-dependent choice model for product quality at the product attribute level that can capture the asymmetric effect of innovation shocks on product demand, i.e., the innovation elasticity of demand, as well as the competitive market structure in product innovation. Moreover, we confirm that there is a certain quality span for a product attribute where the values of products depreciate most significantly due to innovation shocks, which we refer to as the innovation shadow zone. We demonstrate the effectiveness of the proposed approach in developing attribute-specific product innovation strategies using U.S. mobile telephone market data.
Publisher
ELSEVIER SCIENCE BV
Issue Date
2015-09
Language
English
Article Type
Article
Keywords

REFERENCE PRICE RESEARCH; BRAND CHOICE; REFERENCE DEPENDENCE; DECISION-MAKING; LOSS AVERSION; PANEL-DATA; MODEL; CUSTOMER; EXPECTATIONS; EMERGENCE

Citation

INTERNATIONAL JOURNAL OF RESEARCH IN MARKETING, v.32, no.3, pp.284 - 296

ISSN
0167-8116
DOI
10.1016/j.ijresmar.2014.10.003
URI
http://hdl.handle.net/10203/205340
Appears in Collection
MG-Journal Papers(저널논문)MT-Journal Papers(저널논문)
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