Cost–benefit model for multi-generational high-technology products to compare sequential innovation strategy with quality strategy

Hyoung Jun Kim, Su Jung Jee, So Young Sohn

Research output: Contribution to journalArticlepeer-review

Abstract

In the rapidly changing high-tech industry, firms that produce multi-generational products struggle to consistently introduce new products that are superior in innovativeness. However, developing innovative products in a short time sequence period is likely to cause quality problems. Therefore, considering time and resource constraints, two kinds of strategies are commonly employed: sequential innovation strategy, sequentially introducing a new generation of technology product at every launch interval, ensuring timely innovativeness but with relatively uncertain quality, or quality strategy, intermittently introducing a new generation of products, together with a derivative model between generations to enhance the quality. In this study, we propose a framework for a cost–benefit analysis that compares these two strategies by considering competition between firms within a generation as well as that within a firm across multiple generations (i.e., cannibalization) throughout the launch cycle of high-tech products. We apply our proposed framework to the smartphone market and conduct a sensitivity analysis. The results are expected to contribute to strategic decision-making related to the introduction of multigenerational technology products.

Original languageEnglish
Article numbere0249124
JournalPloS one
Volume16
Issue number4 April
DOIs
Publication statusPublished - 2021 Apr

Bibliographical note

Funding Information:
This work was supported by the National Research Foundation of Korea (NRF) grant funded by the Korea government (MSIT) (2020R1A2C2005026).

Publisher Copyright:
© 2021 Kim et al. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

All Science Journal Classification (ASJC) codes

  • General

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