Optimal Intertemporal Pricing Strategies for Firms Introducing New Products

Firms can significantly improve their performance upon the introduction of a new product by following an intertemporal pricing strategy which predicts the adoption of the product through time. Four reasons for gradual adoption are explored: delayed purchase, awareness, social pressures and informational needs. The firm does better by pricing a straightforward new product at a lower introductory price when the product is quite visible to other potential adopters when an individual adopts. Differences in price-sensitivity among consumers also impact the firm’s optimal strategy. Products for which the social relevance varies considerably or for which the average perceived social risk of adoption is high cannot necessarily benefit from a low introductory price. A high initial price which decreases through time is better when consumers are varied in their need for information, when on average, much information is needed and when the information generated by other adopters is forgotten more quickly.

Name thesis:degree_name

Master of Arts (M.A.)

Level thesis:degree_level

Master's

Discipline thesis:degree_discipline

Economics

Grantor dc:publisher

Carleton University

Year dc:date.issued

2014

Author dc:creator

• Brownell, Briana

Statement dc:rights

• Copyright © 2014 the author(s). Theses may be used for non-commercial research, educational, or related academic purposes only. Such uses include personal study, research, scholarship, and teaching. Theses may only be shared by linking to Carleton University Institutional Repository and no part may be used without proper attribution to the author. No part may be used for commercial purposes directly or indirectly via a for-profit platform; no adaptation or derivative works are permitted without consent from the copyright owner.

Language dc:language.iso

en

DOI

10.22215/etd/2014-10116

OAI identifier oai:identifier

oai:carleton.scholaris.ca:20.500.14718/38159