Market Uncertainty and Dynamic New Product Launch Strategies: A Systems Dynamics Model

Meng Zhao and T. Ravichandran, eds., IEEE Transactions on Engineering Management, Vol. 58, No. 3, pp. 530-550, 2011

Posted: 24 Dec 2011

See all articles by Anna Shaojie Cui

Anna Shaojie Cui

University of Illinois at Chicago - College of Business Administration

Date Written: August 21, 2011

Abstract

New products are intrinsically associated with high level of market uncertainty, and product launches often fail because launch strategies formulated based upon pre-launch forecasts cannot accurately capture actual market conditions. While research generally recognizes the importance of flexibility in new product launch, it has rarely examined the dynamic adjustments after initial launch, largely due to the limitation of conventional methodologies in modeling over time feedbacks and interactions. This study develops a system dynamics model of new product launch that formalizes the adjustments of launch scale according to actual market conditions and the dynamic interactions among launch scale and various tactical elements of product launch including advertising, distribution, pricing, manufacturing and inventory management.

This study makes a first attempt to bring systems dynamic modeling to new product launch research and illustrates a new approach to examining dynamic feedbacks in the new product launch process. The model developed in this study illustrates why and how dynamic approaches outperform static ones, and reveals important insights of the behavior of dynamic product launch strategies. The model can be used as a “flight simulator” in managerial training to help new product managers understand the dynamic interactions among different elements of new product launch.

Keywords: New product launch, market uncertainty, system dynamics model

Suggested Citation

Cui, Anna Shaojie, Market Uncertainty and Dynamic New Product Launch Strategies: A Systems Dynamics Model (August 21, 2011). Meng Zhao and T. Ravichandran, eds., IEEE Transactions on Engineering Management, Vol. 58, No. 3, pp. 530-550, 2011. Available at SSRN: https://ssrn.com/abstract=1975557

Anna Shaojie Cui (Contact Author)

University of Illinois at Chicago - College of Business Administration ( email )

601 South Morgan Street
11th Floor
Chicago, IL 60607
United States

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