Waterfall Versus Sprinkler Product Launch Strategy: Influencing the Herd

28 Pages Posted: 26 Mar 2013

See all articles by Manaswini Bhalla

Manaswini Bhalla

Indian Institute of Management (IIMB), Bangalore

Date Written: March 2013

Abstract

A seller decides the price and sequence in which a product of unknown value is introduced to consumers. Consumers inspect the product before consumption and observe past prices and sales. Consumption at a high price is informative for later consumers as it indicates that the product is likely to be of high value. I show that on an average prices decrease over time. However, expected revenue on an average rises over time. For a high enough discount factor, I find that for extreme beliefs the firm introduces the product to all consumers but for intermediate values the product is introduced only to one consumer.

Suggested Citation

Bhalla, Manaswini, Waterfall Versus Sprinkler Product Launch Strategy: Influencing the Herd (March 2013). The Journal of Industrial Economics, Vol. 61, Issue 1, pp. 138-165, 2013. Available at SSRN: https://ssrn.com/abstract=2239533 or http://dx.doi.org/10.1111/joie.12013

Manaswini Bhalla (Contact Author)

Indian Institute of Management (IIMB), Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

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