New Product Development Under Channel Acceptance

Marketing Science, Vol. 26, No. 2, pp. 149-163, March-April 2007

Marshall School of Business Working Paper No. MKT 21-10

16 Pages Posted: 2 May 2007 Last revised: 23 Nov 2010

See all articles by Lan Luo

Lan Luo

University of Southern California

P.K. Kannan

University of Maryland - Robert H. Smith School of Business

Brian T. Ratchford

University of Texas at Dallas

Abstract

In channel structures characterized by a powerful retailer (e.g., Wal-Mart, Home Depot), the dominant retailer's acceptance of a manufacturer's new product often determines the success of the new offering. Focusing on a manufacturer in such a market, we develop an approach to positioning and pricing a new product that directly incorporates the retailer's acceptance criteria into the development process. Our method also accounts for the retailer's product assortment and the competing manufacturers' potential reactions in wholesale prices. Our method merges individual-level conjoint models of preference with game-theoretic models of retailer and manufacturer behavior that are specific to the institutional setting of the focal manufacturer. The application of our approach in the context of a new power tool development project undertaken by this manufacturer also highlights the potential of our approach to other analogous institutional settings.

Keywords: new product forecasting, product positioning, distribution channel, conjoint model, game theory, big-box retailers, retailer acceptance, Wal-Mart, Home Depot

Suggested Citation

Luo, Lan and Kannan, Pallassana and Ratchford, Brian T., New Product Development Under Channel Acceptance. Marketing Science, Vol. 26, No. 2, pp. 149-163, March-April 2007, Marshall School of Business Working Paper No. MKT 21-10, Available at SSRN: https://ssrn.com/abstract=983640

Lan Luo (Contact Author)

University of Southern California ( email )

Hoffman Hall 319
Los Angeles, CA 90089-1427
United States

Pallassana Kannan

University of Maryland - Robert H. Smith School of Business ( email )

Department of Marketing
College Park, MD 20742-1815
United States
301-405-2188 (Phone)
301-405-0146 (Fax)

Brian T. Ratchford

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
363
Abstract Views
2,030
rank
89,605
PlumX Metrics