Knowledge that Transforms

In this paper, we consider the demand for multiple, successive generations of products and develop a population-growth model that allows demand transitions across multiple product generations and takes into consideration the effect of competition. We propose an iterative-descent method for obtaining the parameter estimates and the covariance matrix, and we show that the method is theoretically sound and overcomes the difficulty that the units-in-use population of each product is not observable. We test the model on both simulated sales data and Intel's high-end desktop processor sales data. We use two alternative specifications for product strength in this market: performance and performance/price ratio. The former demonstrates better fit and forecast accuracy, likely due to the low price sensitivity of this high-end market. In addition, the parameter estimate suggests that, for the innovators in the diffusion of product adoption, brand switchings are more strongly influenced by product strength than within-brand product upgrades in this market. Our results indicate that compared with the Bass model, Norton–Bass model, and Jun–Park choice-based diffusion model, our approach is a better fit for strategic forecasting that occurs many months or years before the actual product launch.

We examine three selling strategies of a manufacturer who produces and sells a seasonal product to a retailer under uncertain supply and demand: (1) advance selling—presells the product before observing uncertain supply and demand; (2) regular selling—sells the product after supply and demand are realized; and (3) dynamic selling—combines both advance and regular selling strategies. We model the first two strategies as single-period Stackelberg games, and we model the last strategy as a two-period dynamic Stackelberg game. By comparing the equilibria of these games, we formalize our understanding of several intuitive results. For example, from the manufacturer's perspective, dynamic selling dominates advance selling and regular selling: having more selling opportunities is beneficial to the manufacturer. However, from the retailer's perspective, we find two counterintuitive results: (a) postponing the ordering decision can be detrimental—the retailer can be worse off under regular selling than under advance selling; and (b) more ordering opportunities can be detrimental—the retailer can be worse off under dynamic selling than under advance selling. In addition, we analyze the impact of supply and demand uncertainties under these strategies and find that both types of uncertainties can be beneficial to the retailer.

Modular upgradability has been suggested as a strategy for improving environmental performance: as technology improves, it allows for independent replacement of improving subsystems, instead of replacing the entire product. This may extend the useful life of stable subsystems, reducing production and disposal impact. However, this argument ignores the effect of modular upgradability on a firm's development and introduction decisions and the environmental impact during the use phase. In this paper, we investigate when modular upgradability leads to lower environmental impact and higher profits. We do so by endogenizing a firm's development and introduction decisions and considering the product's environmental impact during its entire life cycle. Our results show that although modular upgradability may accelerate the replacement of some subsystems, it delays the replacement of others. We find that modular upgradability can increase the environmental impact for some product categories due to accelerated obsolescence arising from more frequent introduction and replacement. However, we also find that accelerated obsolescence, under some conditions, can actually make modular upgradability greener.

This paper studies the preorder strategy that a seller may use to sell a perishable product in an uncertain market with heterogeneous consumers. By accepting preorders, the seller is able to obtain advance demand information for inventory planning and price discriminate the consumers. Given the preorder option, the consumers react strategically by optimizing the timing of purchase. We find that accurate demand information may improve the availability of the product, which undermines the seller's ability to charge a high preorder price. As a result, advance demand information may hurt the seller's profit due to its negative impact for the preorder season. This cautions the seller about a potential conflict between the benefits of advance demand information and price discrimination when facing strategic consumers. A common practice to contain consumers' strategic waiting is to offer price guarantees that compensate preorder consumers in case of a later price cut. Under price guarantees, the seller will reduce price in the regular season only if the preorder demand is low; however, such advance information implies weak demand in the regular season as well. This means that the seller can no longer benefit from a high demand in the regular season. Therefore, under price guarantees, more accurate advance demand information may still hurt the seller's profit due to its adverse impact for the regular season. We also investigate the seller's strategy choice in such a setting (i.e., whether the preorder option should be offered and whether it should be coupled with price guarantees) and find that the answer depends on the relative sizes of the heterogeneous consumer segments.

Suppliers are increasingly being asked to share information about their vulnerability to climate change and their strategies to reduce greenhouse gas emissions. Their responses vary widely. We theorize and empirically identify several factors associated with suppliers being especially willing to share this information with buyers, focusing on attributes of the buyers seeking this information and of the suppliers being asked to provide it. We test our hypotheses using data from the Carbon Disclosure Project's Supply Chain Program, a collaboration of multinational corporations requesting such information from thousands of suppliers in 49 countries. We find evidence that suppliers are more likely to share this information when requests from buyers are more prevalent, when buyers appear committed to using the information, when suppliers belong to more profitable industries, and when suppliers are located in countries with greenhouse gas regulations. We find evidence that these factors also influence the comprehensiveness of the information suppliers share and their willingness to share the information publicly.