Stochastic entry of competitors and marketing decisions

Yeu Shiang Huang, Jyh Wen Ho

Research output: Contribution to journalArticlepeer-review

Abstract

The research on determination of product life so far has been mostly focusing on the perspective of strategic development. This study, from a quantitative perspective, assumes that the decision to keep selling or stop selling a product is essentially affected by competitors behaviors, and employs a stochastic approach in which the entry process of rival competitors and its effects within the planned product life are considered. The objective is to provide the managers with an informative decision process in formulating an appropriate strategy to maximize the product profits in a competitive market from the viewpoint of an incumbent firm. A nonhomogeneous Poisson process with a power law intensity function is assumed to be proper for modeling the entry process of rival competitors. The Bayesian decision analysis is utilized to recapitulate the assumptions and provide systematic criteria of rational judgments for quality decision making. Finally, a numerical example is given and the results of the proposed approach are discussed after performing sensitivity analyses.

Original languageEnglish
Article number5734828
Pages (from-to)129-137
Number of pages9
JournalIEEE Transactions on Engineering Management
Volume59
Issue number1
DOIs
Publication statusPublished - 2012 Feb

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Electrical and Electronic Engineering

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