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Author: | Ofek, E. Sarvary, M. |
Title: | R&D, marketing, and the success of next-generation products |
Journal: | Marketing Science
2003 : SUMMER, VOL. 22:3, p. 355-370 |
Index terms: | Marketing Competition High technology New products Product development R&D Models |
Language: | eng |
Abstract: | This paper studies dynamic competition in markets characterized by the introduction of technologically advanced next-generation products. The analysis reveals that when the current leader possesses higher research and development (or R&D) competence, it tends to invest more in R&D than rivals and to retain its lead position. The leader's investment exhibits an inverse-U pattern as this advantage increases. In contrast, when the leader enjoys an advantage that originates from the persistence of reputation, it invests less that its followers. Depending on the extent of leader reputation, industry structure can either exhibit frequent leadership shifts or prolonged incumbent dominance. The basic framework is extended to allow investments in additional marketing variables, e.g. advertising. |
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