Achieving first-mover advantage through product customization on the Internet
نویسندگان
چکیده
The Internet provides an unprecedented capability for sellers to learn about their customers and offer custom products at special prices. Advanced manufacturing technologies have improved sellers’ manufacturing flexibility. To examine how these advances affect sellers’ products and pricing, we first develop a model of product customization and flexible pricing to incorporate the salient roles of the Internet and flexible manufacturing technologies in reducing the costs of designing and producing tailored consumer goods. Simultaneous adoption of customization in a duopoly will lead to reduced product differentiation but will not facilitate the price competition between their standard products. Consumer surplus improves after sellers adopt customization but does not always increase as technologies advance. When firms face a fixed entry cost and adopt customization sequentially, the first entrant always achieves a profit advantage and may even deter the entry of the second entrant by choosing his customization scope strategically.
منابع مشابه
Product Customization and Price Competition on the Internet
The Internet provides an unprecedented capability for sellers to learn about their customers and offer custom products at special prices. In addition, customization is more feasible today because of advances in manufacturing technologies that have improved sellers’ manufacturing flexibility. We first develop a model of product customization and flexible pricing to incorporate the salient roles ...
متن کاملSwift and Smart: The Moderating Effects of Technological Capabilities on the Market Pioneering-Firm Survival Relationship
W extend the concept of first-mover advantage to the context of high-technology industries with multiple product generations, and propose that the notion of first-mover advantage needs to be viewed not only through a dynamic lens, but also in conjunction with technological capability. Our main finding is that first-mover advantages are best understood in tandem with the firm’s technological cap...
متن کاملEvolving user needs and late-mover advantage
We propose a generalized NK-model of late-mover advantage where late-mover firms leapfrog first-mover firms as user needs evolve over time. First movers face severe trade-offs between the provision of functionalities in which their products already excel and the additional functionalities requested by users later on. Late movers, by contrast, start searching when more functionalities are alread...
متن کاملAre there First-Mover Advantages in B2B eCommerce Technologies?
Recently,“dot-com” startups relied on the well-known concept of “first-mover advantage” to justify huge marketing expenses and large financial losses. The idea was that once the firm had gathered customers, it would keep those customers because it had a first-mover advantage. But was that assumption valid? We analyzed whether first-mover advantage actually occurred in 19 Information Technology ...
متن کاملAdoption of Internet-based Product Customization and Pricing Strategies
The Internet commerce technologies have significantly reduced sellers’ costs of collecting buyer preference information and managing multiple prices, enabling cost efficient custom product design and differentiated pricing. Advanced manufacturing technologies have also improved sellers’ manufacturing flexibility. We show that an early adopter of customization has a firstmover advantage, support...
متن کامل