New Product Launch Strategy for Network Effects Products

Abstract

In recent years, there has been a growing interest in the link between launch strategy decisions and new product performance. Much of that research focuses on investigating successful launch strategies for innovative, high-tech-nology products. With the rapid growth of information technology as one high-technology sector, in certain industries,network effects occur, which change the competitive game. The existing literature offers little decisionmaking guidance to managers on how to successfully introduce a product that exhibits network effects. The authors discuss the influence of network effects on the dynamics of market competition and on consumers' consumption behaviors. They argue that, because of these changes, the priority of particular performance objectives and the impact of specific launch strategies differ for products that exhibit network effects from what current wisdom and empirical results prescribe. These ideas are formalized in a conceptual framework and a series of research propositions.