Waterfall and sprinkler new-product strategies in competitive global markets

Abstract

How should a multinational firm introduce a new product into its global markets? Should it first attack and conquer the domestic market before moving into overseas markets or should it plan for a global attack by launching the product in all its global markets simultaneously? Using innovation diffusion models in a monopoly and a competitive game theory framework, this paper analytically examines waterfall (where the markets are entered sequentially) and sprinkler (where markets are entered simultaneously) strategies. Optimal conditions for the implementation of these two strategies are derived. The results generally suggest that the current nature of global competition requires a multinational firm to follow the sprinkler strategy in introducing a new product to its global markets.