Product entry timing in dual distribution channels: The case of the movie industry

Prasad, A and Bronnenberg, B and Mahajan, V (2004) Product entry timing in dual distribution channels: The case of the movie industry. Review of Marketing Science, 2. pp. 83-102.

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Abstract

In many durable goods industries, firms continuously offer new products to customers and market them in different versions through different channel of distribution. This paper examines the issue of when to introduce the product into the different channels. The determinants of entry time include the discounting of future profits, the foresight of the firm, customers' expectations, and the possibility of cannibalization. Of special interest is the effect of customers' expectations about the timing of sequential entries. Specifically, it is shown here that profits decline if firms ignore the role of customer expectations. We discuss how our results can be used to get insights into the workings of the US motion picture industry, which is characterized by sequential introduction of movies first into theaters followed by home video. Finally, a closed form solution for an optimal sequential timing policy is provided.

ISB Creators:
ISB CreatorsORCiD
Mahajan, VUNSPECIFIED
Item Type: Article
Subjects: Marketing
Depositing User: LRC ISB
Date Deposited: 24 Oct 2014 05:09
Last Modified: 24 Oct 2014 05:13
URI: http://eprints.exchange.isb.edu/id/eprint/17
Publisher URL: http://dx.doi.org/10.2202/1546-5616.1008
Publisher OA policy: http://www.sherpa.ac.uk/romeo/issn/1546-5616/
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