TITLE:
Vertical Differentiation and Sequential Introduction for Versioned Information Products
AUTHORS:
Xiangchun Man, Xiaode Zuo
KEYWORDS:
Information Products, Versioning Strategy, Vertical Differentiation, Sequential Introduction
JOURNAL NAME:
Open Journal of Business and Management,
Vol.7 No.2,
April
28,
2019
ABSTRACT: This
article considers three situations when versioned information products
introduce sequentially, then compares vertical differences and pricing strategies.
The result shows that three equilibriums exist in the different sales orders under the vertical
product differentiation. Price of high-versioned product will be highest when
firm provides high-versioned product first then low-versioned product. It is the best strategy for covering the market and
maximizing profits. For providing
low-versioned product first then high-versioned product, the price of
high-versioned product and the total market demands are affected by the waiting
cost threshold. In addition, increasing of network externality will cause the
increasing of the profit, price and demand of high-versioned product, but the
demand for low-versioned product will be reduced.