Authors: Winter, Susanna¹; Sundqvist, Sanna²

Source: International Journal of Technology Marketing, Volume 5, Number 3, March 2010 , pp. 250-271(22)

Publisher: Inderscience Publishers

Abstract:

An increasing amount of products introduced today exhibit network effects, i.e., the value of using the product increases as more people adopt it. However, current marketing literature offers little decision-making guidance for managers introducing network effects products. In this paper, we show that the consistency between product characteristics, objectives of product launch, and pricing objectives determines preferable introductory pricing strategies. Contrary to traditional products, the pricing decisions for network effects products are influenced by whether creating a critical mass of users is important for the future success of the product. Additionally, we demonstrate that although penetration pricing can be recommended in some cases, it is not suitable in all situations. Premium prices can be charged depending on the relative importance of intrinsic and extrinsic product value. The results of our study highlight the need to update the theoretical reasoning on launch strategies for network effects products. Implications for managerial practice are discussed and suggestions for further research offered.

Keywords: MANAGEMENT AND BUSINESS; Operational Management, Marketing and Services; Policy and Organisational Management; Technology Management

Document Type: Research article

DOI: http://dx.doi.org/10.1504/IJTMKT.2010.039036

Affiliations: 1: School of Business, Lappeenranta University of Technology, P.O. Box 20, 53850, Lappeenranta, Finland. 2: School of Business, Lappeenranta University of Technology, P.O. Box 20, 53850, Lappeenranta, Finland

Publication date: 2010-03-01

More about this publication?

• Information for Authors
• Submit a Paper
• Subscribe to this Title
• Terms & Conditions
• Newsletter
• Blog
• ingentaconnect is not responsible for the content or availability of external websites

Related content

• In this: publication
• By this: publisher
• In this Subject: Business ,  Technology
• By this author: Winter, Susanna ;  Sundqvist, Sanna

Website © Publishing Technology. Article copyright remains with the publisher, society or author(s) as specified within the article.

• Terms and conditions
• Privacy policy
• Information for advertisers