A Multiattribute Model of the Timing of Buyer's Upgrading to Improved Versions of High Technology Products
Stanford University GSB Research Paper No. 1720(R)
38 Pages Posted: 5 Jan 2004
Date Written: September 2003
Abstract
This paper presents an approach to forecast the sales path of an improved version of a high technology product defined in terms of its price and multiattribute product specification. The approach is potentially useful to managers to answer what-if questions regarding the profitability (e.g., net present value) of alternative price and product specifications of the upgrade. The proposed approach integrates an individual-level multiattribute utility model with a hazard function specification. An illustrative application to the personal digital assistant (PDA) category confirms the validity and potential of the proposed approach. In particular, higher upgrade costs and expectation of faster product improvement tend to delay buyers' upgrades.
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