MEASURING THE EFFECT OF THE ENTRY INTO THE NEW GENERATION UNDER THE COMPETITIVE MARKET

Abstract

A FIRM?S ENTRY INTO A NEW GENERATION OF TECHNOLOGY CAN POSITIVELY AFFECT ITS MARKET SHARE. HOWEVER, THE FIRM MAY HAVE DIFFICULTY CALIBRATING HOW MUCH MARKET SHARE IT CAN GET BECAUSE OF THE CANNIBALIZATION ACROSS GENERATIONS, AND THE COMPETITION AMONG BRANDS. TO MEASURE HOW AN EARLY ENTRY INTO NEW TECHNOLOGY AFFECTS A FIRM?S MARKET SHARE, THIS STUDY PROPOSES THE MULTI-BRAND/GENERATION BASS MODEL. USING THE PROPOSED MODEL, THIS STUDY DISTINGUISHES THE SWITCHING BRANDS WITHIN A SINGLE GENERATION FROM THE SWITCHING BRANDS ACROSS GENERATIONS. THE PROPOSED MODEL IS VALIDATED BY THE TELECOMMUNICATIONS MARKET DATA IN TWELVE EUROPEAN COUNTRIES, AND SOUTH KOREA. THE RESULTS SHOW THAT (I) AN EARLY ENTRY AND THE ENTRY ITSELF POSITIVELY INFLUENCE MARKET SHARE IN THE LONG RUN IN SPITE OF THE SHRINKAGE OF MARKET SHARE IN THE SHORT RUN DUE TO THE LOYALTY OF THE EARLIER GENERATIONS, AND (II) THE RETENTION PLAYS AN IMPORTANT ROLE IN THE SUBSTITUTION.