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Low-End And High-End Encroachment Strategies For New Products

Author

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  • GLEN M. SCHMIDT

    (The McDonough School of Business, Georgetown University, Washington, DC, 20057, USA)

Abstract

Successful new products typically encroach in some fashion on an existing market, impacting prices, sales, and profits for the old product(s). We present a framework in which encroachment takes one of two forms, either high-end or low-end. High-end encroachment is exemplified by Intel's Pentium III, which encroached on the Pentium II by first catering to high-end customers before diffusing to the low end to fully displace the Pentium II. Low-end encroachment is illustrated by disk drives with smaller form factors, which first catered to low-end customers desiring lower-cost, but eventually diffused upward to the high end. Our low-end encroachment framework may help clarify how a disruptive innovation impacts the market, in terms of sales prices, volumes, and profits. Similarly, our high-end encroachment results may lend insight into the market impact of a sustaining technology.

Suggested Citation

  • Glen M. Schmidt, 2004. "Low-End And High-End Encroachment Strategies For New Products," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 8(02), pages 167-191.
    • Handle: RePEc:wsi:ijimxx:v:08:y:2004:i:02:n:s1363919604000988
    DOI: 10.1142/S1363919604000988
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    Cited by:

    1. Guofang Nan & Xingtao Li & Zan Zhang & Minqiang Li, 0. "Optimal pricing for new product entry under free strategy," Information Technology and Management, Springer, vol. 0, pages 1-19.
    2. Guofang Nan & Xingtao Li & Zan Zhang & Minqiang Li, 2018. "Optimal pricing for new product entry under free strategy," Information Technology and Management, Springer, vol. 19(1), pages 1-19, March.
    3. Islam, Towhidul, 2014. "Household level innovation diffusion model of photo-voltaic (PV) solar cells from stated preference data," Energy Policy, Elsevier, vol. 65(C), pages 340-350.

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