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Introduction of Software Products and Services Through "Public" Beta Launches

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    Abstract

    Public “Beta” launches have become a preferred route of entry into the markets for new software products and web site based services. While beta testing of novel products is nothing new, typically such tests were done by experts within firm boundaries. What makes public beta testing so attractive to firms? By introducing semi-completed products in the market, the firm can target the early adopter population, who can then build the potential market through the word of mouth effect by the time the actual version of the product is launched. In addition, the information gathered through the usage of the public beta gives significant insights into customer preferences and consequently helps in building a better product. We build these marketing and product development implications in an analytical model to compare the different product introduction strategies like “skimming” or “penetration pricing” with beta launches. This analysis is done for products of branded and unbranded Web 2.0 companies like Google and Flickr etc. We also examine the impact of different monetization models like direct pricing and advertising on the beta launch strategy.

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    File URL: http://www.netinst.org/Mehra_Shrimali_08-11.pdf
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    Bibliographic Info

    Paper provided by NET Institute in its series Working Papers with number 08-11.

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    Length: 37 pages
    Date of creation: Sep 2008
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    Handle: RePEc:net:wpaper:0811

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    Web page: http://www.NETinst.org/

    Related research

    Keywords: beta; word of mouth effects; new product launch; exclusivity; externalities; Web 2.0; pricing; new product development; revenue models;

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    1. Shlomo Kalish, 1985. "A New Product Adoption Model with Price, Advertising, and Uncertainty," Management Science, INFORMS, vol. 31(12), pages 1569-1585, December.
    2. Chakravarthi Narasimhan, 1989. "Incorporating Consumer Price Expectations in Diffusion Models," Marketing Science, INFORMS, vol. 8(4), pages 343-357.
    3. Wolfgang Pesendorfer, 1993. "Design Innovation and Fashion Cycles," Discussion Papers 1049, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    4. Dipak C. Jain & Eitan Muller & Naufel J. Vilcassim, 1999. "Pricing Patterns of Cellular Phones and Phonecalls: A Segment-Level Analysis," Management Science, INFORMS, vol. 45(2), pages 131-141, February.
    5. Sachin Gupta & Dipak C. Jain & Mohanbir S. Sawhney, 1999. "Modeling the Evolution of Markets with Indirect Network Externalities: An Application to Digital Television," Marketing Science, INFORMS, vol. 18(3), pages 396-416.
    6. Vijay Mahajan & Eitan Muller & Roger A. Kerin, 1984. "Introduction Strategy for New Products with Positive and Negative Word-of-Mouth," Management Science, INFORMS, vol. 30(12), pages 1389-1404, December.
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