Modelling Multi-Generation Products Diffusion in the Context of Dual Brand Competition and Sustainable Improvement

Abstract

Abstract: The diffusion of competition under the coexistence of multi-generation products has become one of the important challenges faced by enterprises in their daily and sustainable operations. At the same time, the competition between different brands has intensified the difficulty and complexity of decision-making in the process of multi-generation product operation, Therefore, based on the Norton-Bass model diffusion process, this paper introduces two marketing variables, dynamic price and quality level, builds a multi-generation product diffusion model under the dual-brand competition, and analyzes the impact of the company's revenue on the launch time to market, pricing, quality or technical level. By using system dynamics (SD) method, From the perspective of strong brand and weak brand enterprises, the competition diffusion model is built and simulated. The simulation shows that: i) When enterprises have the same brand competitiveness, reducing the pricing level cannot obtain more revenue, but diminish the overall revenue of the industry; Raising the pricing level can get more revenue, but also improve the revenue of competitors. ii) When the competitive strength of enterprises is different, the strong brand tends to maintain a stable pricing on the basis of improving the quality level, or slightly raise the price. Weak brands tend to raise the pricing of new products significantly on the basis of improving the quality level. iii) The launch time to market decision of new product is influenced by the degree of product quality upgrade. Therefore, the frequency of releasing new products should trade-off against the degree of technological upgrading of product quality. This paper provides the theoretical basis and new insights for the new product launch and operation decision of enterprises.