Modeling Competition over Product Life Cycles

Abstract

This paper presents a mathematical model, linking the classical Markov models for brand switching and models for product life cycles, to forecast competition analysis and market share. This integrated model can be used to forecast market shares of all competitors, and their market shares, including customers retained, customers gained from market growth, and customers gained from competitors over the product life cycle. Such information provides forecasters with valuable insight about their market positions. The model is generic and can be applied to different types of products and services, under different types and patterns of product life cycle curves. A numerical example on a typical mobile telecommunication industry is used to illustrate the application of the proposed approach.