Modeling Multi-Generation Product Diffusion in the Context of Dual-Brand Competition and Sustainable Improvement

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 operations. Therefore, based on the Norton–Bass model diffusion process, this paper introduces two marketing variables: dynamic price and quality level. Then, this paper builds a multi-generation product diffusion model under dual-brand competition and analyzes the impact of the company’s revenue on launch time to market, pricing, quality, and technical levels. By using the system dynamics (SD) method (from the perspective of strong brand and weak brand enterprises), the competition diffusion model is built and simulated. The simulation indicates the following: (i) When enterprises have the same brand competitiveness, reducing the pricing level cannot obtain more revenue and instead diminishes the overall revenue of the industry. Raising the pricing level can obtain more revenue and also improve the revenue of competitors. (ii) When the competitive strengths of enterprises are different, strong brands tend to maintain stable pricing on the basis of improving the quality level (or slightly raising 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 products is influenced by the degree of the product quality upgrade. Therefore, the frequency of releasing new products should trade off against the degree of technological upgrading of the product quality. This research provides a theoretical basis and new insights for new product launches and operation decisions of enterprises.