Economic Analysis of Speed-to-market Product Innovation

摘要

Time-to-market decisions clearly play an important role in today's intensive competitive environment. Just as clearly, however, speed to market is not the sole determinant of success, a new product's success depends critically on its performance and its value to customers. Reduction of new product development cycle time and improvements in product performance have become strategic objectives for many firms. However, these goals may conflicts. This article discusses the relationship between product development time and costs and formulates a mathematical model to identify the optimal entry timing and product performance decisions. If the competitor is weak, market opportunity is short, or development cost is high, fast development of low-performance product is optimal; fast development with high performance is optimal under the condition of relatively high sales, long market opportunity and low development cost.