Product-Driven Technology Upgrade and the Branding Development: A Simulation

摘要

This paper addresses an important but normally ignored capability development, the stage of original product manufacturing (OPM) in the stage of upgrading technology from ODM to OBM and proposes a four-stage "OEM-ODM-OPM-OBM" evolution model of technology upgrading and brand development. It explains the development strategies and patterns by technological firms in developing economies for developing their brands. The reason why so many firms may fail in branding or err in long term strategy before they arrive to OBM stage is because they ignore the selection of the strategic patterns in the development phase of a new product, that is a barrier between ODM and OBM in previously identified three-stage model of "OEM-ODM-OBM". This study constructs a model consisting of one brand-owning firm and two contract manufacturers with different technological levels in order to illuminate interactive effects at the technology market, contract manufacturing market, and product market levels. Scenario-based simulation and numerical analysis are employed in combination with this model to explore contract manufacturers' long-term optimal brand development strategies in lieu of brand-owning firms' countermeasures. We find contract manufacturers would adopt their optimal brand development strategies, moving toward long-term brand development strategies through changing strategies in three turning points.