Supporting product launching decisions with adversarial risk analysis

Abstract

In a world of utility-driven marketing, each company acts as an adversary to other contenders, with all having competing interests. A major challenge for companies launching a new product is that, despite testing, flaws in their product can remain, potentially risking a loss in market share. However, delayed launch decisions can lead to losing first-mover advantages. Furthermore, each company generally has incomplete information on the launch strategy and the product quality of competing brands. From a buyer's perspective, along with the price, customers need to make their buying decisions based on noisy signals, e.g.\ regarding the quality of competing brands. This paper proposes how to support product launch decisions by a company in the presence of several competitors and multiple buyers, with the aid of adversarial risk analysis methods. We illustrate applications in two software launch cases that require deciding about timing, pricing, and quality, referring to single and multiple product purchases.