Simultaneous or sequential? Multihoming launch strategies for mobile applications with consideration of promotion and switching costs

Xiuyi Zhang; Wenhua Hou; Wenqing Zhang

doi:10.1080/00207543.2020.1847343

Simultaneous or sequential? Multihoming launch strategies for mobile applications with consideration of promotion and switching costs

Xiuyi Zhang, Wenhua Hou, Wenqing Zhang

Management Studies

Research output: Contribution to journal › Article › peer-review

5 Scopus citations

Abstract

As the number of apps in mobile application markets soars, platforms make significant promotion efforts to help new apps stand out. Some app developers adopt a sequential launch strategy with which they postpone launching the app in other platforms to be eligible for free promotion on the first-launch platform. We model an app developer that considers two platforms. Our results show that for the sequential launch strategy, the developer’s optimal pricing decisions rely on the switching costs to motivate users to adopt different purchase options. Surprisingly, if the switching costs are extremely high, the price on the second launch platform could exceed that on the first launch platform. In addition, we compare the sequential and simultaneous launch strategies and find that switching costs always play a vital role in developers’ launch decisions even when no user switches. Furthermore, developers may prefer the sequential strategy when the app quality is low due to low quality decay. Besides, we extend our model to a situation in which the app is free of charge. While this study focuses on the app market, our results can also be applied to game or video markets where similar phenomena exist.

Original language	English (US)
Pages (from-to)	977-998
Number of pages	22
Journal	International Journal of Production Research
Volume	60
Issue number	3
DOIs	https://doi.org/10.1080/00207543.2020.1847343
State	Published - 2022

Bibliographical note

Funding Information:
This work was supported by National Office for Philosophy and Social Sciences: [grant number 15BGL074]. We thank the editor-in-chief, the associate editor, and anonymous reviewers for their insightful and constructive comments. This work was supported by the China National Social Science Foundation Project under Grant 15BGL074.

Funding Information:
We thank the editor-in-chief, the associate editor, and anonymous reviewers for their insightful and constructive comments. This work was supported by the China National Social Science Foundation Project under Grant 15BGL074.

Publisher Copyright:
© 2020 Informa UK Limited, trading as Taylor & Francis Group.

Keywords

app developers
app platforms
product launch strategy
promotion services
switching costs

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Cite this

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title = "Simultaneous or sequential? Multihoming launch strategies for mobile applications with consideration of promotion and switching costs",

abstract = "As the number of apps in mobile application markets soars, platforms make significant promotion efforts to help new apps stand out. Some app developers adopt a sequential launch strategy with which they postpone launching the app in other platforms to be eligible for free promotion on the first-launch platform. We model an app developer that considers two platforms. Our results show that for the sequential launch strategy, the developer{\textquoteright}s optimal pricing decisions rely on the switching costs to motivate users to adopt different purchase options. Surprisingly, if the switching costs are extremely high, the price on the second launch platform could exceed that on the first launch platform. In addition, we compare the sequential and simultaneous launch strategies and find that switching costs always play a vital role in developers{\textquoteright} launch decisions even when no user switches. Furthermore, developers may prefer the sequential strategy when the app quality is low due to low quality decay. Besides, we extend our model to a situation in which the app is free of charge. While this study focuses on the app market, our results can also be applied to game or video markets where similar phenomena exist.",

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Simultaneous or sequential? Multihoming launch strategies for mobile applications with consideration of promotion and switching costs

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