Robert J. Dolan

Maximizing the Utility of Customer Product Testing: Beta Test Design and Management

Abstract Many companies regularly use beta tests as part of their product development program. Beta testing can validate the product concept, eliminate performance problems prior to market introduction, and serve as an effective sales promotion device. The risks are significant, however, in that a poorly designed test can destroy account relationship, generate inaccurate data on product performance, and stimulate negative publicity. Robert Dolan and John Matthews present guidelines for effective management of beta test programs. They develop these guidelines based on a literature review, an analysis of twenty-one beta test programs as described in secondary sources, and four in-depth field investigations with cooperating firms.

Incentive mechanisms for priority queuing problems

We consider the development of an incentive mechanism to induce users of a service facility to reveal the parameters the system administrator requires to determine the optimal sequence of service to queued users. We first consider using the taxation procedure recently suggested for public goods, and then develop a more efficient mechanism based on marginal delay costs. We prove that setting the priority price for service equal to the marginal delay cost imposed on others structures a situation such that a user maximizes his individual welfare revealing his true delay cost.

A Simulation Analysis of Alternative Pricing Strategies for Dynamic Environments

The implicit assumption of the classical economic model of price determination is that the firm maximizes short-run profits. However, one of the key implications of strategy research of the past decade is that short-run profit maximization is not an appropriate criterion for many market situations. Instead, market share has been proposed as the key to long-term profitability (see, e.g., Buzzell, Gale, and Sultan 1974; Abell and Hammond 1979). This proposition has had a strong impact on both marketing practice and research. Hopkins (1981) reports that 88% of industrial firms surveyed spell out market share goals in detail. The emphasis on market share in practice has been reflected in the theoretical side also, where numerous market share forecasting and maximizing models have been published. Long-term profitability has also become a research interest in its own right: more than a dozen papers have appeared in major journals since 1975. The impetus to this activity has been the recognition of the existence of intertemporal effects in the environment. For example, on the demand side, a consumers purchasing in a given time period may preclude purchasing in the future because of the durability of the good or personal inventory loading. On the supply side, added current production early in new product introduction may reduce the cost of future proResearchers of the strategic implications of the well-known demand (e.g., adoption and diffusion) and supply (e.g., experience effects) dynamics have typically sought analytical solutions. Their success in this has been achieved partly by limiting the richness of the dynamics considered. This paper describes a simulation modeling capability, SIMSTRAT, which trades off analytical solutions for richer, more realistic representations of supply and demand. We present the model and then the results of our initial investigations using SIMSTRAT. When joined with new computer graphics capabilities, the model is successful in identifying conditions conducive to skimand penetration-pricing strategies.

Article not available electronically: Pricing and Market Making on the Internet, Robert J. Dolan, Youngme Moon

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