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Modeling lead/lag phenomena in global marketing : the case of VCRs

Authors Eliashberg, Jehoshua
Helsen, Kristiaan
Issue Date 1995-10
Summary Recently, many multinational companies have experienced much more impressive growth in overseas markets than in their home market. One way to sustain the momentum of global market expansion is via new product development. With respect to the entry timing issue, a company must decide on a phased launch or a simultaneous entry. The focus of this paper is on lead effects. Lead effects refer to the potential that adopters have in one country, the "lead" market, where the product is introduced first, to influence the rate of adoption among potential adopters in another country, the "lag" market, where the new product is launched subsequently (Eliashberg and Helsen 1987; Mahajan, Muller and Kalish 1990). We will suggest a modeling approach that can be used to provide diagnostic information regarding such lead effects. Since our model borrows from the diffusion research literature, we will first provide a brief review of that literature. The next section describes the model development. As an illustration, the model is then applied to the Pan-European VCR-market. Our results show that, contrary to conventional wisdom, lead effects, at least as captured in the current model, are not always positive. We conclude with highlighting some caveats of our approach and outlining directions for future research.
Language English
Format Working paper
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