An Integrated Virtual Store-Based Approach for Price Determination Before Product Launch

An integrated model approach is developed to determine market prices for product options that a company can offer consumers before launching a product. The multiple research streams drawn on include pricing, new product launch, on-line experimentation, conjoint analysis, and optimization. The approach incorporates a consumer-response model that considers the cross-price effects of the options as well as the impact of competing product options and prices. Based on the response model, a profit-optimization model framework is applied in an actual market situation involving an on-line video game to be introduced in a foreign market. A description of the stages of the application, from empirical design and data collection to decision-making and post-launch model validation, demonstrates the usefulness of the approac