Up or Out—or Stay Put? Product Positioning in an Evolving Technology Environment
Article first published online: 5 JAN 2009
© 2005 Production and Operations Management Society
Production and Operations Management
Volume 14, Issue 3, pages 362–376, September 2005
How to Cite
Jain, S. and Ramdas, K. (2005), Up or Out—or Stay Put? Product Positioning in an Evolving Technology Environment. Production and Operations Management, 14: 362–376. doi: 10.1111/j.1937-5956.2005.tb00030.x
- Issue published online: 5 JAN 2009
- Article first published online: 5 JAN 2009
- Received March 2004; revision received September 2004; February 2005; accepted February 2005.
- new product positioning;
- new product development;
- technology management;
- managing uncertainty
When the development cycle for a product is longer than the development cycle for a core technology that is embedded in it, designers may need to modify the product̂s design to avail of upgrades in this core technology. We model optimal product positioning with regard to technology choice in this setting, using a stochastic dynamic programming framework. Under fairly general assumptions, we find that there are three possible optimal actions: to abandon the project, to maintain the current technology, or to reposition so as to use the best technology currently available.
We characterize the optimal positioning sequence in different design environments, discussing throughout the practical implications of our model. Previous research and conventional wisdom suggest early finalization of product specifications if design flexibility is decreasing over time. In contrast, we find that in some design environments, repositioning late in the development cycle can be optimal.