Essays on new product preannouncements

My dissertation studies two phenomena related to new product preannouncement. The topic of Essay I is on the strategic relationship between preannouncement and product positioning of radical innovation. A game-theoretic model is set up to this end. The modeling framework is based on the premise that preannouncement can influence the formation of consumer preference and thus have strategic implication for product positioning, especially for radical innovation for which consumer preference is highly uncertain. The model generates three counter-intuitive results regarding the equilibrium behavior of firms with identical technological expertise and unbiased expectation of original consumer preference. First, we find that if they both preannounce, then the firm with lower (higher) preannouncement impact occupies (leaves) the more favorable marketplace, ceteris paribus . Second, if one firm preannounces while the other doesn't, then the non-announcing (announcing) firm always occupies (leaves) the more favorable marketplace, regardless of the announcing firm's preannouncement impact or repositioning cost, ceteris paribus. Finally, if both firms preannounce, they choose identical position for the product introduction, ceteris paribus, even though they differ in their repositioning cost and differentiate their product positions in the preannouncements.; Essay II studies the phenomenon of vaporware and aims to explain a firm's incentive to engage in vaporware in the presence of competitors. The research problem is distinct from Bayus et al.'s study on vaporware (2001), which attempts to explain vaporware used to maintain monopoly. Furthermore, the essay explains the logic behind the success vs. failure of vaporware. I set up a signaling model to address these issues. According to the model, market share plays a pivotal role in determining the optimality of the vaporware strategy. Moreover, the model yields insights for crafting legal policy concerning vaporware. One surprising result is that lawsuits on vaporware brought against large firms may shoot the wrong targets; instead, more monitoring efforts should be spent on small firms. In addition to explaining vaporware, the study contributes to research on price as a signaling device with the finding that price can be used to signal a firm's delivery speed.