Diffusion and experience curve pricing of new products in the consumer electronics industry
The existence of experience curve is documented in a wide range of industries (Boston
Consulting Group, 1975). However, relating experience curve pricing to diffusion of new
products is rarely addressed in the empirical literature, with the exception of Bass (1980). This
paper adds to the literature by empirical calculation of the experience curve for a larger set of
products and relating it to the introductory stages of these products from the Consumer
electronics industry. The gradual price erosion observed in many consumer electronics products
is consistent with cumulative production learning curve. Results show excellent fit of data to
experience curve models. Comparison of the slope of experience curves for several consumer
electronics products with those from other industries is provided. The results should benefit the
consumer electronics and related industries in setting long term pricing strategies.
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