Date Added: Jul 2009
It has long been recognized that the purchasing behavior of consumers depends not only on the product characteristics but also on other considerations such as their intrinsic desire for exclusivity. The authors study the implications of such consumer behavior on the design and introduction decisions for a durable product, namely the durability and pricing choices of the firm. An extensive body of literature argues for the benefits of planned obsolescence. They draw upon these traditional market models of vertically differentiated durable products to incorporate exclusivity-seeking behavior, and show that firms should instead consider designing products that undergo slow value erosion in conjunction with a high-price, low-volume product introduction strategy.