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You can browse or download additional books there. ii Table of Contents Dedication............................................................................................................................... 1 Acknowledgments................................................................................................................. 2 Preface..................................................................................................................................... 4 Chapter 1: Concepts in the Context of Monopolistic Competition ........................... 12 Monopolistic Competition .......................................................................................................................... 14 The Importance of Being Entrepreneurial and Being a Short-Term Monopolist .................................16 The Entrepreneur Should Design Products and Services for Continuous Product Differentiation and Innovation..................................................................................................................................................... 17 Entrepreneurship Can Be Found in Large and Small Companies ...........................................................18 The Kingpins of Product Differentiation and Entrepreneurial Innovation Activity ............................19 Radical and Incremental Innovation ......................................................................................................... 20 Product and Technology Life Cycles .......................................................................................................... 21 Diffusion of a Technology Usually Lags Performance.............................................................................. 23 Discontinuities, Chasms, and Hype in the Diffusion Process ..................................................................25 The Bridge Model of Technology Life Cycle.............................................................................................. 27 Technologies Do Not Necessarily Fall Into the Abyss: They Become Embedded in New Technology 28 There is Power in Numbers: Network Effects and Metcalfe’s Law..........................................................29 The Role of R&D Process in Innovation ..................................................................................................... 31 Push, Pull, and Reload can go on Forever ................................................................................................. 33 R&D for Start-Ups and Small Businesses................................................................................................... 34 Search and the Role of Learning-About in Developing Ideas for New Products and Services ............35 Building Things and the Role of Learn-By-Doing in Developing Ideas for New Products and Services ......................................................................................................................................................... 38 The Role of the Supply Chain and the Brand in Product Differentiation ..............................................40 Conclusion .................................................................................................................................................... 41 Chapter 2: Fundamentals of Product and Price Differentiation............................... 42 The Demand Curve....................................................................................................................................... 43 First-Degree Price Discrimination: Personalized Pricing ........................................................................44 Second-Degree Price Discrimination: Versioning .................................................................................... 48 Third-degree Price Discrimination: Group Pricing .................................................................................. 52 Legal Issues Related to Price Discrimination and Product Differentiation ...........................................55 Conclusion .................................................................................................................................................... 57 iii Chapter 3: Differentiation in Action............................................................................... 58 Price and Product Differentiation and Enlightenment............................................................................62 Generating Additional Revenues: Willingness-to-Pay ............................................................................. 66 Demand and Differentiation Dashboards .................................................................................................. 68 Monopolistic Competition at Work............................................................................................................ 70 Independent, Complement, and Substitute Goods and Services ............................................................71 Price Discrimination and Price Differentiation ........................................................................................ 73 Irritating Consumers ................................................................................................................................... 74 Waves of Innovation Fueled by Substitutes and Complements ..............................................................76 Arbitrage: Producer’s Paradise and Consumer’s Dread ...........................................................................77 Conclusion .................................................................................................................................................... 79 Appendix: Determining the Optimal Selling Price Using Demand, Revenue, and Cost Equations......80 Chapter 4: Dynamic Tension in Versioning and PD Curves ....................................... 89 Product Differentiation Curves .................................................................................................................. 90 Versioning and Goldilocks Pricing............................................................................................................. 92 Using Dynamic Tension Differentiation to Develop Products and Services for the Entire Demand Curve ............................................................................................................................................................. 93 Dynamic Tension Between Midas and Hermes Spawns Atlas .................................................................96 Midas, Atlas, and Hermes Versions............................................................................................................ 97 Bottom of the Pyramid ................................................................................................................................ 99 Versioning Restaurants, Hotels, and Motels........................................................................................... 100 Versioning Commodity and Standardized Products.............................................................................. 102 Versioning Strategies ................................................................................................................................ 103 Version Rollout Strategies ........................................................................................................................ 105 Customer Segments and Midas, Atlas, and Hermes Versions ...............................................................106 Pricing and Product Differentiation Strategies ...................................................................................... 108 Dynamic Tension in Action at Singapore Airlines.................................................................................. 109 Conclusion .................................................................................................................................................. 110 Addendum on Pareto Economics, Welfare, and Efficiency....................................................................111 iv Chapter 5: Examples of Product Differentiation & Versioning Curves ................. 113 Versioning Automobiles...........................................................................................................................