Optimal new product announcement strategies in supply chains: preannouncement or sudden announcement?

This study examines the impact of the new product’s market potential on a manufacturer’s choice between the new product preannouncement (NPP) and the new product sudden announcement (NPS) strategies and their effects on a retailer’s ordering decisions. We establish a game-theoretical model to examine the impact of the new product’s market potential on a manufacturer (M)’s choice between the new product preannouncement (NPP) and the new product sudden-announcement (NPS) strategies and their effects on a retailer (R)’s ordering decisions. Based on equilibrium, we find that when market potential of new product is low, M prefers to choose the NPS strategy, otherwise, the NPP strategy is more advantageous. Second, a higher substitution rate between new and old products or lower improvement costs for the new product encourages M to adopt the NPP strategy. Third, as the market potential for new products increases, M utilizes an inverse U-shaped pricing strategy for old products to induce R’s U-shaped ordering strategy, and M’s wholesale price as well as R’s order quantity for new products linearly increases. Hence, R’s total profit presents a U shape. Finally, our findings reveal that the strategic switch from NPS to NPP is not merely a tactical choice, but a fundamental shift from relying on competitive surprise to orchestrating a controlled product transition. This shift allows the manufacturer to actively manage cannibalization, align retailer incentives, and maximize total channel profit when the new product’s market potential is sufficiently high.