Abstract: In recent years, an increasing number of firms adopt advance selling when launching new products to the market. The advance selling strategies of two competing firms are studied, and it is assumed that consumers are uncertain about the quality valuation of heterogeneous substitutable products sold by the two firms. In the advance selling period, consumers do not know the real quality of products, while in the spot period, consumers can Bayesian update their valuations of the product quality according to online product reviews provided by buyers in the advance selling period. Strategic consumers choose to buy in advance or postpone by comparing the expected utilities of buying products in the advance selling period and the spot period. The competitive relationship between the two firms is described through a Hotelling linear model, and a game model between strategic consumers and firms is developed. Based on the modeling, solution, and analysis of three cases (neither of the two firms adopts advance selling, only one firm adopts advance selling, and both firms adopt advance selling), the following main conclusions are obtained. If the product review information accuracy is low, when the market competition intensity is medium, the two firms cannot reach a consensus on the advance selling strategy; otherwise, both firms will adopt advance selling. If the product review information accuracy is high, the impact of market competition intensity on the system will be weakened, and thus both firms are more likely to adopt advance selling. Therefore, adopting advance selling does not always benefit firms in a competitive marketplace.

Key words: advance selling; strategic consumer; duopoly; pricing