Henry S.J. Robben

Industrial New Product Launch Strategies and Product Development Performance

Abstract Just as reporters must answer a few fundamental questions in every story they write, decision-makers in the new product development (NPD) process must address five key issues; what to launch, where to launch, when to launch, why to launch, and how to launch. These decisions involve significant commitments of time, money, and resources. They also go a long way toward determining the success or failure of any new product. Deeper insight into the tradeoffs these decisions involve may help to increase the likelihood of success for product launch efforts. Erik Jan Hultink, Abbie Griffin, Susan Hart, and Henry Robben present the results of a study that examines the interplay between these product launch decisions and NPD performance. Noting that previous launch studies focus primarily on the tactical decisions (that is, how to launch) rather than on the strategic decisions (what, where, when and why to launch), they explore not only which decisions are important to success, but also the associations between the two sets of decisions. Because the strategic launch decisions made early in the NPD process affect the tactical decisions made later in the process, their study emphasizes the importance of launch consistency—that is, the alignment of the strategic and tactical decisions made throughout the process. The survey respondents—managers from marketing, product development, or general management in U.K. firms—provided information about 221 industrial new products launched during the previous five years. The responses identify associations between various sets of strategic and tactical decisions. That is, the responses suggest that the strategic decisions managers make regarding product innovativeness, market targeting, the number of competitors, and whether the product is marketing- or technology-driven are associated with subsequent tactical decisions regarding branding, distribution expenditure and intensity, and pricing. The study also suggests that different sets of launch decisions have differing effects on performance of industrial new products. In this study, the greatest success was enjoyed by a small group of respondents categorized as Niche Innovators. Their launch strategy involves a niche focus, targeting innovative products into markets with few competitors. Tactical decisions made by this group include exclusive distribution, a skimming pricing strategy, and a broad product assortment.

The impact of new product launch strategies on competitive reaction in industrial markets

The importance of successful innovation for the long-term performance of companies can hardly be exaggerated. However, we need to consider this in a dynamic setting, in which competitors do not remain passive. We find that two thirds of new product launches meet reaction by competitors after their launch. We also empirically demonstrate that the strategic launch decisions that managers take have an effect on future reaction by competitors. Following an extensive review of the literature, a propositional model is developed. In order to test this theoretical model, an ex post facto field study was designed, in which the authors obtained comprehensive information on 509 new industrial products launched in the US, the UK and the Netherlands. Competitive reaction is diagnosed in terms of changes in the marketing instruments of the competitor. A logistic regression model is estimated on the occurrence of competitive reaction with any marketing instrument. We also look at the occurrence of individual marketing instrument reactions. The data show that competitors react primarily by means of price changes. Product assortment and promotional changes are less frequent, whereas distribution policy modifications occur very rarely. The characteristics of the new product launch strategy were found to have a significant impact on both the occurrence and nature of competitive reactions. We claim that the competitive effect of radically new products and incrementally new products greatly differs. The results show that competitors fail to respond to radical innovations and to new products that employ a niche strategy. They do react if a new product can be assessed within an existing product category and thus represent an unambiguous attack. Both innovative and imitative new products meet reaction in this case. The results also demonstrate that competitors are more inclined to react to the introduction of new products that are supported by extensive communication by the innovating firm. The likelihood of reaction is also higher in high growth markets than in low growth markets. The article discusses theoretical and managerial implications of these results, as well as thoughts for future research that may add more insight.

Launch decisions and new product success: an empirical comparison of consumer and industrial products

Many articles have investigated new product development success and failure. However, most of them have used the vantage point of characteristics of the product and development process in this research. In this article we extend this extensive stream of research, looking at factors affecting success; however, we look at the product in the context of the launch support program. We empirically answer the question of whether successful launch decisions differ for consumer and industrial products and identify how they differ. From data collected on over 1,000 product introductions, we first contrast consumer product launches with industrial product launches to identify key differences and similarities in launch decisions between market types. For consumer products, strategic launch decisions appear more defensive in nature, as they focus on defending current market positions. Industrial product strategic launch decisions seem more offensive, using technology and innovation to push the firm to operate outside their current realm of operations and move into new markets. The tactical marketing mix launch decisions (product, place, promotion and price) also differ markedly across the products launched for the two market types. Successful products were contrasted with failed products to identify those launch decisions that discriminate between both outcomes. Here the differences are more of degree rather than principle. Some launch decisions were associated with success for consumer and industrial products alike. Launch successes are more likely to be broader assortments of more innovative product improvements that are advertised with print advertising, independent of market. Other launch decisions uniquely related to success per product type, especially at the marketing mix level (pricing, distribution, and promotion in particular). The launch decisions most frequently made by firms are not well aligned with factors associated with higher success. Additionally, comparing the decisions associated with success to the recommendations for launches from the normative literature suggests that a number of conventional heuristics about how to launch products of each type will actually lead to failure rather than success.

Managing consumers’ product evaluations through direct product experience

Where traditional mass‐media advertising may perish in the enormous amount of communication messages, the product itself can act as a decisive communication tool and provide consumers with product‐related information in the buying decision situation. For example, the sound the product makes in use and the tactile sensation give an impression of the product’s quality. To complement the little research on the role that durable consumer products can play in marketing communications, we investigated the effects of direct product experience on information processing and product evaluation in a sample of 127 adult consumers. The results showed that direct experience enhanced consumers’ opportunity and ability to process product‐related information, but not their motivation to process the information. Subsequently, the induced levels of motivation, opportunity, and ability influenced both consumers’ attitude toward the product and their attitude confidence. One important implication for product development and marketing communications is that the communicative abilities of products can effectively be employed to enhance positively consumers’ evaluation of the product.

The mediating role of new product development in the link between market orientation and organizational performance

The proficiency in new product development activities may be the key to the conversion of a market‐oriented culture into superior organizational performance through better new product performance. To examine this conjecture our study tests hypotheses on the mediating effects of the proficiency in new product development activities and new product performance on the relationship between market orientation and organizational performance. The results from a sample of 126 manufacturing firms present evidence for the mediating roles of the proficiency in commercialization activities and new product performance. These mediating roles are consistent for three moderator variables: technological turbulence, market turbulence and innovation strategy. Together our findings provide a better understanding of how a market‐oriented culture leads to superior organizational performance.

Behavioral costs as determinants of cost perception and preference formation for gifts to receive and gifts to give

Abstract Four experiments on the evaluation of gifts are reported, two on receiving gifts and two on giving gifts. In a fractional factorial design we investigated the effects of personal relationship, gift occasion and four cost categories, namely financial, time, psychic, and physical costs, on the preference for gifts to give and for gifts to receive. Participants judged gift scenarios after reading descriptions containing external characteristics of gift situations. In the experiments on receiving gifts, manipulation of the behavioral cost variables induced a cost perception and a corresponding preference effect: Gifts that were evaluated as more costly in terms of time, mental and physical effort were significantly preferred. The gift-giving experiments showed no substantial relationship between perception of costs and preference for gifts to give, although mental effort appeared to exert a significant effect on both cost perception and preference for a gift to give. The results suggested that in receiving a gift the evaluation is afected by a perception of costs incurred, while in giving a gift the perception of costs did not lead to a change in the evaluation of the gift. Giving and receiving gifts are not reciprocal with regard to the type and number of factors that explain the relationship between costs and valuation.

New consumer product launch: strategies and performance

The launch strategies of new consumer goods have not been subject to rigorous study, although anecdotes abound in the form of news items in newspapers and specific industry journals. This contrasts...

Individual Reactions to Advertising: Theoretical and Methodological Developments

In both theory and practice, considerable attention is paid to the issue of advertising effectiveness. Even though theoretical insights are developing and methodological improvements are made, predictions of the effectiveness of individual advertising messages can only be made within a very broad range of uncertainty. In the meantime, the communication environment is changing even more rapidly than in the recent past. While the number of commercial messages transmitted through existing and new media is increasing, the likelihood of successful exposure of individual messages may be decreasing. This development calls for a discussion of the changes that may be observed in the issues considered to be important in the literature. A broad distinction may be made between theoretical and methodological issues, even though the two types of issues are likely to be related. In this article an attempt is made to briefly outline the present communication situation, to point at complexities confronted when making pred...