Understanding and Managing International Product Launch: A Comparison between Developed and Emerging Markets

With the developed market becoming increasingly saturated, companies have turned to the rapidly growing emerging market. To compete effectively in the global marketplace, firms need to develop global market competences, such as effective product launch. Although considerable efforts have been devoted to identifying principles of effective new product launch, most of the literature focuses on a single country (i.e., the domestic market) and provides little direct cross‐national comparison. The objective of this study is to provide a better understanding of the patterns of effective product launch in the developed and emerging markets. Drawing from the contingency perceptive, the authors propose a conceptual model that emphasizes the central role of tactical launch decisions and the need to cope with the internal and external constraints for maximum new product performance. The research model is tested on 284 new products launched in the United States and 97 in Taiwan. Although prior literature suggested certain elements of global product launch may be standardized for purposes of efficiencies, the empirical data from this study suggests that global launch requires some degree of customization. The insights of the findings reveal that while some tactical launch decisions are effective for both emerging and mature markets, some are detrimental to each other. For example, customer education preannouncement and promotion discount pricing strategy enhance new product performance and preemption preannouncement strategy upset consumers for both the Taiwan and U.S. market. However, there are some cross‐national differences. Emotional advertising strategy is generally appreciated in the U.S. market but not in the Taiwan market. For management practice, the findings suggest the distinct patterns of effective product launch for the emerging and mature market using the United States and Taiwan as examples.     

Beyond the firm's initial declaration: Are preannouncements of new product introductions and withdrawals alike?

Previous preannouncement research has primarily focused on product preannouncements regarding the firm's intention to introduce a new product and, for the most part, has ignored preannouncements that update the status of new product introductions (e.g., delays in launch dates and cancellation of new product programs). This study's goal is to examine if different factors influence preannouncements of new product introductions (NPIs) versus new product withdrawals or delays (NPWs). A model of six antecedents that could influence a firm's propensity to issue NPIs and NPWs is developed and tested using a sample of 265 CEOs and Presidents from manufacturers of new products. Three of the antecedents are organizational in nature; specifically, first mover predisposition, firm information interactivity, and reputation building. Also, the effects of two environmental constructs, industry innovativeness and competitive hostility, are examined. Finally, the model incorporates the effect of buyer involvement on a firm's propensity to issue NPIs and NPWs. The results indicate that NPIs and NPWs are very alike regarding their antecedent factors. Reputation building, defined as a firm's tendency to pursue a high profile leadership position within its industry, and buyer involvement are the primary motivators of a firm's propensity to issue both NPWs and NPIs. Future directions for research include the development of a normative preannouncement framework and the examination of NPIs and NPWs as nonadvertising forms of marketing communication targeted at numerous audiences such as buyers, employees, channel members, industry influencers (e.g., business and trade related press), and investors.     

Identifying the Key Success Factors in New Product Launch

Effective product launch is a key driver of top performance, and launch is often the single costliest step in new product development. Despite its importance, costs, and risks, product launch has been relatively underresearched in the product literature. We reviewed the extant literature on product launch to identify the most critical strategic, tactical, and information-gathering activities influencing the launch success. We then used a retrospective methodology to gather managerial perceptions regarding launch activities pertaining to a recent new product launch, and the product's performance in terms of profitability, market share, and relative sales. A mail survey of PDMA practitioners elicited data on nearly 200 recent product launches. Successful launches were found to be related to perceived superior skills in marketing research, sales force, distribution, promotion, R&D, and engineering. Having cross-functional teams making key marketing and manufacturing decisions, and getting logistics involved early in planning, were strategic activities that were strongly related to successful launches. Several tactical activities were related to successful launches: high quality of selling effort, advertising, and technical support; good launch management and good management of support programs; and excellent launch timing relative to customers and competitors. Furthermore, information-gathering activities of all kinds (market testing, customer feedback, advertising testing, etc.) were very important to successful launches. We conclude with observations about current product launch practice and with recommendations to management. Logistics plays a key role in successful strategy development and should receive the requisite amount of managerial attention. In particular, activities involving logistics personnel in strategy development showed much room for improvement. We also find that the timing of the launch (i.e., when the launch is conducted from the point of view of the company, the competition, and the customer) is just as important as whether the activities are performed. More managerial attention should be devoted to launch timing with respect to all of these viewpoints in order to improve the chances of success.     

The Impact of Communication Strategy on Launching New Products: The Moderating Role of Product Innovativeness

Academic literature is filled with debate on whether product innovativeness positively impacts new product performance (NPP) because of increasing competitive advantage or negatively impacts performance due to consumers' fears of novel technology and resultant resistance to adopt. This study investigates this issue by modeling product innovativeness as a moderator that influences the relationship between communication strategy and new product performance. The authors emphasize that the impact of innovativeness to producers is different from that to consumers and that the differences have strategic impact when commercializing highly innovative products. Product innovativeness is conceptualized as multidimensional, and each dimension is tested separately. Four dimensions of innovativeness are explored—product newness to the firm, market newness to the firm, product superiority to the customer, and adoption difficulty for the customer.
In this study, communication strategy is comprised of preannouncement strategy and advertising strategy. First, the relationship between whether or not a preannouncement is offered and NPP is explored. Then three types of preannouncement messages (customer education, anticipation creation, and market preemption) are investigated. Advertising strategy is characterized by whether the advertisement campaign at the time of launch was based primarily on emotional or functional appeals.
Using empirical results from 284 surveys of product managers, the authors find that the relationship between communication strategy and NPP is moderated by innovativeness, and that the relationships differ not only by degree but also by type of innovativeness. Implications for research and practice are discussed.     

First Product Success: A Mediated Moderating Model of Resources,Founding Team Startup Experience,and Product‐Positioning Strategy

The success of the first product is of paramount importance for the future development of the new venture. Developing and launching a first product in the Chinese market is even more challenging than in a well‐developed market economy because of weak enforcement of intellectual property laws, a general consumer distrust of new products developed by Chinese firms, and the immediate threat of copycat. This article develops a mediated moderating model to examine first product success in Chinese new ventures, in which product‐positioning strategy (conceptualized as the degree of product differentiation) mediates the impacts of marketing resources, technical resources, and founding team startup experience on product success (conceptualized as timing of product launch and product market and financial performance). Furthermore, we argue that founding team startup experience moderates the impact of marketing and technical resources on building strong product‐positioning strategy. We test our conceptual model using a sample of 909 new products developed by 909 Chinese new ventures in a two‐step selection model. The empirical results provide important insight for new ventures' first product development. Product differentiation does not mediate the impact of marketing resource on product success; but it fully mediates the impact of technical resources on timing of product launch and partially mediates the impact of technical resources on product performance. Marketing resources have significant direct positive effects on both product performance and timing of product launch. Surprisingly, the impacts of marketing resources on product differentiation and product performance are negatively, not positively, moderated by founding team experience. When the founding team has nine years or less startup experience, an increase in marketing resources leads to a significant increase in product differentiation; and when the founding team has more than nine years of startup experience, an increase in marketing resources will not lead to an increase in product differentiation. The impact of marketing resources on product performance is smaller for founding teams with more prior startup experience than those with less prior startup experience. The impacts of technical resources are not moderated by founding team startup experience. Technical resources positively affect product market and financial performance directly as well as through its positive impacts on product differentiation. However, technical resources can negatively affect timing of the product launch because developing a highly differentiated produce can potentially delay the launch of the product. Therefore, new ventures have to be mindful in managing the available resources to succeed in the first product development.     

Externally Directed and Internally Directed Market Launch Management: The Role of Organizational Factors in Influencing New Product Success

Introducing new products remains a critical challenge for managers. Consumer acceptance of new products is key to new product success and requires the effective implementation of market launch activities. The present study describes the relationship between different types of market launch activities and market‐related, time‐related, and financial market launch success. The study's framework extends previous work on launch management by complementing the view that launch activities are predominantly outwardly directed with the notion that launch management can also be inwardly directed. More specifically, launch activities can both target customers as the external audience, for example, via communication and pricing, and address an internal audience, such as management and sales personnel, for example, using departmental coordination or employee incentives. The study also sets out to investigate how situational factors impact the relative effectiveness of both externally directed and internally directed launch activities in engendering successful new product launches. In particular, product newness, technology drivers, and firm size are considered as relevant variables. Structural equation analysis of data on 178 new products across industries provide empirical evidence that market launch success depends on the intensity of both externally directed and internally directed market launch activities. With regard to the overall impact of internally directed activities, the findings confirm that organizational factors and antecedents indeed play a critical role in new product launch and its respective performance with internally directed activities having an even stronger impact on time‐related and financial success than outwardly directed instruments. Specifically, these internal activities are often viewed as idiosyncratic resources that are hard for competitors to observe and are therefore more difficult—if not impossible—to replicate compared to externally directed activities in market launch. The paper clearly pinpoints that the successful launch of new products is a complex task that also necessitates the implementation of internally directed launch activities. Fast market penetration requires coordination among the different internal players as well as support from top management. Furthermore, the financial objectives of the market launch can only be met if employees and executives both receive the necessary incentives and support to effectively execute the new product introduction. The study also demonstrates that moderators impact the strength of the effectiveness of these two different types of market launch activities. This research provides important implications for launch management by advocating that the two foci on external and internal constituencies should not be pursued in isolation but that instead, the opposite is true.     

Launch Strategy and New Product Performance: An Empirical Examination in The Netherlands

Although previous research has investigated the concept and contents of new product performance, there is still no consensus about the managerial decisions that constitute a launch strategy and how such decisions impact new product performance. The research objective for the present investigation is to assess the impact of launch strategy and market characteristics on new product performance and to test the stability of this impact across consumer and industrial products. Data were collected on 272 consumer and industrial new products in The Netherlands through a mail questionnaire approach. We based our definition of a launch strategy on an extensive literature review and interviews with managers. Our conceptualization of new product performance represented two dimensions, namely, market acceptance and product performance. The market acceptance dimension reflects the new product's market position and sales levels. The product performance dimension refers to the quality and technical performance level of the new product. This richer specification of the dependent variable provides a better view on which launch decisions impact which dimensions of new product performance. The impact of launch strategy was higher for market acceptance than for product performance, overall and for both consumer and industrial subsamples separately. In line with results from recent studies, overall, market acceptance is influenced by the product's innovativeness, timing of market entry, breadth of assortment, branding, pricing, the objective of increasing market penetration, and competitor reactions. Product performance is influenced by the product's innovativeness, breadth of assortment, and by the objective of using an existing market. Analyzing the consumer and industrial products separately showed that the general picture of launch decisions and their impact on the dependent variables was comparable across the total sample and both subsamples, indicating that heterogeneous samples in new product launch research may not cause major interpretation problems. Second, the analyses revealed that some launch decisions are more important in attaining new product success for consumer products than for industrial products, and vice versa. While these decisions do not lead to contradicting results in the samples, they show that some decisions may be especially relevant for only consumer or industrial products. We discuss research and managerial implications of the results.     

Timing Product Replacements under Uncertainty—The Importance of Material–Price Fluctuations for the Success of Products That Are Based on New Materials

Being first to market with new products is one of the most enduring pieces of strategic advice handed to managers. This view also emphasizes the importance of launching new products that are based on new materials as soon as possible. However, when the input costs of products that embody new materials are uncertain because of volatile material prices, the advantage of being an early mover comes along with the risk of paying unexpectedly high material prices. Real‐option theory suggests delaying material substitution under uncertainty even if the new material enables superior product performance. Firms who have created the flexibility to switch between alternative inputs can benefit from responding to opportunities or threats that arise from changes in the environment. The current study formalizes this logic in a switching‐option model and tests it on a sample of material substitution projects from the manufacturing sector. Our findings shed light on how input‐cost fluctuations influence the timing–performance relationship and bring into question the common advice to launch new products as soon as possible. Instead, our results suggest that firms who align the timing of market launch to trends and fluctuations of material prices improve their competitive positions. These insights suggest novel ways for new product development (NPD) managers how to successfully use external information at the back‐end of the NPD process and how to compete in an era defined by volatile material prices and technological change.     

The Impact of the Corporate Mind‐set on New Product Launch Strategy and Market Performance

In the last decade, there has been an increasing interest in the link between new product launch strategy and market performance. So far, new product launch research has focused on this performance relationship without giving much attention to background factors that can facilitate or inhibit successful launch strategies. However, investigating such antecedents that set the framework in which different strategic launch decisions enable or prevent the market performance of new products is useful for enhancing the current state of knowledge. Drawing on the concept of a firm's orientation, the present study discusses the influence of the corporate mind‐set on new product launch strategy and market performance. It is hypothesized that the capability to successfully launch new products is based on the interplay between a firm's mind‐set (i.e., an analytical, risk‐taking, and aggressive posture) and its strategic launch decisions on setting launch objectives, selecting target markets, and positioning the new product. A research model with mediating effects is proposed, where the corporate mind‐set determines the launch strategy decisions, which in turn impact market performance. The model is tested with data on 113 industrial new products launched in business‐to‐business markets in Germany using a multiple informant approach. The results support the mediated model as the dimensions of the corporate mind‐set have a significant impact on most strategic launch decisions, which in turn significantly contribute to market performance. It is found that while an analytical posture relates to all three strategic launch decisions, risk taking and an aggressive posture have a significant impact on two, respectively one, launch strategy elements. These findings confirm the importance of investigating antecedents for a successful new product launch, as the corporate mind‐set serves as a background resource that sets the framework for successful new product launch decisions. In the final section implications for research and managerial practice as well as limitations of this research are provided.     

The Relationships between Resource Configurations and Launch Strategies in Taiwan's IC Design Industry: An Exploratory Study

Within the last decade, the link between launch strategies and new product performance has been widely investigated. However, the relationship between resource configurations and launch strategies has received little attention. This study endeavors to fill that void by examining the relationships between resource configurations and launch strategy selections. In addition, this study investigates the moderating effects of market growth and competitiveness on the relationship between resources and launch strategies. Drawing on contingency theory and strategic studies, this study proposes that resource contingencies affect changes in launch strategies. This study also suggests that market characteristics play a contingent role in the relationships between the configurations of resources and launch strategy choices. Based on extensive studies reporting on market characteristics and their links to strategies, this study proposes that two market characteristics—market growth and competitiveness—are relevant for launch strategy decision making. Taiwan's integrated circuit (IC) design industry has been used as the analytical sample, as it has been identified as a promising sector for new product development. Based on the result of investigating 90 firms, four resource configurations are identified: (1) strategic and organizational abilities; (2) technological capabilities; (3) societal assets and goodwill; and (4) physical assets. Furthermore, two different launch strategies—innovative and product advantage and cost oriented—also are discovered. The results from a seemingly unrelated regression model reveal that technological capabilities and societal assets and goodwill contribute to the variation in the firms' choices of launch strategies. This study further conducted the simple slope analysis to observe the effect of the technological capabilities on the innovative and product advantage strategy under different levels of the market growth rate. The results interestingly showed that firms with technological capabilities demonstrated different degree of tendencies in employing this strategy in alignment with various market growth rates. The finding sheds some lights on the moderating role market characteristics play on the relationships between resource configurations and launch strategy selections. Academic implications and suggestions for practitioners also are provided.     

The Effects of Competition in Short Product Life‐Cycle Markets: The Case of Motion Pictures*

It is critically important to understand the relationship between new product launch strategies and their interaction with the competitive environment, which results in the successful introduction of new products. Deciding when to launch new products is among the most significant issues facing managers when formulating new products strategy, especially for products with short product life cycles. However, little extant research has focused on the interaction of product launch timing and the competitive market environment. This study explores the effects of four types of competitive threats on the market performance of short product life‐cycle products. Threats from new products and incumbents are possible. Also, products in the same category and those in related product categories exert competitive pressures. In this paper, a framework of competitive threats is developed, and research questions are constructed and empirically tested using the motion pictures industry as the focus of this research. A set of simultaneous equations was estimated using a sample of 2,948 movies introduced in the U.S. market between 1997 and 2004. The results show that all competition types have negative direct, indirect (as mediated by distribution intensity), and total effects on the performance of a new product. For a focal product, incumbent products exert a greater negative impact on performance than new entrants. Surprisingly, products in different, but related, categories are more harmful to the performance of products than products in the same category. The results have important implications for launch timing and new product performance.     

Enhancing Stock Market Return with New Product Preannouncements: The Role of Information Quality and Innovativeness

To advance development and application of signaling theory in the new product preannouncement literature while seeking to resolve ambiguity regarding the influence of innovativeness on stock market return, the role of information quality is examined. Specifically, this study investigates the effect of innovativeness across low and high levels of information quality. The results, ascertained using event study methodology on a sample of 243 new product preannouncements collected over a nine‐year period, indicate that higher information quality increases the strength of the positive relationship between innovativeness and stock market return. The findings offer managers insight into what role information quality plays in new product preannouncements that can help their firms generate higher stock market return.     

Delineating Design Factors that Influence the Global Product Launch Process*

Preparing for and managing the global product launch process offers unique challenges as each targeted country can pose unique differences across the design categories of channel parameters, country mores, language and colloquialisms, and technology infrastructure. Though not an exhaustive list, these have a predominant influence on the global product launch process on a per‐global‐region basis. Using a case‐study methodology, this article draws on the global product launch experiences of two firms, showing that such influences preclude use of a mass‐marketing, standardization approach. Though it appears that certain elements of global product launch may be standardized for purposes of efficiencies, a global product launch appears to require at least some degree of customization. Such thinking parallels a design perspective, which mandates a tailoring of product and marketing mix to encourage early acceptance within the intended global market. To suggest when customization should be employed, four design categories of channel parameters—country mores, language and colloquialisms, and technology infrastructure—appear to have strong propensity to dictate customized design requirements for a worldwide launch, where greater differences across these design categories would mandate more customization toward each respective global region. Post hoc comments by managers in the focal case studies support this and further delineate that these four design factors necessitate keen consideration in the course of planning and enacting activities during the global product launch process. The two cases studies especially show that customized design decisions will likely pertain to launch schedule due to local retailers' calendars, product aesthetics due to local consumer preferences, point‐of‐sale and other marketing communications due to language requirements, and technology enhancements in light of local market acceptability and both social and regulatory expectations. Managers involved in planning a global product launch should therefore heed channel owners—brand owners, retailers, and distributors—so that they give preference to, promote, and sell the respective company's product relative to competitors' products. To assist toward securing such preference status, channel owners should have a role in advising the timing of launch and design considerations (e.g., color and form). Logistic issues, such as delivery and after‐sales support via this channel, are keen considerations as well. Logistics has to be thought through to ensure that demand can be met across all regions for a new product. And with the growing prevalence of Internet worldwide, managers must pay keen attention to cultural references and language used on any Internet site to ensure that the product is properly represented and promoted during its global launch. The process of a global product launch is therefore more than the company's ability to gain access to a particular market; it is the company's ability to understand key design issues per each global region respectively and to respond to pressing global region differences by customizing the total product offering to meet the needs of that global region.     

The Impact of Market Orientation, Product Advantage, and Launch Proficiency on New Product Performance and Organizational Performance

Some scholars have suggested recently that a market‐oriented culture leads to superior performance, at least in part, because of the new products that are developed and are brought to market. Others have reinforced this wisdom by revealing that a market‐oriented culture enhances organizational innovativeness and new product success, both of which in turn improve organizational performance. These scholars do not reveal, however, through which new product development (NPD) activities a market‐oriented culture is converted into superior performance. To determine how critical NPD activities are for a market‐oriented firm to achieve superior performance, our study uses data from 126 firms in The Netherlands to investigate the structural relationships among market orientation, new product advantage, the proficiency in new product launch activities, new product performance, and organizational performance. We focus on product advantage—because product benefits typically form the compelling reasons for customers to buy the new product—and on the launch proficiency—as the launch stage represents the most costly and risky part of the NPD process. Focusing on the launch stage also is relevant because it is only during the launch that it will become evident whether a market orientation has crystallized into a superior product in the eyes of the customer. The results provide evidence that a market orientation is related positively to product advantage and to the proficiency in market testing, launch budgeting, launch strategy, and launch tactics. Product advantage and the proficiency in launch tactics are related positively to new product performance, which itself is related positively to organizational performance. Market orientation has no direct relationship to new product performance and to organizational performance. An important implication of our study is that the impact of a market orientation on organizational performance is channeled through the effects of a market orientation on product advantage and launch proficiency; subsequently through the effects of product advantage and the proficiency in launch tactics on new product performance; and finally through the effect of new product performance on organizational performance. These channeling effects are much more subtle and complex than the direct relationship of market orientation on organizational performance previously assumed. Another implication of our study is that the impact of a market orientation on performance occurs through the launch activities rather than being pervasive to all organizational processes and activities. A reason for this finding may be that NPD is the one element of the marketing mix that predominantly is the responsibility of the firm, whereas promotion and distribution often are in control of organizations outside the firm (e.g., advertising agencies, major retailers) and whereas the channel or the market often dictates the price. Both implications provide ample opportunities for further research on market orientation and NPD.     

Financial Incentives and Salesperson Time Orientation in New Product Launch: A Longitudinal Study

The success of a new product launch critically depends on an engaged and dedicated sales force. Salespeople who are involved in a new product launch must overcome significant uncertainty associated with the new product's performance, which can affect success expectations and, in turn, sales effort for the new product. Moreover, success expectations may drop in the first few months of the launch period, due to initial negative market feedback or general decline in sales force enthusiasm. Diminished expectations may start a vicious circle effect where lower success expectations for the new product lead to lower sales effort that, in turn, leads to lower performance, which further lowers expectations, and so on. Based on insights from attribution‐expectancy theory, this study investigates two distinct mechanisms to counteract the potential downward spiral in success expectations and sales effort devoted to a new product. Specifically, this research examines the role of financial incentives and salespersons' long‐term orientation in creating and maintaining high new product success expectations and sales effort during a new product launch. To investigate how the effect of these factors changes over time, success expectations and sales effort are examined across two critical points in time: the start of a new product launch and at completion of the first sales cycle. To test the model empirically, the North American sales force (n = 129) of a business unit of a global firm is surveyed longitudinally during the launch of a new line of industrial products. The data are analyzed using a partial least squares model. The results show that initial success expectations have a significant effect on sales effort later in the launch, and that this relationship is mediated by success expectations later in the launch. Success expectations and sales effort early in the launch are also shown to impact the perceived attractiveness of the financial incentives offered, but this does not translate into higher success expectations or sales effort at the end of the launch. In contrast, the long‐term orientation of salespersons is key to maintaining higher success expectations and sales effort at the end of the launch.     

Factors Affecting New Product Forecasting Accuracy in New Firms

This study identifies factors that seem to influence a new firm's ability to accurately forecast new product sales. William Gartner and Robert Thomas present a conceptual model and develop hypotheses that specify antecedent factors prior to new product launch, such as the founder's expertise and the marketing research methods used, as well as environmental factors occurring after product launch, such as competitive factors and market volatility, that influence new product forecasting accuracy. The hypotheses were tested with data collected from a survey of 113 new U.S. software firms. Some tentative guidelines for improving sales forecast accuracy among new firms are offered. Directions for future research are discussed.     

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.     

Best Practices for New Product Pricing: Impact on Market Performance and Price Level under Different Conditions

To date, research on new product pricing has predominantly been approached as a choice between market skimming and penetration pricing. Despite calls for research that addresses other complexities in new product pricing, empirical research responding to these calls remains scarce. This paper examines three managerial price‐setting practices for new products, i.e., value‐informed, competition‐informed, and cost‐informed pricing. By engaging in these practices, managers can develop and compare quantifications in order to attain an introduction price for the product. The authors draw on consumer price perception literature, Monroe's pricing discretion model, and numerical cognition literature to develop hypotheses about the impact of price‐setting practices on new product market performance and price level. By studying the effects on market performance and price level, the paper provides insights that may help explain the growth of new products and address the problems of underpricing. The hypotheses are tested in a management survey of 144 production and service companies. The results indicate which pricing practices are superior for the achievement of either higher market performance or higher prices in specific product and market conditions. Whereas value‐informed pricing has an unambiguous positive impact on relative price level and market performance, the results also suggest that in many cases engaging in value‐informed pricing is not enough. The effects of cost‐informed and competition‐informed pricing may differ depending upon the objective (market performance or higher prices), product conditions (product advantage and relative product costs), and market condition (competitive intensity). Engaging in inappropriate pricing practices leads to a decline in new product performance. Moreover, bad pricing practices make the positive effect of product advantage on the outcome variables disappear. The latter finding suggests that companies can jeopardize their efforts and investments in the new product development process if they engage in the wrong price‐setting practices. The findings imply that managers should consider different factors in new product pricing. First, when launching a new product, they should determine their explicit pricing objective, either stressing market performance or a higher price level. To determine the most appropriate pricing practices, however, they should next assess their situation in terms of product advantage, relative product costs, and competitive intensity. Together with the pricing objective, these conditions determine the best pricing practice. On a higher level, the findings imply that companies should invest in knowledge development in order to engage in the appropriate pricing practices for each product launch.     

New Product Preannouncement as a Signaling Strategy: An Audience‐Specific Review and Analysis*

Firms in various industries with highly competitive environments use new product preannouncement (NPP) as one of the most effective and popular signaling tools. Preannouncements can bring both benefits and costs to firms. Extant research has studied NPP from different perspectives and tackled the questions, “Should a new product be preannounced and when?” and “What information should be preannounced and why?” However, the benefits and costs of preannouncements from an audience‐specific perspective are less well understood. It is important to notice that benefits and costs of a preannouncement vary among different audiences and firms need to apply group‐specific weights in assessing the overall benefits and costs prior to making new product preannouncements. The purpose of this article is to review the existing literature on new product preannouncements for commonly observed marketing problems and to develop a general approach focusing on the target audiences and the incentives in sending signals to each audience and the impacts of these signals. This paper first reviews the literature on marketing‐related NPP issues as well as the determinants and effects of various factors on NPP decisions. Then, it discusses the phenomenon of new product preannouncements linked to other marketing and economics problems: (1) product development and positioning; (2) product diffusion and adoption; (3) firm value; (4) vaporware and antitrust litigations; and (5) consumer welfare. In addition, this paper divides the target audience of the new product preannouncement into four groups: customers, competitors, investors, and distributors. Based on current signaling theory, it proposes an audience‐specific framework to analyze the determinants, incentives, and impact of new product preannouncements. The proposed approach may provide more comprehensive insights on NPP strategies to managers and industrial decision makers. Finally, the paper suggests a number of future research directions from four different perspectives (i.e., customer, firm, government/industry, and methodology).     

Launch Decisions and the Early Market Survival of Innovations: An Empirical Analysis of the Italian Mobile Value‐Added Services (VAS) Industry

There is a surprisingly high number of new products and services that fail to produce enough return on the firm's investments in development and launch activities. Literature has shown that these failures can be due to a poorly planned and executed launch. Although a vast stream of research has studied how strategic and tactical launch decisions affect the performance of new products and services, some issues still need theoretical and empirical investigation. This paper aims to extend new product launch research in two ways. First, it studies how tactical launch decisions (i.e., investments in advertising and involvement of external organizations in the launch process) interact with an important strategic choice (i.e., the degree of radicalness of the new product or service) to affect new product performance. Second, it focuses on a particular dimension of performance, that is, early market survival, which has been overlooked in launch strategy and tactics research so far. Using a data set comprising more than 9300 new mobile value‐added services launched in Italy between 2003 and 2006, the paper finds that launch tactics interact with the radicalness of the innovation to affect early market survival. In particular, communicating the distinctive characteristics of the new product or service and partnering with external organizations during the launch process are tactics that work particularly well with radical innovations. This is possibly due to the fact that they help reduce customers’ uncertainty regarding expected benefits and transaction costs, and hence contribute to win their resistance to adopt the innovation soon after launch. Investments in corporate advertising lead instead to a tangible improvement of the probability of early market survival for both radical and incremental innovations. In other words, the positive impact on the probability of early survival of increasing investments in corporate advertising appears to be relevant for both radically and incrementally new services. One possible explanation is that this tactic helps increase the number of potential customers who come to know about the existence of the innovating firms and its offering soon after launch, but this is likely to be equally important to stimulate early diffusion of both incremental and radical innovations.