New Product Strategies of Large, Dominant Product Manufacturing Firms: An Exploratory Analysis

Although researchers have expended considerable effort exploring the links between new product strategy and firm-level performance, most studies of this subject focus on small- to medium-sized firms. Compared to smaller firms, however, large companies typically maintain broader portfolios of products and have easier access to capital markets. Such fundamental differences suggest the need for closer examination of the relationship between new product strategy and the performance of large firms. Based on a study of 459 new products introduced during a 5-year period, Richard W. Firth and V. K. Narayanan profile the new product strategies of 18 large companies. They examine the methods used to acquire new products (internal development or external sources) as well as three dimensions of each firm's new product introductions: newness of embodied technology, newness of market application, and innovativeness in the market. In other words, these profiles identify the degree to which a firm's new product introductions involve core technologies and markets that are new to the firm, as well as the degree to which the market views these products as innovative. Because new product strategy is an investment decision, the study also examines the relationship between these strategic profiles and two facets of firm-level performance: risk and return. The study identifies five archetypes of new product strategy: Innovators, who produce innovative products by using their existing resources; Investors in Technology, who focus on expanding their technological base. Searching for New Markets, firms that venture into unfamiliar markets by introducing products closely aligned with those in their existing portfolios; Business as Usual, firms that rely on existing technologies and products to serve existing markets; and Middle-of-the-Road, firms content to introduce new products rated as low to moderate along all three dimensions of the strategic profile. For new products closely aligned with their core markets and technologies, the firms in this study typically rely on internal development. To introduce products involving new technologies or market applications, they turn to acquisition from external sources. Firms that emphasized market innovativeness in their new product introductions enjoyed higher returns than less innovative firms. And contrary to conventional wisdom, they gained this advantage without an accompanying increase in risk. In other words, continual innovation might provide a large firm with the means for achieving higher returns without higher risk.     

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.     

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.     

Breakeven Time on New Product Launches: An Investigation of the Drivers and Impact on Firm Performance

The ability to break even faster on new product projects is becoming increasingly critical for firms in fast‐moving industries where continually reinvesting in research and development efforts matters greatly for survival. However, most research to date has focused on studying the impact of two primary innovation outcomes: sales and profits. The exclusive emphasis on sales and profit may be warranted for certain types of goods such as durable goods, but when examining the effects of new products in fast‐moving consumer goods or in the entrepreneurial sphere, where cash to cash matters greatly for survival, it is critical for both researchers and practitioners to not only consider the profits and sales generated by the new product but also the time to breakeven. This paper develops a theoretical framework using the competency‐based literature to examine the effects of innovation drivers (customer idea source, speed to market, product quality, and product newness) on breakeven time (BET) and project profits, and their subsequent impact on firm performance. A three‐stage least square estimation method was employed using longitudinal data on 945 new product development projects and launches in the morning (breakfast) foods category. The results clearly pinpoint that for successful product innovation, managers need to consider the time taken to breakeven on new product development. Specifically, the results demonstrate that speed to market and product quality shorten BET, but customer idea source extends BET. Second, the analysis also empirically demonstrates that BET is an equally effective predictor of firm performance as project profits in the short run, but significantly a stronger predictor of firm performance in the long run (t + four years), suggesting that BET should be regarded as a superior leading indicator of firm performance versus product profitability for fast‐moving consumer goods segment. This is an important finding that suggests firms that recoup their cash investments more quickly experience greater short‐term and significantly more long‐term success.     

Impact of Strategic Type on Success Measures for Product Development Projects*

Does the strategic type of firm affect which success measures should be used for product development (PD) projects? This paper theorizes that it should and finds that it does because the PD projects undertaken are usually an expression of the strategic type of the firm. The purpose of this research is to affirm a 1996 survey of members of the Product Development & Management Association (PDMA) that proposes that firms' PD performance measures should vary by their strategic type. Thus, for example, prospectors, the strategic type most likely to introduce new products to new markets, should place greater importance on PD success measures consistent with their characteristic strategies of changing product lines and early market entry. In contrast, defenders, the strategic type most likely to maintain stable product lines for existing markets, should place greater importance on PD success measures consistent with their characteristic strategies of stable product lines and market penetration. Analyzers, a hybrid type between prospectors and defenders, should prefer measures consistent with their characteristic strategies for improving products and being early followers in newer markets. To relate strategic types to specific success measures for PD projects, this paper proposes a model of the relationship based on the degree of project newness to the firm and then catalogs measures of PD project success and groups them according to degree of project newness. The research findings are based on survey responses from 222 individuals who are employed by financial service providers, who identified their firms by strategic type and rated the importance of PD success measures to their firms. The importance of 21 performance measures is compared by strategic type to find significant differences among prospectors, analyzers, and defenders. This research finds several significant relationships. prospectors, for example, attach greater importance to customer satisfaction, launch timeliness, and product return on investment, all of which may be characterized as relating to a higher degree of project newness to the firm. defenders and analyzers, on the other hand, attach more importance than prospectors to measures of unit volume, cost reduction, and margin goals, all of which relate to a lower degree of project newness to the firm. In short, because prospectors seek to introduce new products to new markets, they consider important those measures, which accord with greater product and market newness. The major conclusion of this paper is that strategic type affects the importance of project performance measures and that all firms should not use the same success measures. Firms should contextualize their success in PD projects based on their strategic type. This conclusion resonates with previous findings that strategy is a key determinant of PD success, though it is infrequently included in PD success studies. This paper, therefore, challenges the implicit assumption in the mainstream of PD success literature that success can be determined without regard to firm strategy.     

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.     

Exploring Mediating and Moderating Influences on the Links among Cycle Time,Proficiency in Entry Timing,and New Product Profitability*

Development cycle time is the elapsed time from the beginning of idea generation to the moment that the new product is ready for market introduction. Market‐entry timing is contingent upon the new product's cycle time. Only when the product is completed can a firm decide whether and when to enter the market to exploit the new product's window of opportunity. To determine the right moment of entry a firm needs to correctly balance the risks of premature entry and the missed opportunity of late entry. Proficient market‐entry timing is therefore defined as the firm's ability to get the market‐entry timing right (i.e., neither too early nor too late). The literature has produced divergent evidence with regard to the effects of development cycle time and proficiency in market‐entry timing on new product profitability. To explain these disparities this study (1) explores the mediating roles of development costs and sales volume in the relationships among development cycle time, proficiency in market‐entry timing, and new product profitability, respectively; and it (2) explores the moderating influence of product newness on the relationship between development cycle time and development costs and that of new product advantage on the link between proficiency in market‐entry timing and sales volume. The results from a survey‐based study of 72 manufacturers of industrial products in the Netherlands suggest that development costs mediate the relationship between development cycle time and new product profitability and that sales volume mediates the link between proficiency in market‐entry timing and new product profitability. In addition, the findings indicate that new product advantage strengthens the positive relationship between proficiency in market‐entry timing and sales volume. The results provide no evidence for a moderating effect of product newness. These results have important implications because to maximize new product profitability managers need to distinguish between costs and demand side effects of development cycle time and market‐entry timing on new product profitability. Keeping this distinction in mind should help them to better determine the relative profit impact of investments in cycle time reduction or improved entry timing. Moreover, the findings suggest that highly advantaged products that enter the market at the right time may have a highly attenuated sales volume. It also implies that new products with lower advantage may have very little leeway in hitting the “sweet spot” in market. The message is that “doing the right thing” (i.e., to develop a highly advantaged new product) may be at least as important as correctly balancing the risks of premature entry and the missed opportunity of late entry.     

An Exploratory Analysis of the Impact of Market Orientation on New Product Performance

For many firms, emphasizing the importance of market orientation has taken on a mantra-like quality. Mission statements and memos, policies, and procedures all highlight the importance of staying in touch with the customer. It is also widely assumed that the relationship between market orientation and new product performance depends on environmental conditions and product characteristics. To date, however, little empirical evidence has been presented to support the assumption that market orientation influences new product performance. Kwaku Atuahene-Gima addresses this research need in a study of 275 Australian firms. In addition to exploring the relationship between market orientation and new product development activities and performance, his study examines the effects of environmental conditions and product characteristics. Specifically, the study investigates whether the relationship between market orientation and new product performance depends on the degree of product newness to customers and the firm; the intensity of market competition and the hostility of the industry environment; and the stage of the product life cycle at which the new product was introduced. The survey results provide strong support for the basic proposition that market orientation influences new product performance and development activities. The results show a strong positive relationship between market orientation and a new product's market performance. Market orientation is also shown to have a strong positive effect on proficiency of predevelopment activity, proficiency of launch activity, service quality, product advantage, marketing synergy, and teamwork. Although market orientation is generally found to be an important factor in the success of new products, its influence varies depending on the type of new product—that is, radical versus incremental. Market orientation appears to have greater influence on new product performance when the product represents an incremental change to both the customers and the firm. However, this does not mean that a market-oriented approach is unnecessary in the development of radically hew products. Market orientation also has a greater effect when the perceived intensity of market competition and industry hostility are high, and during the early stage of the product life cycle. Because market competition and industry hostility typically intensify as the product life cycle progresses, these findings suggest that the effects of market orientation are pervasive. In other words, managers should not limit their expectations of market orientation to specific projects or specific stages of the development process and product life cycle.     

Industrial New Product Launch Strategies and Product Development Performance

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 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.     

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.     

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.     

Product Change Intensity, Product Advantage, and Market Performance: An Empirical Investigation of the PC Industry

Product change decisions, such as the frequency of new product introductions, can impact product performance characteristics, sales, and market share of several generations of products and, therefore, a firm's long‐term survival and growth. The purpose of this study was to explore the impact of a firm's product change frequency, also referred to as product change intensity. A conceptual model linking a firm's product change intensity to its product advantage—and, in turn, to its market performance—with strategic product change orientation and technology competence as moderating effects, was used as a foundation for the study's hypotheses. These were tested using hierarchical and linear regressions, based on survey data collected from 55 U.S. companies in the personal computer (PC) industry. The analysis confirmed that a PC firm's product rate of change is positively associated with its product advantage and that its product advantage, in turn, is positively associated with its market share and growth performance. However, the hypothesized moderating effects were not confirmed. Rather, a firm's product change orientation and its level of technology competence are more likely to have a direct impact on product advantage. The implications of these findings are that, in general, firms that release new products frequently will have them viewed more favorably by the market than products with lower change intensities. Also, firms with higher levels of competence in the product technology domain tend to create products with greater market attraction. Finally, more radical changes to PC product architectures may pay off better than relatively minor changes. These results may not apply to other industries due to the specific design of personal computers and the nature of this fast‐paced market. Neither do the findings necessarily apply to all firms regardless of those firms' specific product and market strategies. More research is necessary to understand how a firm's adopted strategy, and the industry in which it operates, affect the relationships demonstrated in this study.     

Towards Holistic "Front Ends" In New Product Development

Any firm that hopes to compete on the basis of innovation clearly must be proficient in all phases of the new-product development (NPD) process. However, the real keys to success can be found in the activities that occur before management makes the go/no-go decision for any NPD project. In other words, the most significant benefits can be achieved through improvements in the performance of the front-end activities—product strategy formulation and communication, opportunity identification and assessment, idea generation, product definition, project planning, and executive reviews. Noting the inherent difficulty of managing the front end, Anil Khurana and Stephen R. Rosenthal discuss findings from in-depth case studies of the front-end practices in 18 business units from 12 U.S. and Japanese companies. They offer a process view of the activities that the front end comprises, and they discuss the insights that their case studies provide regarding key success factors for managing the front-end activities. The case studies involved companies in industries ranging from consumer packaged goods to electronics and industrial products. Foremost among the insights provided by the case studies is the notion that the greatest success comes to organizations that take a holistic approach to the front end. A successful approach to the front end effectively links business strategy, product strategy, and product-specific decisions. Forging these links requires a process that integrates such elements as product strategy, development portfolio, concept development, overall business justification, resource planning, core team roles, executive reviews, and decision mechanisms. The case studies suggest that firms employ two general approaches for achieving these links. Some companies rely on a formal process to lend some order and predictability to the front end. Other companies strive to foster a company-wide culture in which the key participants in front-end activities always remain focused on the following considerations: business vision, technical feasibility, customer focus, schedule, resources, and coordination. This cultural approach is more prevalent among the Japanese firms in the study; the U.S. firms tend to rely on formality of the front-end process. The case studies also suggest that the front-end approach must be compatible with the firm's product, market, and organizational contexts. For example, standardized approaches seem to work best for incremental innovations.     

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.     

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.     

Ordered to Innovate: A Longitudinal Examination of the Early Periods of a New Product Development Process Implementation in a Manufacturing Firm

Firms can generate rather long‐lasting growth spurts through continuous innovation. Moreover, literature suggests that, when growing organically, firm performance is enhanced through a revenue expansion emphasis encompassing new‐to‐the‐world or new‐to‐the‐firm physical goods or service augmentations. This organic approach usually outperforms cost‐reduction programs, which often yield minor improvements to existing products; or an emphasis on simultaneous revenue expansion and cost reduction. While this finding has the major implication that firms should focus and generate more radical new products for long‐term success, there is need for research that investigates how firms should implement the strategy change to organic growth via innovation. The authors present a case study, which suggests that in the short run, it might be better to commence a revenue expansion strategy by focusing on incremental new product development (NPD) efforts, rather than focusing too much on new‐to‐the‐world or new‐to‐the‐firm products. Moreover, analyses of the rich, multimethod data, collected over a two‐and‐a‐half‐year interaction with the focal firm, illustrates that to increase success prospects of an organic innovation strategy, managers should not only engage incrementally innovative new product projects initially, but also ensure proficiency in commercializing the new product with cross‐functional NPD teams. Thus, in early stages of organization transformation, the merits of the organic growth strategy will be swiftly demonstrated, the cross‐functional teaming skills are learned and tested, and the new strategy becomes institutionalized. While somewhat contradictory to other studies on this topic, this more evolutionary exploration provides a new perspective for organizational change, especially when a firm is ordered to innovate. In conclusion, the insights gleaned in this study shed light on the journey from stagnating firm to a successful serial innovator via formalized NPD process implementation.     

Product variety and firm survival in the microcomputer software industry

This article provides an analysis of product variety and scope economies in the microcomputer software industry by using detailed firm‐level and product‐level information on firms' bundling of functionalities over application categories and computing platforms. We find that the management of product variety through the way different application categories are integrated in products and the platforms on which these products are offered can be as important as the significance of scope economies at the more aggregated firm level. Specifically, we find that there is little evidence of firm benefits from economies of scope in production, but there is substantial evidence that products benefit from economies of scope in consumption. In addition, we find that firms with products that encapsulate more application categories perform better, and those with products that cover more computing platforms perform worse. Finally, changes in product variety through new product introductions improve firm performance, but extensions to existing products hinder the performance of the firm and the product. We conclude that research in scope economies can benefit from a more detailed model of the evolution of product variety that includes data and analysis at the firm level and at the product level. Copyright © 2004 John Wiley & Sons, Ltd.     

Success in Global New Product Development: Impact of Strategy and the Behavioral Environment of the Firm

Product innovation and the trend toward globalization are two important dimensions driving business today, and a firm's global new product development (NPD) strategy is a primary determinant of performance. Succeeding in this competitive and complex market arena calls for corporate resources and strategies by which firms can effectively tackle the challenges and opportunities associated with international NPD. Based on the resource‐based view (RBV) and the entrepreneurial strategic posture (ESP) literature, the present study develops and tests a model that emphasizes the resources of the firm as primary determinants of competitive advantage and, thus, of superior performance through the strategic initiatives that these enable. In the study, global NPD programs are assessed in terms of three dimensions: (1) the organizational resources or behavioral environment of the firm relevant for international NPD—specifically, the global innovation culture of the firm and senior management involvement in the global NPD effort; (2) the global NPD strategies (i.e., global presence strategy and global product harmonization strategy) chosen for expanding and exploiting opportunities in international markets; and (3) global NPD program performance in terms of shorter‐ and longer‐term outcome measures. These are modeled in antecedent terms, where the impact of the resources on performance is mediated by the NPD strategy of the firm. Based on data from 432 corporate global new product programs (North America and Europe, business‐to‐business, services and goods), a structural model testing for the hypothesized mediation effects was substantially supported. Specifically, having an organizational posture that, at once, values innovation plus globalization, as well as a senior management that is active in and supports the international NPD effort leads to strategic choices that are focused on making the firm truly global in terms of both market coverage and product offering. Further, the two strategies—global presence and global product harmonization—were found to be significant mediators of the firm's behavioral environment in terms of impact on performance of global NPD programs.     

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.