Applying Hedonic Pricing Models and Factorial Surveys at Parker Pen to Enhance New Product Success

Walking the path from new product concept to successful commercialization is a tightrope act. Product developers must carefully balance a variety of factors, including predictions of consumer price sensitivity as well as which combination of product attributes will be most valued by the intended market. A well-chosen mix of analytical tools can enhance a firm's chances of accurately predicting market demand. Chuck Tomkovick and Kathryn E. Dobie describe how the integration of two product attribute assessment techniques–hedonic pricing models and factorial surveys–allows product designers to more accurately gauge price sensitivity and market receptivity to new product designs. They also describe how these analytical tools were used to improve decision-making in product development at the Parker Pen Company, and they discuss the role these tools can play in facilitating the transition from concept to commercialization. Hedonic price analysis is an econometric method for determining the value purchasers place on attributes of existing products. In product development, factorial surveys are used to identify the value members of the target market place on new product concepts and prototypes. When used in combination with identified hedonic prices, the responses to a factorial survey allow product developers to predict consumer willingness-to-pay for various combinations of new product attributes. Following development of prototypes for two new product lines, product developers at the Parker Pen Company used hedonic pricing models and factorial surveys as a means for reducing demand uncertainty and for clarifying what consumers were willing to pay for various combinations of product attributes that were under consideration. The integration and use of these techniques involved a five-step process of target market identification, product attribute identification, hedonic price estimation, administering of the factorial survey, and determination of consumer willingness-to-pay. The results of these analyses allowed Parker Pen to better focus product development efforts on those design elements for which test market customers indicated both demand and willingness-to-pay. The Parker Pen Company found hedonic pricing and factorial surveys useful for predicting both the rate and the degree of change in consumers' marginal utility for specific product attributes. The usefulness of these techniques also extends beyond the early stages of new product conception. These techniques are helpful in the development and implementation of dynamic new product marketing mix strategies, including such elements as product design, pricing, channel selection, and promotion.     

Beijing meeting puts China on the tourist map

In Beijing from 28 February–4 March 1983. 1000 delegates from 45 countries came together for the first China International Tourism Conference. Sponsored jointly by the China National Tourism Adminis- tration and the Civil Aviation Administration of China, this conference marked an important point in the development of the tourist industry of that country. Chuck Y. Gee, Dean of the School of Travel Industry Management at the University of Hawaii, and author of an article on the tourist industry in China in this issue, attended the conference.     

耶鲁大学——美国股市：监管不可放松

自2005年夏季以来,美国财政部长保尔森及一群华尔街和美国商界高管们,一直在发出警告,称美国资本市场的竞争力正不断削弱。他们一直在争取放宽《萨班斯-奥克斯利法》的某些规定;改革美国会计文化,提倡使用广泛的会计准则而非细则规定;约束对企业不当行为的诉讼;以及整合零散的监管结构。然而,这些综合举措在其基础和时机方面都存在一些严重缺陷。     

MAINBANKS AND INVESTMENT EFFICIENCY IN FINANCIAL DISTRESS

We explore the effects of mainbanks on investment efficiency in financial distress. The previous literature argues that firms with close financial relationships with banks have lower costs of financial distress because of a reduced underinvestment problem. Although benefits may accrue to such close relationships, we contend shortcomings are possible as well. A firm in financial distress without a mainbank may be forced to reduce investment or sell assets to a buyer who has a higher value. However, for a firm with a mainbank, this disciplinary force is weakened. To firms with poor investment opportunities, the presence of mainbanks may actually induce an overinvestment problem. The empirical findings reported here are consistent with this idea. JEL classification: G31, G33, G34.     

Perspective—Riding the Wind: Managing New Product Development in an Age of Change

New product development (NPD) has never been more challenging or rewarding than it is today. With the dawning of the new millennium, new product developers now find themselves in an “age of change,” the likes of which the world has never known. The rate of change is numbing, if not stupefying for many business people. With the winds of change blowing at near gale force intensity levels, this is clearly a time for NPD professionals to pursue new product and market strategies that are anchored on sound business fundamentals. This article begins with a brief review of the Product Development & Management Association's 1998 International Research Conference held in Atlanta. The theme for the conference was “Achieving Excellence in New Product Development and Management.” The article then offers a reflective look at seven NPD themes that could dominate new millennium business thinking and offer guidance to those seeking new product success. The article's first theme discusses why NPD is increasing in importance. The second theme outlines key NPD building blocks which NPD champions must bolster for new product success. The third theme explores the value in conceptualizing NPD output in items of “turns per decade.” The fourth theme champions the notion that continuous quality improvement is an integral part of NPD's contribution to a firm. The fifth theme explains why product elimination is an essential element in the innovation process. Theme number six reminds readers that fun and optimism are essential and commonly overlooked ingredients for sustaining NPD achievement. The seventh theme states that product development professionals build credibility and successful careers by delivering on promises made. Innovation opportunities embedded within each theme are explored from both firm‐level and individual developer‐level perspectives. In building the case for their themes, the authors initially provide a rationale for NPD's growing stature and importance. Then they suggest NPD strategies that firms can implement with high likelihood of success. The article concludes with suggested actions that individual developers can undertake to bolster their own careers while simultaneously strengthening the NPD profession.     

Cultural practices and life insurance consumption: An international analysis using GLOBE scores

This cross-disciplinary study examines how national culture practice affects cross-country variations in life insurance consumption. To proxy for national culture dimensions, we use the refined measure of the GLOBE project which includes several additional cultural dimensions not included in Hofstede's analysis. Using 1966–2004 data across thirty-eight countries, our analysis reveals a strong relationship between life insurance consumption and the practice scores of in-group collectivism as well as power distance. These relationships continue to hold, even after controlling for other country-level variables such as national income, expected inflation rate, banking sector development, investor protection index, dependency ratio, life expectancy, and religion.