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.     

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.     

Decomposing Product Innovativeness and Its Effects on New Product Success

Does product innovativeness affect new product success? The current research proposes that the ambiguity in findings may be due to an overly holistic conceptualization of product innovativeness that has erroneously included the concepts of product advantage and customer familiarity. This article illustrates how the same measures have often been used to assess product advantage with product innovativeness and product innovativeness with customer familiarity. These paired overlaps in measurement use are clarified in this research, which decomposes dimensions of product innovativeness along conceptual lines into distinct product innovativeness, product advantage, and customer familiarity constructs. To further support this decomposition, structural equation modeling is used to empirically test the distinctions. The measurement model supports the conceptual separation, and the path model reveals contingent effects of product innovativeness. Although product innovativeness enhances product advantage, a high level of innovativeness reduces customer familiarity, indicating that product innovativeness can be detrimental to new product success if customers are not sufficiently familiar with the nature of the new product and if innovativeness fails to improve product advantage. This exercise in metric development also reveals that after controlling for product advantage and customer familiarity, product innovativeness has no direct effect on new product profitability. This finding has strong implications for firms that mistakenly pursue innovation for its own sake. Consideration of both distribution and technical synergy as driving antecedents demonstrates how firms can still enhance new product success even if an inappropriate level of innovativeness is present. This leads to a simple but powerful two‐step approach to bringing highly innovative products to market. First, firms should only emphasize product innovativeness when it relates to the market relevant concepts of product advantage and customer familiarity. Second, existing technical and distribution abilities can be used to enhance product quality and customer understanding. Distribution channels in particular should be exploited to counter customer uncertainty toward newly introduced products.     

Team Design Thinking,Product Innovativeness,and the Moderating Role of Problem Unfamiliarity

Team design thinking in new product development (NPD) refers to a set of design-oriented principles that can be embedded in the everyday routines of NPD teams. We theorize that team design thinking enables NPD teams to develop more innovative products––products that are useful and novel––by reducing the routine and cognition-based inertia that constrains the team’s innovativeness. Through a study of 247 NPD projects, we investigate the relationships between team design thinking, product utility, and product novelty. Further, we also explore whether the team’s unfamiliarity with product contexts influences these relationships. Findings show that team design thinking is positively associated with useful products in both familiar and unfamiliar contexts, but that team design thinking is associated with product novelty only in familiar contexts. Findings also suggest that team design thinking can be framed as a dynamic capability that addresses routine and cognition-based inertia by expanding the organization’s knowledge resource base, particularly in familiar contexts. A key implication of this research is that team design thinking will influence product utility in a variety of situations, but its influence on product novelty will be evident primarily in familiar contexts.     

Retailers' Adoption Decision of New Consumer Durables

In today's competitive environment, members of the market chain, such as retailers and suppliers, are becoming increasingly powerful. It has been established in the packaged goods area that the ability to get new products on the shelves' is an essential factor in the success of a new product. However, no research exists to date that relates variables investigated in packaged goods contexts to retailers' adoption decision of new consumer durables. The present study focused on the dimensions that influenced the new product adoption decision by 291 retailers of consumer durables by exploring the relative importance of 26 adoption criteria across seven product categories. The results largely supported previous findings but simultaneously extended that body of knowledge. For example, six dimensions characterized the new product adoption decision in our sample of Dutch retailers. We discuss implications of this study and provide directions for future research in this area.     

The Impact of Product Innovativeness on the Link between Development Speed and New Product Profitability*

A review of the literature reveals that the relationship between development speed and new product profitability is not as strong and straightforward as conventional wisdom suggests. A number of studies show positive results, others show mixed results, and some present no evidence of a relationship. In other words, the valence of the link between development speed and new product profitability is unclear at this time. Therefore, this study investigates whether or not speeding new products to market has positive or negative effects on new product profitability. Prior research shows that product innovativeness influences both development speed and new product profitability. This raises the question of whether increasing speed is equally successful in improving profitability across new products that differ in their degree of innovativeness. Therefore, this study also investigates the moderating effect of product innovativeness on the relationship between development speed and new product profitability. The results from a survey‐based study of 233 manufacturers of industrial products in the Netherlands reveal an inverted U‐shaped relationship between development speed and new product profitability. The findings also show that the optimal point is different for two new product types—product improvements and line additions—that vary in their innovativeness. These results provide an onset for the development of a decision tool that helps managers to determine how much to spend on accelerating the development of individual new products and how they should allocate that spending across products in their new product portfolio.     

The Impact of Product Innovativeness on Performance

While many writers and strategists maintain that innovation is important, research has often demonstrated that product innovativeness does not have a major impact on the rate of success in the marketplace. Elko Kleinschmidt and Robert Cooper demonstrate that the relationship between product innovativeness and commercial success is U-shaped. That means that both high and low innovativeness products are more likely to be more successful than those in-between. The authors suggest that past research has not allowed for this non-linear relationship and that their data show that moderately innovative, middle-of-the-road products are less likely to succeed when measured by a number of performance criteria. They explore a number of implications of these results.     

Consumer Innovativeness and the Use of New versus Extended Brand Names for New Products*

Despite the importance of branding to new product success, little research has been conducted on how individual adoption orientation might affect brand name preferences. This paper draws on the diffusion literature to investigate how consumer innovativeness affects consumer response to alternative branding strategies (i.e., new vs. extended brands, for new products). The results of an empirical study found that consumer innovativeness has a greater effect on new product evaluations for new brand names relative to extended brand names. Also, results indicate that highly innovative consumers evaluate new products with new brand names more favorably than brand extensions. Furthermore, consumer confidence in the new product was found to mediate the effects of consumer innovativeness and its interaction with brand name type on new product evaluation. Implications include not only giving greater managerial consideration to using new brands but also supporting the chosen branding strategy with appropriate promotional efforts for respective adopter groups.     

The Form of Relationship between Firm‐Level Product Innovativeness and New Product Performance in Developed and Emerging Markets

This study compares the new product performance outcomes of firm‐level product innovativeness across a developed and emerging market context. In so doing, a model is constructed in which the relationship between firm‐level product innovativeness and new product performance is anticipated to be curvilinear, and in which the nature of this relationship is argued to be dependent on organizational and environmental factors. The model is tested using primary data obtained from chief executive officers and finance managers in 319 firms operating in the United Kingdom, an advanced Western market, and 221 firms from Ghana, an emerging Sub‐Saharan African market. The model is assessed using a structural equation model multigroup analysis approach with LISREL 8.5. In the United Kingdom and Ghana, the basic form of the relationship between firm‐level product innovativeness and business success is inverted U‐shaped, but the strength and/or form of this relationship changes under differing levels of market orientation, access to financial resources, and environmental dynamism. While commonalities are identified across the two countries (market orientation helps firms leverage their product innovativeness), differences are also observed across the samples. In Ghana, access to financial resources enhances the relationship between product innovativeness and new product performance, unlike in the United Kingdom where no moderation is observed. Furthermore, while U.K. firms leverage product innovativeness to their advantage in more dynamic environments, Ghanaian firms do not benefit in this way: here, high levels of innovation activity are less useful when markets are more dynamic. If the study's findings generalize, there are a number of implications for managers of both emerging and developed market businesses. First, managers in both developed and developing market firms should focus on determining and managing an optimal balance of novel and intensive product innovativeness within the context of their unique institutional environments. Second, for emerging market firms, a market orientation capability helps businesses leverage local market intelligence, enabling them to compete with multinational giants flocking to emerging markets, but typical developed market learning approaches may be insufficient for multinational firms when seeking to compete in emerging markets. Third, for emerging market firms, access to finances helps deliver product innovation success (although this is not the case for developed market firms, possibly due to strong financial institutions). Finally, unlike developed market firms, burdened by institutional voids at home, emerging market firms appear to be less capable of competing on an innovation front in more dynamic market conditions. Accordingly, policymakers in emerging markets should consider identifying ways to help businesses raise market orientation levels, and seek to create conditions that enhance access to financial capital (e.g., direct financing, matching grants, tax rebates, or rewarding firms that innovate creatively and intensely). Likewise, since environmental dynamism is likely to be a growing issue for emerging markets, efforts to help firms become more adept at keeping up with more agile developed market counterparts are needed.     

Product Innovativeness Dimensions and Their Relationships with Product Advantage,Product Financial Performance,and Project Protocol

A considerable body of research informs the relationship of product innovativeness with firm and environmental variables as well as the impact of product innovativeness on product financial success. While providing significant insight, the extant literature exhibits conflicting findings that raise questions as to how, specifically, product innovativeness contributes to product financial performance. This study ties together several streams of research related to the product innovativeness construct to enhance understanding of the product innovativeness—product financial performance relationship. The product innovativeness construct is deconstructed by conceptualizing the relationships among three dimensions of product innovativeness: technological discontinuity, marketing discontinuity, and customer discontinuity. Product innovativeness is distinguished from product advantage, and the relationships among product innovativeness dimensions, product advantage, and product financial performance are empirically tested. The results reveal that, indeed, product innovativeness consists of three separate dimensions that exhibit no or moderate correlations with product advantage. Furthermore, product advantage positively and marketing discontinuity negatively influence product financial performance. Finally, the study also examines how project protocols impact the product innovativeness dimensions. Project protocols, also known as product definitions, describe the general parameters a new product should exhibit (i.e., target segments, product functions and features, base technology, pricing, communication and distribution channels, and required resources) as well as the priorities of the general parameters. Because they guide product design and set priorities and have been found to be a dominant driver of product financial performance, project protocols are important. The present study enhances understanding of how project protocols influence the dimensions of product innovativeness, finding that project protocols positively impact product financial performance indirectly through product advantage and marketing discontinuity.     

The Effect of Sales Force Adoption on New Product Selling Performance

Although several studies have suggested that the sales force is a major contributing factor to new product success, few studies have focused on new product adoption by the sales force, particularly with respect to its relationship with selling performance. The present article presents empirical evidence on the impact of sales force adoption on selling performance. We defined sales force adoption as the combination of the degree to which salespeople accept and internalize the goals of the new product (i.e., commitment) and the extent to which they work hard to achieve those goals (i.e., effort). It was hypothesized that the impact of sales force adoption on selling performance will be contingent on supervisory factors (sales controls, internal marketing of the new product, training, trust, and supervisor's field attention), and market volatility. Therefore, this article also provides evidence of the conditions under which sales force adoption of a new product is more or less effective in engendering successful selling performance. The hypothesized relationships were tested with data provided by 97 high technology firms from The Netherlands. The results show that sales force adoption is positively related to selling performance. This finding suggests that salespeople who simultaneously exhibit commitment and effort will achieve higher levels of new product selling performance. Outcome based control, internal marketing and market volatility are also positively related to new product selling performance. The effect of sales force adoption on selling performance is stronger where outcome based control is used and where the firm provides information on the background of the new product to salespeople through internal marketing. Training and field attention weaken the adoption‐performance linkage. These findings may indicate that salespeople in The Netherlands interpret training as “micromanaging” and field attention as “looking over their shoulder.” We conclude with implications of our study for research and managerial practice.     

Technological Innovativeness as a Moderator of New Product Design Integration and Top Management Support

Many war stories, as well as a number of empirical research studies, point to the value of design integration and top management support in new product development (NPD) efforts, where design integration is conceptualized as the coordination of product and process design activities performed by various organizational groups. However, some emerging evidence suggests that these aspects of program management are not equally valuable in all NPD contexts. Furthermore, the benefits of these approaches may not extend to all dimensions of NPD performance. This article addresses these issues as they relate to technological innovativeness. The author reports the results of a research study designed to (1) assess the direct contributions of design integration and top management support to several dimensions of NPD performance, and (2) identify potential moderating influences of technological innovativeness on these direct effects. A survey of 136 NPD projects drawn from firms representing most of the major U.S. manufacturing industries provides data for the study. The overall goals of the study were to amplify our understanding of management's role in NPD and to further the development of contingency theory explaining new product success. The results indicate that design integration is positively associated with higher design quality in NPD, but it is not significantly linked with better financial performance. In addition, design integration appears to be an important influence on achieving NPD time goals, but only in cases of high technological innovativeness. This result suggests that increased design integration produces its greatest impacts when development processes are full of uncertainty. Top management support is positively associated with better time‐based performance, design quality, and financial performance on the whole. However, a significant interaction effect suggests that high levels of top management support are ineffective in securing good financial performance in high technologically innovative environments. Other forces appear to be at work in these circumstances, making top management support less important. The article discusses the implications of these findings for management practice, a contingency‐oriented view of NPD processes, and future research.     

NPD Planning Activities and Innovation Performance: The Mediating Role of Process Management and the Moderating Effect of Product Innovativeness

The aim of this study is to investigate the effects of planning and control on the performance of new product development (NPD) projects. It is hypothesized that (1) thorough business planning at the beginning of a project creates a basis for proficient project and risk planning; (2) the proficiency of project planning, risk planning, and process management activities each improves innovation performance directly; (3) the relationship of planning and success is mediated by process management; and (4) the strength of these relationships is moderated by uncertainty, as determined by the degree of innovativeness. To test the hypotheses, data from 132 NPD projects were collected and analyzed. A measurement model was used to establish valid and reliable constructs, a path model to test the main effects, and a multiple-moderated regression analysis for the moderator hypotheses. The results suggest that the proficiency of project planning and process management is important predictors of NPD performance. Specifically, project risk planning and goal stability throughout the development process are found to enhance performance significantly. Business planning proves to be an important antecedent of the more development-related planning activities such as project planning and risk planning. Additionally, the results lend support to the hypotheses regarding the mediating role of process management in the planning–performance relationship. Project planning and risk planning support the quality of process management and thus impact NPD performance indirectly. Only to a limited extent are the strengths of these relationships moderated by the degree of innovativeness of the NPD project.     

Information,Promotion, and the Adoption of Innovative Consumer Durables*

The diffusion of innovative new products is critically dependent on the transmission of relevant information to potential adopters. Existing research indicates that the relative effectiveness of different communication tools depends on the type of information being communicated. Written and verbal communication tools can be effective when consumers make adoption decisions based on search attributes. However, when adoption depends on experience attributes, marketers must find ways to effectively expose consumers to these attributes. In this paper the authors explore the effectiveness of promotional incentives in motivating consumers to engage in behaviors that should increase their understanding of an innovation's experience attributes. To the authors' knowledge, the research described here is the first published study of the relative effectiveness of different promotional vehicles in stimulating adoption of a consumer durable. The empirical analysis is based on data collected in a real‐world experiment involving 614 households. Just over half of these households received a free DVD movie disc as an incentive to participate in the study. The authors assigned the participating households to four treatment groups of 100 households each and a control group of 214 households. The households in the treatment groups received one of four promotional offers that featured some form of a $50 monetary incentive. These promotional offers differed in the degree to which they encouraged behavior that exposed consumers to the experience attributes of a DVD player. After one month the authors surveyed these households again to determine how many purchased a DVD player in the preceding month. An analysis of this experimental data reveals that all four monetary promotions significantly enhanced the probability of adoption. In particular, the average adoption rate among the households receiving one of the monetary incentives was 41%. In contrast, none of the households in the control group reported purchasing a DVD player. Promotions that paid consumers for specific behaviors that precede purchase were no less effective than a coupon that reduces the purchase price by an equivalent amount. In addition, promotions that directly exposed consumers to experience attributes were more effective than promotions that simply provided consumers with the opportunity to learn about experience attributes. Finally, the gift of a free complementary product (a DVD movie) enhanced the effectiveness of three of the four monetary promotions. The authors close with a discussion of managerial implications and directions for future search.     

The Role of Salary and Incentives in the New Product Function

It seems reasonable to expect that a company's reward systems would recognize the importance of the new product function. It also seems reasonable that those systems should take into account the importance of cross-functional teams. Unfortunately, current reality does not meet those reasonable expectations. Laurence P. Feldman presents the results of a 1994 PDMA membership survey on the compensation of new product professionals. This study updates and extends the information collected in his 1990 PDMA survey, and thus meets four objectives: tracking changes in compensation levels since the 1990 survey; assessing the effects of various factors on compensation; examining the structure of non-salary financial incentives; and obtaining information on the extent and types of nonfinancial incentives used with cross-functional teams. The survey results indicate that compensation of new product professionals increased by 9.6% between 1989 and 1993. This compares unfavorably with a Labor Department benchmark of 14.7%. Survey findings indicate that the compensation of technical or scientific people does not differ significantly from that of marketing personnel. A firm's industry classification has a greater influence on compensation level than does a person's role in the new products process. Even more important are such factors as number of people supervised, length of time with the firm, and education level. Respondents indicate that performance-based financial incentives play a minor role in overall compensation. Such incentives gain importance as you move up the ranks of the organization, accounting for slightly more than 20% of total compensation at the vice presidential level. Despite the benefits of using cross-functional teams, compensation programs typically do not reward team efforts. Less than 20% of the respondents who served on such teams reported that any portion of their compensation was directly attributable to their team effort. In most cases, the new product professional's performance is evaluated by a functional manager rather than the team leader or project leader. In place of financial rewards for contributions to a team effort, companies often use nonfinancial rewards such as plaques, hoping to minimize the effect of possible errors in judging performance.     

The Role of the User in Successful New Product Development

Abstract: The purpose of the study reported in this paper is to examine the view that one of the reasons for the poor performance of British companies in certain engineering industries may be the relatively low technical sophistication of its domestic customers. Data for the study were collected predominantly by mail questionnaire from customer organisations in Great Britain and West Germany. The results of the study suggest that British customers are significantly less receptive to new technology than their West German counterparts, and less demanding of new technology from their suppliers. Given the importance of the domestic customer to new product development activity this appears to be a major problem for British suppliers, and suggests an alternative approach to public policy designed to improve the innovative performance of British Industry in these sectors.     

The Role of Market Research in the Development of New Consumer Products

Managers today face the twin challenges of producing better results, faster than ever before. Robert Davis presents a number of lessons on how market research can enhance a typical new product development and decision plan. His central theme is the disciplined use of very focused market research to make better and faster decisions about a new product throughout its development. These lessons are based on his thirty years of experience in market research, mostly in the new products work conducted at Procter & Gamble.     

Continuity,Change, and New Product Performance: The Role of Stream Concentration*

Product development teams often face the challenge of designing radically new products that cater at the same time to the revealed tastes and expectations of existing customers. In new product development projects, this tension guides critical choices about continuity or change concerning product attributes and team composition. Research suggests these choices interact, but it is not clear whether they are complements or substitutes and if the level of change in one should match or not the level of change in the other. In this article, we examine the interaction between product attribute change, team change, and a new team-level factor, which we term stream concentration, as it captures differences among team members in terms of familiarity with the knowledge domain of the new product being developed. We measure stream concentration as team members’ prior NPD experience within a given set of products and assess its impacts on the management of change in new product development projects using longitudinal data from the music industry. We analyze 2621 new product development projects between 1962 and 2008 involving 34,265 distinct team members. Results show that stream concentration is a critical factor in new product development projects that, together with product attributes and team composition, affects new product performance. We discuss implications for research and practice.     

The Role of Market and Technical Information Generation in New Product Development

Firms are investing an increasing amount of time and resources to gather information about market and technology in new product development (NPD). Yet there is a lack of consistent understanding of whether such costly information generation activities can improve product outcomes. More importantly, it is unclear how the benefit of market information and technical information generation may differ and how they may jointly impact new product performance. This study examines the role of market and technical information generation in NPD in three ways: (1) It contrasts the effects of market and technical information generation on product outcomes; (2) it identifies conditions that moderate the effects of market and technical information generation and further investigates how the moderating effects differ for these two types of activities; and (3) it examines the joint effect of market and technical information generation to understand potential synergies between them. Using survey data at the NPD project level, we find that market information generation has an inverted U‐shaped effect on new product advantage, whereas the effect of technical information generation follows a U‐shape. Furthermore, these effects are moderated differently by two conditions: a firm’s R&D intensity that influences NPD projects’ need for different types of information, and the use of multidisciplinary teams that affects the degree to which information can be shared and utilized to improve product design. The findings provide important implications for organizational learning and shed light on how to manage information generation activities to achieve NPD success.