When do the stock market returns to new product preannouncements predict product performance? Empirical evidence from the U.S. automotive industry

Substantial research has examined how stock market reactions to marketing actions affect subsequent marketing decisions. However, prior research provides limited insights into whether abnormal stock returns to a marketing action actually predict the future performance resulting from that action. This study focuses on new product preannouncements (NPPAs) and investigates the relationship between short-term stock market returns to an NPPA and the post-launch new product performance under various industry and firm conditions. Findings based on a dynamic panel data analysis of 208 NPPAs in the U.S. automotive industry between 2001 and 2014 reveal that stock returns associated with an NPPA are not an appropriate forward-looking measure of future product performance. However, under specific conditions (i.e., when the preannouncement is specific, the preannounced new product has low innovativeness, the preannouncing firm has a high reputation and invests heavily in advertising, and the preannouncement environment is less competitive), abnormal stock returns to NPPAs actually predict the future performance of new products. Thus, this study extends the marketing–finance and innovation literature with its focus on the conditions that affect the predictive power of immediate stock returns for the future performance of new products.     

Who should be in power to encourage product program innovativeness,R&D or marketing?

The degree to which the research and development (R&D) department is regarded as more important for product innovativeness than is marketing, with greater potential to influence innovation decisions, appears ambiguous. This study examines how R&D’s level of power, relative to marketing’s, affects product program newness and meaningfulness, and thus market and financial performance. Relying on the motive of enhancement, this study reveals two underlying mechanisms to explain considerations of R&D and marketing depending on R&D’s power. A multi-informant sample of top executives and subordinates from 229 firms indicates distinct effects of R&D’s relative power on product program newness and meaningfulness. Specifically, R&D power exhibits a positive linear relationship with product program newness but a nonlinear effect with meaningfulness. To expand market and financial performance, firms should seek to generate meaningful product innovations through a moderate level of relative R&D power, particularly when their environments are characterized by high competitive intensity.     

The effects of extrinsic product cues on consumers’ perceptions of quality, sacrifice, and value

The authors report the results of two experiments designed to test the effects of extrinsic cues—price, brand name, store name, and country of origin—on consumers’ perceptions of quality, sacrifice, and value. The results of the experiments support hypothesized linkages between (a) each of the four experimentally manipulated extrinsic cues and perceived quality, (b) price and perceived sacrifice, (c) perceived quality and perceived value, and (d) perceived sacrifice and perceived value. The results also indicate that the linkages between the extrinsic cues and perceived value are mediated by perceived quality and sacrifice. R. Kenneth Teas is a distinguished professor of business in the Department of Marketing, College of Business, Iowa State University. He received his Ph.D. from the University of Oklahoma. His areas of research include consumer behavior and decision processes, marketing research methods, services marketing, and sales force management. His articles have been published in numerous journals, including theJournal of Marketing, theJournal of Marketing Research, theJournal of Consumer Research, theJournal of the Academy of Marketing Science, theAmerican Journal of Agricultural Economics, theJournal of Retailing, theJournal of Personal Selling and Sales Management, theJournal of Occupational Psychology, andIndustrial Marketing Management. Sanjeev Agarwal is an associate professor in the Department of Marketing, College of Business, Iowa State University. He received his Ph.D. from The Ohio State University. His areas of research include multinational marketing strategies, modes of foreign market entry, and sales force management. His articles have been published in theJournal of Consumer Research, theJournal of International Marketing, International Marketing Review, Industrial Marketing Management, theJournal of International Business Studies, theJournal of the Academy of Marketing Science, and theJournal of Personal Selling and Sales Management.     

It’s not easy being green: the effects of attribute tradeoffs on green product preference and choice

Despite widespread pro-green attitudes, consumers frequently purchase non-green alternatives. One possible explanation for this value–action gap is the tradeoffs that green products often force on their users: higher prices, lower quality, and/or reduced performance. The current study uses conjoint analysis to uncover the attribute preferences of car and TV buyers when green attributes are negatively correlated with conventional attributes. These attribute preferences are then used to predict choice among sets of green and less green alternatives currently sold in the marketplace. Strong preferences for green products are found when tradeoffs are not apparent, but preference shifts significantly to less green compromise alternatives when the actual attribute tradeoffs are considered. Although general preference is reduced by tradeoffs, a green product offering some compensatory advantage on a conventional attribute does attract a broader spectrum of consumers, while only “dark green” consumers are willing to pay the price to go green when the product offers few compensatory qualities. In all cases, however, predicted buyers of the greenest technologies offset some of their environmental benefits by choosing more energy-thirsty specifications on negatively correlated conventional attributes. Managerial and public policy implications of the findings are then discussed.     

Does innate consumer innovativeness relate to new product/service adoption behavior? The intervening role of social learning via vicarious innovativeness

Empirical studies provide an inconsistent picture of the relationship between an innovative personality predisposition (i.e., innate consumer innovativeness [ICI]) and innovative behavior (i.e., new product adoption behavior). Such inconsistencies suggest intervening variables that may mediate the relationship have not been considered. Using data from a panel of consumers (n = 296 in a cross-sectional phase, n = 147 in a matched, two-phase longitudinal analysis), we find that ICI does not directly influence adoption behavior but does so indirectly through two of three components of vicarious innovativeness (modeling and engagement in word of mouth but not exposure to advertising). Furthermore, despite the evidence that consumers’ decision processes differ for service versus product adoption, extant studies largely ignore the role of ICI in new service adoption. Our findings suggest that vicarious innovativeness plays a similar intervening role in service contexts. Finally, divergent operationalizations of adoption behavior (ownership, relative time of adoption) appear to perform equally well.

A longitudinal analysis of supplier involvement in buyers’ new product development: working relations,inter-dependence,co-innovation,and performance outcomes

Drawing on social exchange theory, this study develops a longitudinal theoretical framework of supplier participation in buyers’ new product development (NPD) activities. The study focuses on the longitudinal temporal dynamics of supplier involvement in buyers’ new product development and postulates that working relations and inter-dependence impact suppliers’ attitudes toward co-innovation and suppliers’ co-innovation behaviors. Applying this framework to a 10-year longitudinal dataset from the North American automotive industry, the drivers of the escalation of supplier involvement in buyers’ NPD over time and the effect of this involvement on innovation performance, buyer sales performance, and supplier sales performance are identified. The results indicate that buyer–supplier communication, suppliers’ anticipated long-term returns, suppliers’ trust of a buyer, and supplier–buyer inter-dependence all play a significant role in changing supplier attitudes toward co-innovation and supplier involvement in a buyer’s NPD. Further, the study also shows that supplier involvement in buyer new product development is mutually beneficial for both the buyer and the supplier as it increases performance of both parties. Performance returns are actually greater for suppliers than for buyers. As such, this study contributes to both relationship management and new product development literature streams, as well as providing practical direction to manufacturers as to how they can increase suppliers’ involvement in their NPD to benefit both parties.