Investigating the roles of online buzz for new product diffusion and its cross-country dynamics

This research investigates the roles of online buzz activities in influencing the speed and scope of new product diffusion and also the interactive dynamics of online buzz activities within and across countries. This study applies a diffusion model with two latent adopters and a log linear model to monthly sales and online messages collected from major online communication sites in five different countries. The empirical study evaluates two different roles of online buzz: (1) accelerating the new product diffusion process by influencing imitation tendency; and (2) expanding potential market size. In addition, the empirical study shows the interactive dynamics of online buzz activities within and across countries, and provides some information on what encourages online buzz activities, and how they interact with each other within a country and across countries.     

Incorporating heterogeneous adoption rates in new product diffusion: A model and empirical investigations

This paper presents a stochastic model of the adoption process for durables that explicitly incorporates heterogeneity in adoption rates among the consumers. The model assumes that the individual adoption times follow the Weibull distribution. Heterogeneity in adoption rates is represented by the gamma distribution. The resulting Burr distribution is more general than the Bass model, fits data as well as the Bass model estimated using OLS regression, and has parameters that can be used to make inferences about individual adoption behavior without being influenced by spurious aggregation effects.Special thanks are due to Professor Donald Lehmann for providing numerous suggestions and encouragement at all stages of the study. Thanks are also due to Professors David Schmittlein and Richard Colombo and two anonymous reviewers for helpful comments on an earlier draft of the paper.     

Tacit meaning in disguise: Hidden metaphors in new product development and market making

This article explores the role of metaphor in product development processes and market making. Based on a sociocognitive perspective of innovation dynamics and required learning by market actors, the potential of metaphors for mental model development during new product development (NPD) processes is investigated. Three roles for metaphors as cognitive focusing devices for the co-evolution of producers' and consumers' mental models are inferred: mental model communication, mental model matching, and mental model creation. These roles are illustrated by examples that reinforce the need for creativity in applying metaphors as cognitive focusing devices in NPD and market making.     

Familiarity and competence diversity in new product development teams: Effects on new product performance

When developing new products, most firms use cross-functional teams, but research on the effect of functional diversity on new product performance returns heterogeneous results. We propose a measure of competence diversity that is more comprehensive than the common functional diversity proxy. Empirical findings, based on a survey of 142 product and sales managers, support the improved predictive validity of our scale. We further observe a mediating effect of the instrumental use of information in the competence diversity–new product performance relationship. Finally, we discuss the moderating effect of familiarity among team members on the relationship between competence diversity and the instrumental use of information. All authors contributed equally to this article and are listed in random order.     

Signaling quality with new product preannouncements: Vaporware and the role of reference quality

This research develops a signaling game that captures the essential dynamics of new product preannouncements (preannouncement/launch/market feedback). New product preannouncements are preannouncing firms' formal efforts to inform their competitors and customers about the future availability, superior quality and introductory price of their upcoming new products. In a market, two firms compete (entrant preannounces and incumbent responds) across two periods. The entrant has private information about the true quality of a new product (the incumbent and customers do not know it), and this informational asymmetry provides the entrant with a preannouncement dilemma. Should the entrant preannounce and, if the entrant does, should the entrant tell the truth about quality? Preannouncements often get customers who might buy now from a competitor to wait for a higher quality to be available. Therefore, the entrant may have an incentive to bluff the quality of a new product in order to enhance the likelihood of customers' waiting. However, because the quality exaggeration is also likely to increase customers' quality expectations, the entrant may suffer a significant sales penalty if the entrant does not deliver the promised quality. Through the signaling game, this paper derives conditions under which such a bluff does/does not put the preannouncing firm at risk (i.e., this paper derives the separating/pooling equilibria that are the focus of signaling games).     

Can a good organizational climate compensate for a lack of top management commitment to new product development?

This study examines the marketing—R&D relationship at different levels of top management commitment to determine if such commitment moderates the effect of the climate between departments on new product performance. Four key variables of relationship marketing-cooperation, communication, trust, and internal commitment-serve to measure the interfunctional climate, and the measures of top management commitment rely on both top management support and risk aversion. According to surveys of R&D directors from 178 Spanish innovative firms pertaining to 345 products, low top management commitment enhances the importance of effective cross-functional communication flows for new product performance. Furthermore, this unique research (1) uses a relationship marketing approach to investigate intrafunctional relationships, (2) measures new product performance as a formative construct, and (3) includes top management commitment as a possible moderator.     

Experiential product attributes and preferences for new products: The role of processing fluency

This study shows how experiential product attributes that are part of the design of new products can create compelling consumer experiences. Following processing-fluency theory, when consumers attend to experiential attributes (sensory or affective), they should process them fluently (i.e., spontaneously and with little effort); however, consumers should process functional attributes always deliberately, irrespective of whether or not they attend to them. An experiment testing the fluency hypothesis confirms that the processing of experiential attributes, but not functional attributes, depends on attention focus. When consumers focus their attention on specific experiential features, products with experiential attributes are evaluated more positively. In contrast, the processing of functional attributes does not depend on attention focus. Further confirming the fluency hypothesis, the experiment also shows that presentation duration does not affect the processing of experiential attributes but does affect the processing of functional attributes. The authors discuss how marketers can use experiential product design in market segmentation and innovation.     

Entrepreneurial actions and optimistic overconfidence: The role of motivated reasoning in new product introductions

Optimistic overconfidence (OO), that is, being certain of success only to end up disappointed, represents a potentially catastrophic error. However, few studies have identified which entrepreneurial actions are associated with it. To explore this issue, we examined 55 small companies and found that OO of product success was positively related to introducing products that required more resources and were more pioneering. Furthermore, satisfaction with company performance had a curvilinear (U-shaped) relationship with overconfidence. Both high and low levels of satisfaction were associated with greater OO in product introductions. In addition, the bias was positively correlated with entering hostile environments; that is, environments that are characterized by intense competition that threatens a firm and its introductions. Contrary to expectations, however, OO was negatively associated with environmental dynamism; defined as environments that embody frequent and large changes. The research also compared general knowledge overconfidence to OO, concluding that each represents a distinct bias with distinct effects.     

A two-generation new product model by considering forward-looking customers: Dynamic pricing and advertising optimization

Nowadays, one of the challenges of the firm managing multi-generation products is the forward-looking behavior of customers. Anticipating the introduction of a newer generation affects the demand and sales volume of the current generation and next generation. In this research, we investigated how to efficiently structure the pricing and advertising strategies of a firm that launches a two-generation new product to a market populated by forward-looking customers. Two thresholds were determined on the advertising expenditure of Generations 1 and 2. Our analysis proposed that the optimal pricing path of Generation 1 was monotonically decreasing or increasing and, then, decreasing. The optimal pricing of Generation 2 followed a concave curve. A heuristic solution method was proposed to solve the numerical examples. Findings revealed that, with increasing the customers' forward-looking behavior, the firm's profit would decrease. In the presence of forward-looking customers, it is beneficial for the firm to reduce the price of Generation 1 and allocate more budget to advertise Generation 2. Among other results, the advertising expenditure was shown to be positively affected by the number of potential customers and advertising effectiveness. Also, the length of the planning horizon had a negative effect on the advertising expenditure. A higher discount rate could lead to lower price, while higher advertising effectiveness and length of the planning horizon would result in higher price. Further, the results showed that, with increasing the word-of-mouth advertising effectiveness, the firm should increase the advertising expenditure and decrease the price firstly and, afterwards, decrease the advertising effort and increase the price.     

Lead users and the adoption and diffusion of new products: Insights from two extreme sports communities

Lead users are proposed as a valuable resource for marketers in terms of the (1) development, (2) adoption, and (3) diffusion of new products. We present the first consumer study to provide evidence that the latter two suggestions are justified. First, we find that lead users demonstrate stronger domain-specific innovativeness than more “ordinary” users. Second, lead users perceive new technologies as less “complex” and might therefore be better prepared to adopt them. Third, we find that lead users demonstrate stronger opinion leadership and weaker opinion seeking tendencies. Finally, we discuss the implications of our findings for the marketing of new products.     

Distance from core competences and new export survival: Evidence from multi‐product exporters

We study the determinants of the survival of new export products of multi‐product firms. We use micro‐level data from Chile to estimate linear fixed‐effects and non‐linear survival models to show that a measure of “distance” between a firm's new export and its previous export basket is a negative and significant determinant of the survival of the new export, especially during its first year. Our interpretation of this finding is that exports further away from firms’ core competences have lower chances of survival in exports since it is more difficult for firms to achieve competitiveness in them. Our results suggest that country‐level diversification, at least through existing firms, should be gradual.     

A spatial interaction model for deriving joint space maps of bundle compositions and market segments from pick-any/J data: An application to new product options

We propose an approach for deriving joint space maps of bundle compositions and market segments from three-way (e.g., consumers x product options/benefits/features x usage situations/scenarios/time periods) pick-any/J data. The proposed latent structure multidimensional scaling procedure simultaneously extracts market segment and product option positions in a joint space map such that the closer a product option is to a particlar segment, the higher the likelihood of its being chosen by that segment. A segment-level threshold parameter is estimated that spatially delineates the bundle of product options that are predicted to be chosen by each segment. Estimates of the probability of each consumer belonging to the derived segments are simultaneously obtained. Explicit treatment of product and consumer characteristics are allowed via optional model reparameterizations of the product option locations and segment memberships. We illustrate the use of the proposed approach using an actual commercial application involving pick-any/J data gathered by a major hi-tech firm for some 23 advanced technological options for new automobiles.     

A Micromodel of New Product Adoption with Heterogeneous and Forward-Looking Consumers: Application to the Digital Camera Category

We develop an empirical model for the adoption process of a new durable product that accounts for consumer heterogeneity as well as consumers forward-looking behavior. Accounting for heterogeneity is important for two reasons. As the mix of consumers with different preferences and price sensitivities could change over time, firms need to update their marketing strategies. Further, it allows for a variety of shapes for the aggregate adoption process over time. As prices for durable and technology products fall over time with firms continually introducing enhanced products, consumers may anticipate these prices and improvements and delay their purchases in the product category. Forward-looking consumers optimize purchase timing by trading off their utilities from buying the product and their expectations on future prices, quality levels, and brand availability. Such forward-looking behavior will result in price dynamics in the marketplace as price changes today influence future purchases. And it results in different shapes of the new product sales pattern over time by influencing the time to take-off. We show how the parameters of our model can be estimated using aggregate data on the sales, prices, and attributes of brands in a product category. We apply our model to market data from the digital camera category. Our data are consistent with the presence of both heterogeneity and forward looking behavior among consumers. At the product category level, we are able to decompose the effects of the entry of Sony into primary demand expansion and switching from other brands. At the brand level, we find that there exist several segments in the market with different preferences for the brands and different price sensitivities leading to differences in adoption timing and brand choice across segments. For a given brand, we show how the changing customer mix over time has implications for that brands pricing strategies. We characterize how price effects vary across brands and over time and how price changes in a given time period influence sales in subsequent periods. Model comparison and validation results are also provided.     

Managing the transition to the new agile business and product development model: Lessons from Cisco Systems

Through an in-depth case study of Cisco Systems, this Executive Digest finds that companies face two broad challenges when transitioning to the agile product development model. The first is identifying and helping business units and engineering teams adopt this method; the second is developing new management practices that are compatible with and can sustain the agile development practices. Although extant literature has conducted many analyses on these two challenges, there still exist gaps in the research of the agile development method. Herein, we explore how Cisco Systems addressed these two challenges followed by a discussion of the broad implications of adopting the agile development method. This research deepens our understanding of how to adopt and lead the agile development process.     

A comparative analysis of location and non-location-bounded strategic asset seeking in emerging and developed market MNEs: An application of new internalization theory

Do emerging market (E)MNEs have a stronger strategic asset seeking FDI orientation than developed market (D)MNEs? If so, what are the properties of the strategic assets they actually seek and are they similar or dissimilar to those of DMNEs? Drawing from new internalization theory, we show that lying concealed within some mainstream EMNE models are important predictions regarding differences in the location-boundedness properties of the strategic assets sought by EMNEs compared with DMNEs. Using multinomial logit modelling on 2414 international M&A deals, we explore how acquirer characteristics shape location-bounded (trademark) and non-location bounded (patent) strategic asset seeking choices. In general, we find evidence that EMNEs have a comparatively stronger patent but weaker trademark seeking orientation than DMNEs. We discuss implications for EMNE related theory, focusing on the qualitative differences in asset seeking orientation between EMNEs and DMNEs.     

Research on satisfaction recovery from service failure due to attitude defect and unfair price: A dynamic and longitudinal evaluation model based on customer win-back management

Customer win-back is a cognitive process of satisfaction changing from a low level to a high level with service recovery strategies as the stimulus. Because prior research tends to view service recovery strategies as a static antecedent, it is difficult to analyze and observe how the recovery strategies affect satisfaction and repurchase intention dynamically. Moreover, not enough attention has been directed to the relationship between reasons of customer loss and recovery strategies. This research conducted a field experiment involving a 2 × 2 between-subjects design (defects of service attitude and unfair price × tangible recovery and intangible recovery strategies). From a longitudinal and dynamic perspective, this study has produced the following key results: First, there are significant differences in satisfaction and purchase intention between the four groups categorized by specific reasons of customer loss. Second, recovery strategies may have non-linear effects on customer’s satisfaction. Lastly, based on the prospect theory and disappointment theory, we discuss important managerial implications of the function curves fitted between customer satisfactory (before customer loss and after implementation of customer winback strategy) and purchase intention.