Problems in Demand Estimation For a New Technology

It is difficult to estimate demand for a new product or service when a prelaunch test market is not practical. This is often the case for products that incorporate advanced technology. In this article, Robert Thomas reviews 29 different research methodologies used to measure demand for a new telecommunications service. He found several problems in how the research was designed and executed and offers a number of suggestions for improving the accuracy of demand estimates.     

Estimating Market Growth for New Products: An Analogical Diffusion Model Approach

There has been a lot of interest in diffusion models as a basis for prelaunch estimates of the sales of new products, and indeed there have been several models developed that have achieved fairly good acceptance by new product managers. One of the limitations of such models, however, has been the requirement that a sales history for the new product, even a short one from a test market, for example, be available to derive the parameters of the model. For some types of products—consumer durables, services, industrial products, for example—a sales history isn't available. In this article, Professor Robert Thomas suggests some steps toward the development of models that incorporate the attractive features of diffusion models. His approach is to use, in a systematic way, the sales histories of products that can be considered to have analogous features from a buyer's point of view. He illustrates the approach by forecasting the sales of a new service.     

An experience curve explanation of export expansion

Various explanatory variables have been identified in past research as determinants of the export behavior of firms. This article proposes that while many factors contribute to export behavior, experience curve effects are a major variable explaining the international activities of firms. The research reported here finds that younger firms are much more faborably disposed toward and active in international marketing than older firms. This is attributed to the competitive domestic situation younger firms encounter. Since older firms are often well entrenched in the domestic market, exporting may be the only alternative available to younger firms to obtain the production expertise and efficiency necessary to become a successful domestic competitor.     

Criteria changes across product development stages

This paper analyzes the criteria used at making go/no-go decisions at major points in the product-development process, taking each phase separately. First, the variation in the sets (market, product, and financial) criteria used from one phase to another is studied. Second, the specific criteria deployed are analyzed. The results of the decision-systems interviews conducted show shifts in weights among the three sets of criteria as the development cycle progresses. In terms of criteria, the product-development process can be summarized using the following three questions in this specific order: 1) “Is there a market for the concept?” 2) Can the concept be transformed into a concrete product?” and 3) “Can the concrete product be manufactured and marketed profitably?” The analysis of specific criteria reveals that the use of some criteria is restricted to one particular phase, whereas some are used at every decision-making point. Also, the orientation of the company in question will cause variation among specific criteria use and weighting. Some factors, however, are quite universally applicable.     

Risk in product development stages

Risk perceptions have an important bearing on the product-development process. The product-development literature reports risk-level and cost increases as a project advances in the R&D pipeline, but no quantification of these concepts is available. Data are provided on how people involved in the product-development process view the relationship between cost and risk escalation. The results are discussed in terms of how companies manage risk and uncertainty in product development.     

Segmenting U.S. firms for export development

In attempting to aid firms in their exporting efforts, various segmentation approaches have been developed by government agencies and research groups. Each of these segmentation schemes aims at the identification of specific export needs within different groups of firms. The four major approaches suggested in the literature propose to differentiate firms into groups based on the level of international activities, managerial attitudes, size, and service orientation of firms. The research presented in this article investigates these four segmentation approaches by applying them to common data collected from small and medium sized U.S. manufacturing firms and investigating their effectiveness in differentiating among groups of firms. The results indicate that the differentiation of firms according to their level of international activities is the most effective one of the four approaches investigated. Subsequently, various specific needs of exporting firms are presented and a redirection of current export promotion efforts is suggested.