Identification of Lead Users for Consumer Products via Virtual Stock Markets*

Newly launched products in the consumer goods and services markets show high failure rates. To reduce the failure rates, companies can integrate innovative and knowledgeable customers, the so‐called lead users, into the new product development process. However, the detection of such lead users is difficult, especially in consumer product markets with very large customer bases. A new and potentially valuable approach toward the identification of lead users involves the use of virtual stock markets, which have been proposed and applied for political and business forecasting but not for the identification of experts such as lead users. The basic concept of virtual stock markets is bringing a group of participants together via the Internet and allowing them to trade shares of virtual stocks. These stocks represent a bet on the outcome of future market situations, and their value depends on the realization of these market situations. In this process, a virtual stock market elicits and aggregates the assessments of its participants concerning future market developments. Virtual stock markets might also serve as a feasible instrument to filter out lead users, primarily for the following two reasons. First, a self‐selection effect might occur because sophisticated consumers with a higher involvement in the product of interest decide to participate in virtual stock markets. Second, a performance effect is likely to arise because well‐performing participants in virtual stock markets show a better understanding of the market than their (already self‐selected) fellow participants. So far, only limited information exists about these two effects and their relation to lead user characteristics. The goal of this paper is to analyze the feasibility of virtual stock markets for the identification of lead users. The results of this empirical study show that virtual stock markets can be an effective instrument to identify lead users in consumer products markets. Furthermore, the results show that not all lead users perform well in virtual stock markets. Hence, virtual stock markets allow identifying lead users with superior abilities to forecast market success.