Successive product generations: financial implications of industry release rhythm alignment
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ORIGINAL EMPIRICAL RESEARCH
Successive product generations: financial implications of industry release rhythm alignment Torsten Bornemann 1
&
Cornelia Hattula 2 & Stefan Hattula 3
Received: 12 October 2018 / Accepted: 31 October 2019 # Academy of Marketing Science 2019
Abstract A central question for firms releasing successive generations of a product is whether they should pursue a market-driven approach and align own product releases to existing industry-level patterns. While an alignment with industry patterns enables firms to capitalize on general market receptivity, it may also entail dilution and competitive interference effects. Using data on the consumer electronics and automotive industries, we show that the effectiveness of such alignment depends on two additional timing-related decisions: the firm’s release regularity for successive product generations and its preannouncement timing. Firms benefit from alignment to the industry only if they release successive generations in a regular manner (to create anticipation) and refrain from early preannouncements (to avoid competitive counteraction). For all other combinations of release regularity and preannouncement timing, not aligning to the industry rhythm leads to higher levels of firm performance. Taken together, our findings enable a nuanced view of the interplay of timing-related launch decisions that provides actionable guidance for managers. Keywords Successive product generations . Launch timing strategy . Industry release rhythm alignment . Release regularity . New product preannouncements
Introduction Launching new products is a complex endeavor, and the criticality of this phase in the new product development process cannot be underestimated. If managed successfully, it “changes a project from a resources consumer to a revenue generator for the firm” (Calantone and Di Benedetto 2012, p. 526). The
V. Kumar served as Area Editor for this article. * Torsten Bornemann [email protected] Cornelia Hattula [email protected] Stefan Hattula [email protected] 1
Department of Marketing, Goethe University Frankfurt, Theodor-W.-Adorno-Platz 4, 60323 Frankfurt am Main, Germany
2
Marketing, Sales, Tourism & Sports Department, ISM International School of Management, Olgastrasse 86, 70180 Stuttgart, Germany
3
Marketing Department, University of Stuttgart, Keplerstrasse 17, 70174 Stuttgart, Germany
challenges of such an endeavor, and the ensuing launchrelated decisions, however, vary with the innovativeness of the to-be-launched product (Hultink et al. 1998). When launching a major innovation, the firm typically faces little or no competition but has to educate and inform the market about unknown features and functionalities (Lee and O’Connor 2003). In contrast, when launching product improvements into an established market, the level of competition is higher and a key challenge lies in getting through to customers despite high levels of information clutter: “With the speed of new technology comes the speed o
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