Does Your New Product Launch Strategy Have to Change if Your Product is Tech-Based versus a Design-Based Innovation?

CHALLENGE

Frequently, we want to get a new product out into the market as swiftly as possible so as to enjoy our returns as swiftly as possible, but costs accumulate swiftly. To mitigate initial costs, we could roll out less aggressively and let introduction costs accumulate slowly. Do we know when to accelerate our efforts, and when to go easy? It matters depending on whether the underlying innovation is technology-based or design-based, whether we are marketing to global markets and whether those market cultures tend to avoid or embrace uncertainty, and the importance of social status in those market cultures.

HOW THEY RESEARCHED IT:

This study examines the length and success of new product rollout strategies, based on variables including types of innovation as well as cultural factors. Fourteen new product innovations of cell phones were observed in eight European countries by 17 unique firms between 2000 and 2007. Innovations were either technology-based or design-based. Technological innovations improve functionality whereas design innovations improve stylistic product features. The researchers measured uncertainty avoidance (culture seeks ways to control future events via planning, institutions, etc.), power distance (sensitivity of citizens to social status differences), and individualism for each country. Hypotheses were created based upon each of the four factors and whether or not a long or short time lag for technological and design innovations would be more successful. Time lag was by the number of months elapsed between the month in which an innovation was initially introduced and the month in which the innovation was launched in another focal country.

WHAT HAPPENED?

The researchers found that a longer rollout strategy for a new product is more effective when the product is a technology-based innovation. In contrast, a shorter new product rollout strategy is more effective for design innovations. Further, longer rollouts lead to greater market share in high uncertainty avoiding markets for technology-based products, but shorter rollouts lead to greater market share for low uncertainty avoiding markets for design-based products. The researchers inferred that technological innovations require time for education and accommodation in cultures that are high in uncertainty avoidance. Regarding power distance, technology-based innovations were found to be more readily adopted in cultures with high sensitivity to social status, suggesting that technology adoption may facilitate status perceptions. Surprisingly, individualism and uncertainty avoidance did not affect performance and/or market share; this is not consistent with prior research that suggests individualist countries are more likely to adopt new products, in comparison to collectivist countries.

WHY MANAGERS SHOULD CARE:

Substantial investment is made in developing and launching new products and global competition pressures firms to rollout new products as quickly as possible. Many factors are considered, but lead time management is rarely considered. Regional cultural differences as well as the type of innovation should be factored in planning new product launch strategy. Manager must expect a longer rollout for technology-based products in uncertainty avoiding markets to give the market time to absorb complexities, although cultures with high status sensitivity might be quicker to adopt. Design-based rollouts can be accelerated. While the authors suggest no such speculation, a technology-based product with high design value could accelerate a successful rollout process. This would explain how Apple has been so successful regardless of where it introduces its iPod, iPhone or iPad.

CAN YOU HELP?

Does your actual experience support or refute these findings?

This research was done by Gaia Rubera and David A. Griffith at Michigan State University, and Goksel Yalcinkaya of the University of New Hampshire and published in Journal of Product Innovation Management. The authors want to thank Alatest.com, developed by International Consumer Services Sweden AB, for providing access to the data pertaining to the product category investigated.