134 J PROD INNOV MANAG

1985;3:134-144

0000

New Industrial Product Performance: The Effects of Market

Characteristics and Strategy*

Eunsang Yom and Gary L. Lilien

There’s no need to state again the cumplexity of the

problem of achieving high performance in the new Introduction
product process. What we do need is a framework to
help sort out the cumplexity, and that is what Eun-
sang Yuun and Gary Lilien provide in this article.
They first differentiate between original and refur- The ong-term health of many organizations is tied to
mulated new pruducts. Then they examine how pat- their ability to innovate- to provide existing and new
terns of R&D and marketing activities determine mers with a continuing stream of new products
short and lung-run success. ana services. Under modem conditions of competition,
it is becoming increasingly hazardous not to innovate.
The firm that does not maintain a program of managed
innovations can quickly find itself behind competition.
Although innovation is important, it is risky and
costly. Booz, Allen & Hamilton [3] estimate that al-
most half of the resources spent on new products are
allocated to products that are never successful in the
market. They also report that of over 13,000 new prod-
ucts of 700 U.S. manufacturers, approximately one-
third have not been successful. A survey of 148 com-
panies by Hopkins [ 171 indicates that only half of the
companies have achieved successful performance in
two-thirds or more of their new industrial products. In a
study of 122 industrial product innovations, Cooper [S]
reports that for every 100 products that are fully devel-
oped, only 60 become commercial successes.
There are good reasons to believe that successful
new product development will be even harder in the
future. These factors include the shortage of new prod-
uct ideas, the fragmentation of markets, increasing
governmental restriction, capital shortages, and shorter
product life cycles.
Thus, management is faced with a dilemma: It must
develop new products to survive, yet the odds are
*This study was funded by the Institute for the Study of Business Mar-
kets at The Pennsylvania State University, by the Novaction Company, and
weighted against their success, The recognition of this
by the Center for Research in Management Science of ESSEC, France. situation is instrumental in stimulating managements’

0 1985 Elsevier Science Publishing Co., Inc. 0737-678218S/$3.30

52 Vanderbilt Ave., New York, NY 10017
NEW PRODUCT PERFORMANCE J PROD INNOV MANAG 135
19853: 134-144

nature of the sample and data collection, we consider

BIOGRAPHICAL SKETCH this to be an exploratory study.
Eunsang Yoon is Assistant Professor of Marketing at Auburn
University. He received his Ph.D. from Pennsylvania State
University in March of 1984 and served as a research associ-
ate for the Institute for the Study of Business Markets at Penn
State from June 1984 to June 1985. His research interests A Model of Innovation Performance
include new product planning, business marketing, and man-
agement science applications in marketing.
Gary L. Lilien is Research Professor of Management Science
and Research Director of the Institute for the Study of Busi-
Our investigation centers around a set of research hy-
ness Markets at Pennsylvania State University. He pre-
viously taught at the Sloan School of Management at MIT. potheses derived from the conceptual model on new
He holds a BS, and MS, and a DES from Columbia School of product performance in Exhibit 1. The model indicates
Engineering. He has published widely in the areas of new the interactions between R&D and marketing invest-
product planning, business marketing, and management sci- ments, between short-term and long-term perfor-
ence in marketing. He is co-author of two books, Market
mance, and between innovation and marketing rivalry
Planning for New Industriul Products (Wiley, 1980) and
Marketing Decision Making: A Model Building Approach
in the market. The model also suggests that product
(Harper and Row, 1983). He was Departmental Editor, Mar- type/innovation strategy is related to R&D/marketing
keting, for Management Science, serves on the editorial programs and the market environment, and that
board of the Journal of Marketing, and is Editor-in-Chief of R&D/marketing decisions, market characteristics, and
the journal Interfaces. product type/innovation strategy all influence new
The authors are very grateful to Jean-Marie Choffray for his product sales performance. This conceptual model of
contribution to this research. They would also like to thank new product innovation performance is an extension of
C, Merle Crawford, Robert R, Rothberg, and anonymous
the new product R&D diffusion model, suggested by
reviewers for their useful comments on a previous draft of
Yoon and Lilien [23] in developing a new product
this paper.
launch-time decision framework. It is also based on the
results of empirical research on the determinants of new
industrial product performance [ 1, 6, lo]. From the
conceptual model, the following hypotheses have been
selected for their normative value: each has important
implications for new industrial product market intro-
duction strategy.
strategic concern and academic research on new prod-
Our discussion below will focus on two general
uct innovation. In a study of 125 firms, Crawford [ 121
classes of new products that we will call “original”
found that managements are increasingly recognizing
and “reformulated” products. These are defined as
that a new product R&D and marketing strategy should
follows:
be explicit and central elements of corporate strategy.
Empirical research has suggested the reasons for new
product success and failure, and what separates suc-
Original new products (ORNP’s). ORNP’s are
cesses from failure [6, 7, 11, 13, 17, 21, 221. For
technological breakthroughs, often relying on
normative purposes, key dimensions of new product
technologies never before used in the industry.
strategy were identified [ 121, and scenarios for suc-
They are referred to elsewhere [3] as “new prod-
cessful innovation were also suggested [4]. But rela-
uct lines” and “new to the world” products.
tively few empirical investigations have focused on
testing the relationships between a firm’s new product
R&D/marketing/launch strategy and the new industrial Reformulated new products (RFNP’s). RFNP’s
product performance [ 1, 6, 91, are product line extensions or modifications.
In the next section, we suggest a conceptual model Here, the innovating firm modifies physical prod-
of industrial new product performance, based on find- uct characteristics. Such modifications reduce
ings from recent innovation research. We then test sev- costs or enlarge the range of possible usage. They
eral hypotheses and develop implications for new prod- are referred to in other contexts as “cost reduc-
uct market introduction strategies. Because of the tions, ’ ’ ’ ‘improvements, ’ ’ and “additions” [3].
136 J PROD INNOV MANAG E. YOQN AND G. L, LILIEN
1985;3:134-144

Exhibit 1. A Model of Innovation Performance

R&D and Sales Market

Marketing Declslons Performance Characteristics

El R&D

Investment

I
I
Short-Term
Performance
[e.g., First
Year Sales,
Market Share
or ProfIt}
Ellnnovatlon

Rivalry

Long-Term
Performance

I El
(e.g., ROI or
Marketing Growth into a Marketing
Product Group)
Investment Rwalry

lnnovat#on Strategy Objectwes

- Owersiflcatron

- Product Line Expansion

Product Type and Innovation Strategy Objective

Our research hypotheses, below, focus on many key comespond, roughly, to Cooper’s [lo] “high budget,
differences between these general classes of products. diverse strategy” and “low budget, conservative strat-
egy,” respectively.

Hypothesis I (HI)
Hypothesis 2 (H2)
ORNP’s and RFNP’s are heterogeneous in key strate-
gic aspects of their R&D and marketing activities. The initial sales performance of a new product innova-
Comment 1. This hypothesis is a dichotomous ver- tion is closely associated with the product’s com-
sion of the empirical finding that the degree of newness petitive marketing program strength and market
is one of the most important factors affecting a new characteristics, including the stage of the product life
product’s success/failure 17, 14, 161. In particular, we cycle and market structure.
expect that ORNP’s will provide the means for business Comment 2. Empirical studies show that new
line expansion for firms looking for diversification, product success depends directly on product/market
whereas RFNP’s will provide the mechanism for firms variables, including ( 1) the degree of newness and mar-
looking for product line expansion. These categories keting efficiency, (2) the vulnerability of existing
NEW PRODUCT PERFORMANCE J PROD INNOV MANAG 137
1985;3: 134- 144

brands, (3) the long-term attractiveness of the product

market, and (4) the ease of distribution access and other The Data Base
profit/sales-growth/share relationships [7, 161. The re-
lationship between market concentration and the suc-
cess of a.ne w product has been one 0 f the logical deriva-
In 1980, the Center for Research in Management Sci-
tives of oli gopoly theory [ 151 . But in some empirical
ence at ESSEC, 1 in conjunction with The French Min-
studies, the inverse relationship between the market
istry of Industry and the Novaction Company,2 launch-
share of a new product and concentration was not sup-
ed a project to provide the basis for studying new indus-
ported 1191.
trial product innovation patterns,
The products studied represent a convenience sam-
ple from a list of 500 industrial firms registered in
France, drawn randomly from a national directory in
proportion to the importance of top priority sectors for
French national policy. Firms were contacted in a two-
Hypothesis 3 (H3) step procedure. They were selected after a telephone
The initial sales performance (operationalized as mar- interview, checking whether they had introduced a new
ket share after 1 year) of a new product is related to the product in the last 5 years. Next, selected firms were
timing of the product launch, with initial success relat- contacted sequentially and asked to participate in the
ed to launch delay via a bell-shaped curve. study, after receiving a statement of the project objec-
Comment 3. A premature entry may risk pushing tives. The acceptance rate was 83%, and the final sam-
an underdeveloped product into the marketplace, with ple size was 112 products of 52 firms. Data were col-
possible negative feedback from customers and poor lected by personal interview, requiring about 3 man-
initial performance. On the other hand, potential sales days per product. Although these products were devel-
will be sacrificed if entry is delayed too long, and poor oped mainly by French companies, most were mar-
initial sales will result as well. Kalish and Lilien [ 181 keted in several major industrial countries, including
studied this issue for a government demonstration pro- the United States.
gram for photovoltaics. Yoon and Lilien [23] also de- The following data were collected for this project for
veloped a launch -timing decision model based on the each product studied.
proposit ion that underly ing controllable dimensi ons
determining the performance of a new product innova- R & D process. Cost structure, financing, dura-
tion can be grouped as R&D efficiency and marketing tion, methods of product evaluation, types of pro-
efficiency. tection, etc.

Market introduction strategy. Basis for decision,

success or failure, evaluation criteria, initial mar-
keting mix, etc.
Hypothesis 4 (H4)
A new product must gain rapid market acceptance and Marketpenetration. Sales of the new product and
achieve a satisfactory market share within a short peri- its prime competitors, market structure, changes
od of time if it is to become a market leader. If a new in the marketing mix, etc.
product does not realize a significant market share
quickly (within a year or so), then its chance of becom-
Other data included managerial judgments about
ing a leader is slim.
how the new product performs relative to competition,
Comment 4. This hypothesis suggests that the des-
information on the objectives set for the new product,
tiny of a new industrial product is determined in the first
few years following its introduction into the market [5].
Most new product-planning models, designed to fore- IESSEC is Cole Sup&ewe des Sciences Economiques et Cammercial-
cast and diagnose short-term new product performance
es* 2Novaction Company, a leading European consulting firm and a mem-
before and after test marketing, explicitly or implicitly ber of the Institute for the Study of Business Markets at the Pennsylvania
accept this proposition [2]. State University, provided access to these data for this research.
138 J PROD INNOV MANAG E. YOON AND G. L. EILIEN
1985;3:134-144

2 . have higher R&D cost for basic research and lower

R&D cost for prototype development;
Exhibit 2, Major Industrial Sectors Represented
3 . are in markets where potential buyers show lower
in the Data Base
satisfaction with existing products;
Number of Percent 4 . are developed by firms with higher production ex-
Industrial sector new products of total pertise/lower marketing expertise;
5 . have higher degree of innovativenessllower market
Electronics, electrical
competition;
equipment, scientific
43 38
6 . are in an earlier stage of the product life cycle,
instrumentation
Chemistry, biochemistry 17 15 smaller number of competitors/lower market con-
Construction, earth moving 15 14 centration ratio;
Transport, services 11 10 7 use more direct selling/infrequently
l use a high price
Metal processing, metallurgy 10 9
strategy.
Food, agriculture 9 8
Miscellaneous 7 6 Note that these results describe the circumstances
Total 112 100 and strategies of products of these two types. There are
many differences. To the extent that these differences
reflect the sound judgment of successful decision
makers, the results may be used normatively as guides
for successful launch strategies [20]. For example, a
firm will have a higher chance of success with an origi-
the way these objectives evolved over time, and how nal new industrial product when the firm has a strategic
they were achieved. plan to expand its business line, has the capability to
We have reproduced the distribution of the sample invest for basic research, and has high expertise in pro-
across industrial sectors in Exhibit 2. The electronics duction. It will also have an improved chance for suc-
and scientific instrumentation area is well represented, cess if the target market is less satisfied with existing
reflecting both national policy emphasis and the high products, is less competitive, and is in an earlier stage
level of innovation in this sector. The miscellaneous of the product life cycle.
sector includes a heterogeneous set of new industrial
products, ranging from computer software to tank
engines.
H2: Short-Term Performance: First-Year Market
A.

Share
Hypothesis 2 deals with short-term performance of new
Analysis Results industrial products. The results of H 1 showed that
ORNP’s and RFNP’s are quite dissimilar. Therefore,
we study them separately below.
HI: Comparison between Original and Reformulated
We use analysis of variance as the mechanism here,
Products
where the criterion (dependent) variable is first-year
Of the 112 products in the data base, 100 had suffi- market share. That variable is then related to indepen-
ciently complete data for the items under test _Of these, dent variables,3 as shown in Exhibit 3. In Exhibit 3A,
41 items are ORNP’s and 52 items are RFNP’s. We we see that for ORNP’s, 86% of the variation in the
performed a (two-tailed) t-test of two group means, first-year market share is explained by five categorical
along with an equal variance test between ORNP’s and variables and their interactions.
RFNP’s, to test for strategic differences between these Four market situation variables are important in ex-
groups. The complete details of that comparison are plaining the initial market share achievement of an
available elsewhere [24], and those results can be sum- original new industrial product: the relative competit-
marized as follows: compared with reformulated new
industrial products, original new industrial products

1. are more diversification oriented/less expansion 3The heavily skewed disttibution of the independent variables led us to
oriented; transform them into O- 1 dichotomous variables to stabilize the analysis.
NEW PRODUCT PERFORMANCE J PROD INNOV MANAG I39
1985;3: 134- 144

iveness level of the market (DGRCM), the stage in the

Exhibit 3. ANOVA Results on First-Year
product life cycle (LFCLA), market growth rate (GR-
Market Share
WTH), and the number of competitors (BLCOM).
First-year market share (dependent variable) First-year market share is higher when

A. URNP Modela
Source df ANOVA SS F value p > F l the degree of ComDetitiveness
U
in the market is
L

low 9
Model 8 28592.2 14.35 O.oool

DGRCM 1 8996.5 36.12 0.0001 9 the product-class life cyc e is in the introductory
LFCLA 1 6091 .o 24.45 WOO1
stage;
GRWTH 1 4906.0 19.70 0.0003
BLCUM 1 3857.8 15.49 0.0001
MEF2 1 1991.1 7.99 0.0112 l the market growth rate is low;
MEF2WRWTH 1 1070.9 4.30 0.0527 . 11

MEF2*LFCLA 1 865.9 3.48 0.0786 l the number of competitors 1s small,

MEF2WGRCM 1 813.0 3.26 0.0876

EIT0r 18 4483.4
The level of relative efficiency of the firm’s market-
Total 26 33075.6 ing strategy influences the new product’s performance
level not only directly but also by interacting with mar-
aMean square (model) = 3574.0; mean square (error) =
249-I; R square = 0.864. ket condition variables, such as degree of com-
petitiveness of the market, stage of the product life
B. RFNP Modela
cycle, and market growth rate.
Source df ANOVA SS F value p > F
Higher marketing efficiency, such as in advertising,
Model 10 16766.0 11.86 0.0001 leads to better market share performance. Its influence
is particularly important when
ATS 1 5516.7 40.86 O.UOOl
MEF3 1 3212.6 23.79 0.0001
OBJEX z 3063 .O 21.67 0.0001
BLCOM 1 709.4 5.25 0.0310 l the market growth rate is lower;
DGRCM 1 462.2 3.42 0.0766
l the product-class life cycle is in the introductory
MEF3 *‘OBJEX 1 2209.5 16.36 0.0005
DGRCM*LFCLA 4 1592.6 2.82 0.0467 stage;

Error 25 3534.2
l the degree of competitiveness in the market is
Total 35 20300.2 lower.
aMean square (modeI) = 1676.6; mean square (error) =
141.4; R square = 0.826.
Variable Definitions: (DGRCM) Relative degree of competi- An important implication of these results is that be-
tiveness of the market, compared with the other markets: 1 indi-
cates strong or average; 2 indicates weak. (LFCLA) Stage of cause the success of the original new industrial product
product life cycle at the product’s market launch time: 1 indicates depends heavily on uncontrollable market variables,
introductory stage; 2 indicates growth stage. (GRWTH) Market
growth rate in the existing market (more or less than 10%).
the selection of the market opportunity, as well as the
(BLCOM) Number of competitors before market launch (more or product itself, is critical to the success of ORNP’s.
less than 5%). (MEF2) The average of the scores of the marketing
In Exhibit 3B for RFNP’s, 83% of the variation in
efficiency of advertising (MEFAD) and of distribution-support-
ing advertising (MEFDA); both were scaled over ranges from 1 to the first-year market share is explained by seven cate-
7 {much less or much more efficient, respectively; broken at gorical variables and their interactions.
scale-median). (MEF3) The average of the scores of the market-
ing efficiency of advertising (MEFAD), distribution-supporting The potential buyer’s attitude toward existing prod-
advertising (MEFDA), and distribution effort (MEFDI). All three ucts (ATS), the marketing efficiency level of the inno-
were scaled over a range from 1 (much more efftcient) to 7 (much
less efficient). (OBJEX) Degree of importance of the strategic vating firm (MEF), the strategic objective of product
objective-to expand the product group: 1 indicates most impor- line expansion (OBJEX), the number of competitors in
tant; 4 indicates least important. (ATS) Potential buyers’ satisfac-
tion with the sewice level of existing products: 1 indicates com-
the market (BLCOM), and the competitiveness level of
pletely satisfied; 2 indicates totally dissatisfied. the market (DGRCM) are important in explaining the
initial market share performance of a reformulated new
140 J PROD INNOV MANAG E. YOON AND G. L. LILIEN
1985;3:134 144

industrial product. First-year market share is higher sion of the product group. The effect of marketing effi-
when ciency on market share performance is higher when the
expansion of the product group is an’ important objec-
tive for the new product.
l potential buyers’ satisfaction with the “service” The stage in the product life cycle has a negative
level of existing products is lower; effect on first-year performance, particularly in a
strongly competitive market.
l marketing efficiency in advertising and distribu- In summary, those variables related to market poten-
tion is perceived to be higher; tial and structure are critical for explaining short-term
performance for ORNP’s, whereas those variables re-
l a strategic objective for the reformulated new lated to the level of customer satisfaction with the exist-
product is for expansion of the product group; ing products and the strategy-product type fit are partic-
ularly critical for RFNP’s. The relative marketing
l the number of competitors in the market is small; efficiency of the innovating firm for the new product
diffusion are important for the new product’s initial
l the competitiveness level of the market is low. market share performance, both for ORNP’s and
RFNP’s. Among marketing instruments, advertising
was found to be an important factor for ORNP’s,
The marketing efficiency level influences the new whereas distribution effort is important for RFNP’s.
product’s performance level not only directly but also The structure of these relationships is summarized in
through interaction with the strategic objective: expan- Exhibit 4.

Exhibit 4. The Determinants of First-Year Market

Share for Original and Reformulated New Industrial Products

the New Product

Cycle

1
Market
Stage

dMar*elGronn

Rate

Number of
Competitors
In the Market

I_ : important in both ORNP’s and RFNP’s

: mportant particularly for ORNP’s

-C--I-II. . Important particularly for RFNP’s
NEWPRODUCTPERFORMANCE JPRODINNOV MANAG 141
1985;3:134-144

H3: Launch-Time Delay and Initial Market Share H4: Lung-Term Peeurmance: Growth
into a Product Group
Here, we investigate the hypothesis that the initial sales In studying short-term performance, we used analysis
performance of a new product is related to the timing of of variance because the dependent variable, first-year
the product launch: for example, the sales performance market share, was a continuous variable. For long-term
increases up to a certain point and decreases thereafter performance, we used a dichotomous variable-
with respect to a delay of launch time [ 18, 231. We whether or not the product developed into a product
analyze the market share of the new product during the
group-as the measure of success. Our analytical plan,
first launch year and relate it to the time lag between the then, is to use discriminant analysis to identify charac-
decision to develop the product and the introduction of teristics that distinguish between those products that do
the new product into the marketplace. We only include (and do not) develop into a product group.
a small subset of the data base here, however, noting In Exhibit 6, we again run separate analysis for
that (1) the new product items that realized 100% mar- ORNP’s and RFNP’s. We see that the following factors
ket share are not appropriate for our analysis because are important in determining the long-run success of a
they are monopoly items, and (2) many product items (reformulated or original) new industrial product inno-
that realized low levels of initial market share, not more vation (measured in terms of whether it grows into a
than lo%, say, were generally unsuccessful (H2) and product group):
are inappropriate for our analysis.
To test this hypothesis on a homogenous data base,
we separated the data into original and reformulated a the degree of expertise in marketing activity;
successful new products where, to be successful, a
product had to both achieve an initial market share of at the marke ting effectiveness for the new product
least 10% and grow into a product group in the long diffusion;
run.
In Exhibit 5A, first-year market share of the suc- the stage of product life cycle.
cessful original new products shows an increasing trend
at first, but a decreasing trend later, as the launch time Potential buyers’ satisfaction level with existing prod-
is delayed. This curving trend is statistically tested in ucts is also important for the long-run performance of a
Exhibit 5C, Equation 1, by fitting a quadratic function reformulated product.
The regression analysis shows that the first-year market Finally, we investigated the relationship between
share of (successful) ORNP’s is explained by a quad- short-term and long-term success. We found a signifi-
ratic function of launch-time delay. On the other hand, cant, positive correlation between the chance for a
frrst-year market share of (successful) RFNP’s monoto- product to grow into a product group and first-year
nically decreases with launch-time delay, as shown in market share. (Spearman’s rho = 0.24 for ORNP’s and
Exhibit 5B. This down-sloping trend is statistically 0.2 1 for RFNP’s.) This suggests that, as expected,
tested in Exhibit 5C, Equation 2, through linear and short-run success is a positive determinant or predictor
log-linear functions. of long-run success.
This analysis leads us to conclude that H3 is partially
supported by a limited (and expost) data base of new
industrial products; for (successful) ORNP’s , first-year
market share increases with delay of launch time up to a Conclusions and Implications
certain point and decreases thereafter. For RFNP’s,
however, we found that initial market share perfor-
mance decreases with delay of new product launch
time. This contrast between ORNP’s and RFNP’s may This research has focused on the development of a con-
reflect differences in product-market situations: in par- ceptual model of the determinants of new industrial
ticular, the market is relatively better developed for product success and has derived several testable hy-
RFNP’s than for ORNP’s; the longer an incremental potheses from that model. When comparing ORNP’s
innovation takes to get to market, the greater its risk of with RFNP’s, we found that these product types had
failure due to changing market conditions, competitive different objectives (e.g., ORNP’s are more diversifr-
response, or further technological advances _ cation oriented), different marketing programs (e.g.,
142 J PROD INNOV MANAG E. YOON AND G. L. LILIEN
1985;3:134-144

Exhibit 5. Original and Reformulated New Products and Regression Models

A. ORNP’s Relationship between Launch-Time Delay and First-Year

Market Share: Successful Industrial New Products

80 A

First Y0ar

Market

Share (%) 4. -

0.‘
0
20 0

A/’
0
A

0
/’
0 - /’
0 10 20 30 40 50 60

DELAY (months)

B. RFNP’s Relationship between Launch-Time Delay and First-Year Mar-

ket Share: Successful Industrial New Products

80

60
First Year

Market

Share (%) A

20 40 60 80 100 120

DELAY (months)
NEW PRODUCT PERFORMANCE J PROD INNOV MANAG 143
1985;3: 134- 144

C l Regression Models
Relationship between Launch Time Delay and First-Year Market Share: Successful Industrial New Products

ORNP’s That Achieved Short-Run and Long-Run Successes

F value R square

Equation 1. FSTSH = 2.354 Delay - 0.024 Delay2 30.90 0.925

(4.09)a (-2.00)~ (0.002)
(O*Ol)b (O.lO)b

n=7

RFNP’s That Achieved Short-Run and Long-Run Successes

F value R square

Equation 2.1. FSTSH = 46.609 - 0.344 Delay 6.50 0.482

(7.3O)u (-2.55)a (0.038)
(0.00)~ (0.04)b

Equation 2.2. log(FSTSH) = 3.846 - 0.012 Delay 12.85 0.647

(23.91)~ (-3.59)~ (0.009)
(O.OO)b (0.01)b

n=9
c
where FSTSH is the market share of a new product realized during the first launch year, and
Delay is the time lag between the decision of physical product development and new product
launch into the market place.

a( ) indicates t value for the hypothesis (parameter = O),

b( ) indicates significance level.

ORNP’s used more direct selling), and are introduced industrial product. These are market-situation variables
in different environments (ORNP’s are introduced in and R&D/marketing-strategy variables. We see vary-
markets where potential buyers show lower satisfaction ing levels of success for different product types in dif-
with existing products). ferent market situations here. And strategy variables
New product sales performance is closely related to must be tuned to the specific market situation, deter-
competitiveness in the marketplace, the stage in the mining the best use of marketing resources and the best
product-class life cycle, the market growth rate, the time to launch the new product [23].
number of competitors in the marketplace, and the mar- There are several ways a manager can use these re-
keting efficiency of the seller. sults. First, they provide a quantitative checklist for the
An interesting result emerged from our analysis of manager of a soon-to-be launched product, identifying
the appropriate launch time for the new product. Our an appropriate set of objectives and a marketing strat-
analysis suggested that, all things equal, it pays to egy . Indeed, by providing estimates of the level of key
launch a RFNP as early as possible, whereas success market situations and marketing strategy variables in
levels were highest for ORNP’s when launch was de- Exhibits 3 and 6, the manager can receive a prediction
layed somewhat. This may reflect the greater care taken of the level of first-year market share performance and
with new product and market development activities the likelihood that the product will grow into a product
for ORNP’s, group. Secondly, for a manager of a recently intro-
Our findings suggest that two major sets of variables duced product, these results provide diagnostic infor-
seem to be at work in determining the success of a new mation, suggesting what product and market variables
144 JPRODINNOVMANAG E. YOON ANDG. L. LILIEN
1985;3:134-144

3. Booz, Allen & Hamilton. brew Products ManagementLfor the 1980’s.

New York: Booz, Allen & Hamilton, Inc., 1982.
Exhibit 6. Discriminant Analysis of Long-Run 4. Calantone, Roger, and Cooper, Robert G. New product scenarios:
New Product Success Prospects for success. Journal of Marketing 4548-80 (Spring 198 1).
5. Choffray , Jean-Marie, and Lilien , Gary L. Marketing Planning fur New
1 Original New Industrial Products
l
Industrial Products. New York: John Wiley & Sons, 1980.
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