Conceptualizing Newness and Positioning Really New Products

Steve Hoeffler, University of North Carolina at Chapel Hill
EXTENDED ABSTRACT - New products hold the promise of the future for most companies. Without successful new products, revenues, market share, and profits eventually decline in accordance with product life-cycle models. Thus, new product development is a high priority and a large expenditure item for most companies. Yet, the failure rate of new products is rather high and higher still for products that are more novel (Urban and Hauser 1993). Indeed, this is one reason why many firms have opted for brand extension as the preferred method of new product introduction. While brand extensions are seen as vehicles for steady profit expansion, on average they don’t have the same ability to reshape the competitive landscape as really-new products (RNPs) do. In fact, a reshaping of the competitive landscape has become definitional of RNPs: RNPs create new product categories and lead to major shifts in market share (Lehmann 1997). In addition, a company’s ability to successfully develop RNPs impacts their future growth capabilities. John E. Pepper, CEO of Procter & Gamble states AOur greatest periods of growth have occurred when we’ve been able to bring truly new-to-the-world products to market.@
[ to cite ]:
Steve Hoeffler (2002) ,"Conceptualizing Newness and Positioning Really New Products", in NA - Advances in Consumer Research Volume 29, eds. Susan M. Broniarczyk and Kent Nakamoto, Valdosta, GA : Association for Consumer Research, Pages: 267.

Advances in Consumer Research Volume 29, 2002     Page 267

CONCEPTUALIZING NEWNESS AND POSITIONING REALLY NEW PRODUCTS

Steve Hoeffler, University of North Carolina at Chapel Hill

EXTENDED ABSTRACT -

New products hold the promise of the future for most companies. Without successful new products, revenues, market share, and profits eventually decline in accordance with product life-cycle models. Thus, new product development is a high priority and a large expenditure item for most companies. Yet, the failure rate of new products is rather high and higher still for products that are more novel (Urban and Hauser 1993). Indeed, this is one reason why many firms have opted for brand extension as the preferred method of new product introduction. While brand extensions are seen as vehicles for steady profit expansion, on average they don’t have the same ability to reshape the competitive landscape as really-new products (RNPs) do. In fact, a reshaping of the competitive landscape has become definitional of RNPs: RNPs create new product categories and lead to major shifts in market share (Lehmann 1997). In addition, a company’s ability to successfully develop RNPs impacts their future growth capabilities. John E. Pepper, CEO of Procter & Gamble states "Our greatest periods of growth have occurred when we’ve been able to bring truly new-to-the-world products to market."

Conceptualizing Newness

One difficulty that arises when investigating questions relating to RNPs is trying to understand what it means for a product to be "Really New." Researchers have talked about newness as a function of outcome measures (e.g., creates new product category) or requiring some sort of reearning on the part of the consumers (e.g., new usage situation). This leads to the first purpose of the research, which is to develop a conceptual definition of product newness that is decoupled from the outcome measures that are often cited as representative of RNPs. We need a definition that captures more precisely the essence of consumer perceptions of newness which lead to measurement error. The first core proposition of this paper is that newness stems from the consumer’s difficulty or uncertainty in estimating the future utility (benefits, drawbacks, and social implications) of a new product. Validating the construct of uncertainty in predicting future utility is the goal of Study 1, which is detailed below.

Indeed, the main proposition is validated in Study 1 is that perceived newness stems from the consumer’s difficulty or uncertainty in estimating the future utility (benefits, drawbacks, and social implications) of a RNP. In the study subjects had greater levels of uncertainty in estimating their utility for products that had previously been rated as newer by a separate group of subjects.

Improving Positioning of RNPs

Additional goals of this research are geared toward understanding and ameliorating the factors that lead to the high failure rate for RNPs. Why do new products in general and RNPs in specific have such high failure rates? I contend that the high failure rate for RNPs is caused by inherent difficulties in marketing products where consumers lack knowledge about their preferences (e.g., appropriate tradeoffs, and utility or value functions). This lack of domain knowledge is a core characteristic of RNPs. Key marketing difficulties include understanding what makes products really new to consumers (Study 1) and positioning RNPs (Study 2).

In Study 2 we used information learned during the measurement process to improve the targeting and positioning of RNPs. The core positioning proposition is that companies should position based on an attribute/benefit combination that has low levels of uncertainty in terms of consumers’ prediction of their future utility. In the study, subjects viewed print advertisements that controlled for the level of information available while varying the salience of a high or low uncertainty attribute/benefit combination. Subjects who viewed the low uncertainty positioning had higher purchase intention levels.

REFERENCES

Feldman Jack M., and John G. Lynch, Jr. (1988). Self-Generated Validity and Other Effects of Measurement on Belief, Attitude, Intention, and Behavior," Journal of Applied Psychology, 73 (August), 421-435.

Fischoff, Baruch (1991). "Value Elicitation: Is There Anything in There?," American Psychologist, 835-846.

Lehmann, Don. (1997). "A Different Game: Setting the Stage," Presentation given at MSI conference titled "A Different Game: Really New Products, Evolving Markets, and Responsive Organizations," Boston.

Payne, John W., James R. Bettman, and Eric J. Johnon (1993). The Adaptive Decision Maker, Cambridge University Press.

Urban, Glen L., and John R. Hauser. Design and Marketing of New Products, New Jersey: Prentice Hall. (1993).

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