Strategic Firm Behavior in New Product Preannouncement

Abstract

Prior to new product launch, firms often engage in marketing activities to maximize the chance of new product success. New product preannouncement is a specific premarket behavior that this dissertation focuses on. While serving a common purpose of providing information about the new product, firms make preannouncements in different ways. For example, the timing of preannouncement and the specific information provided can vary significantly across firms and products. This dissertation examines how different preannouncement strategies influence sales of the new product when it is eventually introduced. I focus on the digital camera market from January 2004 to May 2007. The analysis of preannouncement strategies is made possible by employing a dataset that includes the specific details of the preannouncements made by digital camera producers. Using the control function approach, I find that different preannouncement strategies do matter for new product sales. However, their effects depend on targeted market segments. Specifically, making early new product preannouncements increases sales of premium market products, but making late preannouncements helps mass market products. Furthermore, providing pricing information in preannouncements enhances the sales of premium market products. However, providing specific new product release date has a negative impact on the sales of premium market products. Furthermore, these results contribute to research on new product strategies and provide useful managerial implications.