Academic journal article Global Business and Management Research: An International Journal

An Empirical Model for Product Launches in Industrial Market and Exit under Market Improbability

Academic journal article Global Business and Management Research: An International Journal

An Empirical Model for Product Launches in Industrial Market and Exit under Market Improbability

Article excerpt

Introduction

The role product development in Industrial market as per Booz, Allen and Hamilton (1980), are for repositioning of market segment, cost reduction, adding advantage to the customers in terms of high performance, safety, and easy availability.

According to Kotler (1997: 37) today's organisations are facing their toughest competition ever and organisations should strive to retain customers by developing new products to meet customer expectation.

'Industrial new product launch are ordinary in domestic and overseas most markets,' as per Gunter J. Hitsch (2006). 'New products are of major importance for companies' performance & firm aims at achieving certain sales and performance objectives,' as refereed by Dr.R. K Srivastava, (2006). Steven D Eppinger & Karl T Ulrich, (2009) suggests, 'successful launch requires considerable financial resources, thus is a risky venture.'

Even if product is successfully launched in the market, it is equally important to remain till it completes its life cycle and sustain profitability through out entire life cycle in market as elucidated by Hory Sankar (2009).

As per Harrington, J. E. (1995) firms are not sure on market demand and profitability of their new products and many times products are scrapped with preconceived wrong opinion. 'Many of these new products "fail," i.e. exit from the market, soon after product launch', according to R.G. Cooper (@2007). As observed by Weiss, C.R., Wittkopp, A. (2003b), & Hyun-Sook Lee 'Close to 50% of all new products are scrapped within span of initial one to -two years after their introduction.'

Roberto Vergant, (2009) & Margaret J Wheatley (2006) state, that product failures are costly, as the development costs and marketing costs during the launch period can no longer be recovered. Therefore always there will be pressure on attainable profits from noticeable enhancements in innovation pace, as per by Michael E Porter (2004.p 194-196) which again is due to reduced product life cycle times, fast technological changes and ever-changing customer needs. Thus, higher number of failures of launched products is not surprising!

It is important for firm to learn about true profitability of their products, decision making process to launch or scrap a product based on demand uncertainty as per Michael E Porter (2004). There is need of research solution in respect with reduction in the demand uncertainty, of industrial market.

According to Erdem, T., M. P. Keane (1996), if new product have high exit rates that indicates firms use suboptimal product launch strategies, or may be launch products for reasons that are not related to demand uncertainty.'

Proposed paper addresses these and related issues, through a model of a decision maker (a firm), who decides whether to launch a new product; and after the product launch, whether the product should be scrapped or to be continued in the market.

The model is tested with actual data, and then is used to predict optimal launch behavior and the associated stream of profits. The model allows us to calculate the expected profit from a product under some level of demand uncertainty.

Finally, the author implies through this research that, the stakeholders in some firms should not only be concerned about high product exit rates, but also about low exit rates. Study is conducted about understanding, how the product launching decision are taken based on the market influence, and when product to kill from market presence. The strategy of new product launch process is a key for sustaining product life and that can influence market development issue and it is equally important for firm to know by when product must exist from market. This research is in respect with the factors influencing the product success, milestones in understanding factors related to the successful introduction of new products in industrial market and withdraw from market before customer decline to use. …

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