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- Title
Riding the Saddle: How Cross-Market Communications Can Create a Major Slump in Sales.
- Authors
Goldenberg, Jacob; Libai, Barak; Muller, Eitan
- Abstract
Using data on a large number of innovative products in the consumer electronics industry, the authors find that between one-third and one-half of the sales cases involved the following pattern: an initial peak, then a trough of sufficient depth and duration to exclude random fluctuations, and eventually sales levels that exceeded the initial peak. This newly identified pattern, which the authors call a 'saddle,' is explained by the dual-market phenomenon that differentiates between early market adopters and main market adopters as two separate markets. If these two segments--the early market and the main market--adopt at different rates, and if this difference is pronounced, then the overall sales to the two markets will exhibit a temporary decline at the intermediate stage. The authors employ both empirical analysis and cellular automata, an individual-level, complex system modeling technique for generating and analyzing data, to investigate the condition under which a saddle occurs. The model highlights the importance of cross-market communication in determining the existence of a saddle. At low levels of this parameter, more than 50% of the cases of new product growth involved a saddle. This percentage gradually decreased as the parameter increased, and at values close to the within-market parameters, the proportion of saddle occurrences dropped below 5%.
- Subjects
MARKETING of new products; HOUSEHOLD electronics industry management; SALES reporting; SALES forecasting; MARKETING research; MARKETS; EMPIRICAL research; PRODUCT management research; INDUSTRIAL research; COMMERCIAL product marketing; MANAGEMENT
- Publication
Journal of Marketing, 2002, Vol 66, Issue 2, p1
- ISSN
0022-2429
- Publication type
Article
- DOI
10.1509/jmkg.66.2.1.18472