Harbingers of Failure

50 Pages Posted: 6 Apr 2014

See all articles by Eric Anderson

Eric Anderson

Northwestern University - Department of Marketing

Song Lin

Hong Kong University of Science & Technology (HKUST) - Department of Marketing

Duncan Simester

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Catherine E. Tucker

Massachusetts Institute of Technology (MIT) - Management Science (MS)

Date Written: April 4, 2014

Abstract

We show that some customers systematically purchase new products that flop. Their early adoption of a new product is a strong signal that a product will fail - the more they buy, the less likely the product will succeed. These customers, whom we call ‘Harbingers’ [of failure], prefer products that other customers do not want. More broadly, we document that distinguishing among the types of customers who adopt a new product can be predictive of whether a new product will succeed or fail. We discuss how these insights can be readily incorporated into the new product development process. Our findings challenge the conventional wisdom that positive customer feedback is always a signal of future success. The possibility that firms are encouraged by Harbingers’ purchases during pilot market tests may help to explain the high failure rate for new products.

Keywords: new product development, early adopters, lead users, preference heterogeneity

JEL Classification: M31

Suggested Citation

Anderson, Eric and Lin, Song and Simester, Duncan and Tucker, Catherine E., Harbingers of Failure (April 4, 2014). Available at SSRN: https://ssrn.com/abstract=2420600 or http://dx.doi.org/10.2139/ssrn.2420600

Eric Anderson (Contact Author)

Northwestern University - Department of Marketing ( email )

Kellogg School of Management
2001 Sheridan Rd.
Evanston, IL 60208
United States

Song Lin

Hong Kong University of Science & Technology (HKUST) - Department of Marketing ( email )

Department of Marketing
Hong Kong
Hong Kong

HOME PAGE: http://www.bm.ust.hk/mark/staff/song_lin.html

Duncan Simester

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

Management Science
Cambridge, MA 02142
United States
617-258-0679 (Phone)
617-258-7597 (Fax)

Catherine E. Tucker

Massachusetts Institute of Technology (MIT) - Management Science (MS) ( email )

100 Main St
E62-536
Cambridge, MA 02142
United States

HOME PAGE: http://cetucker.scripts.mit.edu

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