The Dive & Disruption of Successful Current Products: Measures, Global Patterns, and Predictive Model

40 Pages Posted: 7 Nov 2014

See all articles by Javier Palacios Fenech

Javier Palacios Fenech

affiliation not provided to SSRN

Gerard J. Tellis

University of Southern California - Marshall School of Business, Department of Marketing

Date Written: November 5, 2014

Abstract

A study of pairs of new products in five categories across 86 countries between 1977 and 2011 finds that most current products reach a peak at about 56% of market penetration. Subsequently they suffer a dramatic decrease in relative penetration of 286% which we call the dive. A dive occurs in 96% of 295 pairs of current-new products. On average, the time from takeoff of new product to a peak in penetration of current product is 6.6 years and to the dive of the current product is 8.4 years. The total time-to-dive includes a hidden discontinuance period (10.4 years), from the introduction of the new product to the peak of the current product, plus an overt time-to-dive (1.8 years), from the peak to the dive of the current product. The hidden discontinuance period and the overt time-to-dive are shorter and the dive is steeper in emerging markets than in developed ones. A discrete-time hazard model shows that takeoff of the new product, relative percentage growth in penetration of the current product prior to a peak, the length of the hidden discontinuance period, and prior dives in other countries predict the hazard of a dive. The models can predict the occurrence of a peak with true positive rate of 62% and a true negative rate of 87%, and a dive with a true positive rate of 82% and a true negative rate of 61%. The authors discuss important implications of these results.

Keywords: Dive, Disruption, New Product Diffusion, Takeoff, Adoption, Discontinuance, Disadoption, Market Penetration, Hidden Discontinuance Period, Discrete Time Hazard Model

Suggested Citation

Palacios Fenech, Javier and Tellis, Gerard J., The Dive & Disruption of Successful Current Products: Measures, Global Patterns, and Predictive Model (November 5, 2014). Available at SSRN: https://ssrn.com/abstract=2519620 or http://dx.doi.org/10.2139/ssrn.2519620

Javier Palacios Fenech

affiliation not provided to SSRN

Gerard J. Tellis (Contact Author)

University of Southern California - Marshall School of Business, Department of Marketing ( email )

Hoffman Hall 701
Los Angeles, CA 90089-0443
United States
213-740-5031 (Phone)
213-740-7828 (Fax)

HOME PAGE: http://gtellis.net

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