The Long-Term Impact of New-Product Introductions and Promotions on Financial Performance and Firm Value

Abstract

Year after year, managers strive to improve financial performance and firm value by marketing actions such as new product introductions and promotional incentives. The current study investigates the short-term and long-term impact of such marketing actions on financial metrics, including top-line, bottom-line and stock market performance. While product introductions increase long-term financial performance and firm value, promotions do not. Managers may use these results to justify product innovation efforts and to weight short-term and long-term consequences of promotional incentives.