Why and When to Launch New Products During a Recession: An Empirical Investigation of the U.K. FMCG Industry and the U.S. Automobile Industry.

Abstract

Do new products launched during a recession perform better? Does the severity of the recession matter? Are products more successful when launched earlier or later in a recession? These are all questions of managerial importance that as yet remain unanswered in the extant marketing literature. The authors analyze 2 datasets: 1) 8,981 product launches in 20 United Kingdom fast-moving consumer goods categories over 18 years and 2) 1,071 product launches in the United States automotive market over 63 years. The results reveal products launched (a) during a recession and (b) later rather than earlier in the recession survive longer, while more severe recessions are associated with shorter survival. This paper thus enriches marketing theory on recessions by conceptualizing and quantifying timing effects on new product launch success. For managers, the results demonstrate the benefits of countercyclical launching of new product during recessions and to market proactively in such economic conditions.

Keywords: new product launch, recession, business cycles, fast moving consumer goods, automobile industry

JEL Classification: M31