27 Aug Product Launch Pacing. Click to keep reading…
Researchers at Georgia State University, V. Kumar and his colleagues, considered how Apple, the most successful company in the world, launched products to the marketplace. They studied the relationship between the frequency of product launches, how unique the product is and the valuation of the company.
Product launches do take a certain toll on an organization. High costs can be incurred by design and development, manufacturing and marketing. Kumar writes “firms introducing products at a rapid pace have little time to evaluate their products, learn from them, assimilate their experiences, and deploy them to commercial ends. In theory, optimal pacing allows firms to use the lessons from one launch to improve subsequent ones, which should boost shareholder returns.”
This is the theory that Kumar tested using examples from the pharmaceutical industry. Their results confirmed their hunches, for the most part. Firms that launched new products, and firms that launched new products not related to their current offerings, found their value decrease over time. The same was true for firms who launched products irregularly. The researchers wrote “our results indicate that there is an optimal level of pace and scope of product introductions that managers must consider.”
While the study does not specify the necessary pace, it does offer some suggestions and equations that managers can use to help establish a more rational pace for innovation. “Our study highlights the importance of looking at the entire portfolio instead of focusing only on the next product.”
You can learn more about the study in the upcoming Journal of Marketing.