Clustering product launches by price and launch strategy
Journal of Business & Industrial Marketing
ISSN: 0885-8624
Article publication date: 6 February 2007
Abstract
Purpose
The purpose of this paper is to examine the interaction of pricing strategies with other aspects of launch, in particular, timing, logistics/inventory strategy, and coordination with support organizations, and the effect on profit and competitive performance.
Design/methodology/approach
The paper presents an empirical study of 215 recent new product launches, focusing on pricing and other strategic and tactical launch decisions and the resulting profitability and competitive performance. Clusters of new product launches are identified and the profitability and competitiveness of each cluster are discussed.
Findings
The paper finds that some clusters are related to greater success than others. The most profitable and competitively successful cluster contained launches supported by solid market research and marked by good timing decisions. By contrast, the least profitable/successful cluster were higher price launches unsupported by adequate research.
Research limitations/implications
The study is limited by the fact that the sampling frame is made up of members of a professional association of product development and management, and may therefore be more representative of “best practice” in new product development (NPD) than of NPD in general. The authors believe the use of the key informant method is justified in this study, however this method has been criticized in the past.
Originality/value
The pricing decision for a new product is sometimes oversimplified as a “high‐low” or “skimming versus penetration” choice. The study finds that the actual effect of pricing on ultimate success is much more complex, and that one must consider not only price level, but also the timing of the launch, the logistics and inventory strategy, the extent of market research, testing, and planning, and so forth.
Keywords
Citation
Calantone, R.J. and Di Benedetto, C.A. (2007), "Clustering product launches by price and launch strategy", Journal of Business & Industrial Marketing, Vol. 22 No. 1, pp. 4-19. https://doi.org/10.1108/08858620710722789
Publisher
:Emerald Group Publishing Limited
Copyright © 2007, Emerald Group Publishing Limited