Encroachment Patterns of the “Best Products” from the Last Decade^*

Abstract

Based on the examination of 239 ''best products'' (all those on Business Week's annual lists from the past decade), this article tests and validates a conceptual framework identifying six ways in which new products open new markets and/or encroach on original products. Three of these six scenarios involve high-end encroachment (the new product first opens a new high-end market, or enters at the high end of an existing market, and then diffuses down-market), and three scenarios involve low-end encroachment (encroachment starts at the low end, followed by diffusion upmarket). As illustrated in a 2 Â 3 matrix, high-end encroachment ensues when the new product enhances performance with regard to the market's core attribute (low-end encroachment ensues when this performance is diminished). The three high-end sub-types and three low-end sub-types are determined by the strength of performance along an ancillary attribute dimension. If the ancillary attribute performance is week, then the encroachment of the new product on the old market is immediate (corresponding to immediate high-end encroachment and immediate low-end encroachment, respectively). If the ancillary performance is moderate, then the new product expands the market at the high or low end (corresponding to new-attribute high-end encroachment and fringe-market low-end encroachment, respectively). If the ancillary performance is strong, then the new product first opens an entirely new market at the high or low end (corresponding to new-market high-end encroachment and detached-market low-end encroachment, respectively). The reliability and comprehensiveness of the encroachment framework is tested by asking a panel of eight judges to categorize each of the 239 products. Results show inter-judge reliability of 98%, with all products falling within one of the six encroachment categories. Each of the encroachment types has unique implications on product positioning and pricing, as further discussed in the paper. Thus the model helps firms identify and analyze the various possible strategies that they might choose from when introducing new products.

A Reflective Review of Disruptive Innovation Theory

“…In this school of thought, Utterback and Acee provided a more comprehensive view of technological innovations by adding the third dimension – ancillary performance – and what Christensen defined as disruptive innovation was one of the eight possibilities (Utterback and Acee 2005). Van Orden et al . (2008) further proposed a comprehensive framework including three high‐end and three low‐end encroachment patterns, and emphasized that the three high‐end encroachment patterns (with destructive effects) are not disruptive.…”

Dynamics of disruptive innovations in outperforming global brands: a study in Mexico

“…This is due to the changing preferences of both core and ancillary attributes that constitute an attribute set upon which customers decide their purchase. More recently, it has been observed that core attributes still play a critical for the adoption of high-end successful products (Van Orden et al, 2011). Therefore, we propose, H3 Lowering the attributes of overshooting in reference to consumer preferences tends to decrease the adaptation of disruptive innovation products in the low-end market.…”

“…It is not clear though, that all innovative products follow the previous pattern. Van Orden et al (2011) identify that a majority of innovations encroach directly to the high-end segment of the market but their prices are not inevitably high. Similarly, it has been suggested (Utterback and Acee, 2005) that products may also be high-performing, high-price innovations that compete in a mature market segment that eventually embraces the mass market.…”

Legitimizing Academic Research in Design: Lessons from Research on New Product Development and Innovation

“…For example, the winners of IDSA's yearly IDEA competition could represent an expertly selected sample of “great” design that could be analyzed in various ways, potentially resulting in publishable articles. For an example of an analogous piece of research in the NPD field which analyzes Business Week 's “Best Products” as a data set, see van Orden, Van der Rhee, and Schmidt (2011).…”