Innovation Sequences over Iterated Offerings: A Relative Innovation, Comfort, and Stimulation Framework of Consumer Responses

Abstract

Innovations commonly involve changes to iterated market offerings (e.g., new games, car models, film sequels). To better understand consumer iteration responses, the authors develop and test a theoretical framework grounded in (1) prior innovations serving as reference states (comparators) for later innovations and (2) consumer desires for both comfort and stimulation. In Study 1's online game, prior innovations and loss aversion (greater loss than gain impact) moderate evaluations of current innovations, whereby an introduction-weaker-stronger innovation sequence (Periods 1–3 of four periods) generates more entertainment than an introduction-stronger-weaker sequence because the former's weak-opening-then-rise does less harm than the latter's strong-opening-then-drop. Study 2 replicates Study 1 and shows that an introduction-weaker-weaker sequence produces enough habituation and diminishing negative returns to outperform an introduction-stronger-weaker sequence at Period 4. Study 3 offers marketplace corroboration with a film industry test in which minor (fewer) innovations perform better (e.g., sales, return on investment) earlier in franchises, whereas major (many) innovations perform better later, thereby reconciling prior research's opposing prescriptions for the use of major versus minor sequel innovations. The framework and results implicate carefully sequenced innovations for managing consumer iteration responses, including the possibility of interspersing weaker/minor innovations among stronger/major innovations.

Continuity, Change, and New Product Performance: The Role of Stream Concentration*

“…First, organizations developing new products that join an existing set of products characterized by a strong identity and distinctive product attributes should aim for moderate change. This is consistent with the results obtained by Heath et al (2015), in a study on the success factors of sequels in the movie industry. Second, product attributes and team composition are complementary choices that should be jointly managed.…”

“…Team change can enhance creativity through a broader discussion of issues and alternatives (Choi and Thompson, 2005; Skilton and Dooley, 2010), which can result in more innovative and successful products (Taylor and Greve, 2006). Furthermore, research on social categorization (Zuckerman, 2017) and intergroup bias in the evaluation of novelty (Criscuolo, Dahlander, Grohsjean, and Salter, 2017) considers membership change as an opportunity for NPD teams to develop a better understanding of customers’ needs and wants, which can positively affect the adoption of new products (Heath et al, 2015; Spanjol et al, 2018).…”

“…Hence, product development teams are challenged to manage trade‐offs between something old and something new. They may opt for continuity, re‐using tried and tested product attributes, or for change, introducing new ones, eliminating others, or designing completely different new products (Carbonell and Rodríguez Escudero, 2019; Eggers, 2012; Eling et al, 2016; Heath, Chatterjee, Basuroy, Hennig‐Thurau, and Kocher, 2015; Spanjol, Xiao, and Welzenbach, 2018).…”

A Pilot Study on the Perception of Innovation and Entrepreneurship

“…The second focus is the explanation of the degree of innovation from the perspective of company or customer. On a product basis, the companies on product basis do not emphasize what direct innovation types are, but mention the marketing problems they face following of the development of their products, and do not use basic literature topics like "marketing innovation" at all (Ha-Young & Chang Mu, 2010 ;Kaynak & Demir, 2015;Balasescu, 2015;Rostami, 2015;Heath, Chatterjee, Basuroy, Hennig-Thurau, & Kocher, 2015). For instance, Tatikonda and Rosenthal (2000) stated that it is difficult for companies to develop new products when they have limited experience in product and process technologies, and some companies prefer to outpace their technological competition by attracting more attention in the market.…”

Managing uncertainty in creative industries: Film sequels and Hollywood’s profitability, 1988–2015

“…Given the secular trend in film financial performance that appears to be present in Figure 2 a film's year of release might also impact on financial performance. It is within such a framework, then, that the relative performance of sequels can be evaluated (for a comparable approach see, for example, Heath, et al, 2015).…”