The Role of Market Information in New Product Success/Failure

Abstract

Although no single variable holds the key to new product performance, many of the widely recognized success factors share a common thread: the processing of market information. Understanding customer wants and needs ultimately comes down to a company's capabilities for gathering and using market information. And another well‐acknowledged success factor the integration of marketing, R&D, and manufacturing focuses on the sharing of information. In other words, a firm's effectiveness in market information processing—the gathering, sharing, and use of market information—plays a pivotal role in determining the success or failure of its new products. Brian D. Ottum and William L. Moore describe the results of a study that examines the relationship between market information processing and new product success. They also explore the organizational factors that facilitate successful processing of market information, and thus offer ideas for better managing the development of new products. The respondents—marketing, R&D, and manufacturing managers from Utah‐based computer and medical device manufacturers—provided information about 58 new products, including equal numbers of successes and failures. The survey responses reveal strong relationships between product success and market information processing, with success most closely linked to information use. In other words, the gathering and sharing of information are important, but only if the information is used effectively. In 80 percent of the product successes studied, the respondents ultimately possessed and used a greater than average amount of market information. And in 75 percent of the failures, the respondents knew less than average about the market at project inception, and gathered or used less than the average amount of market information during the project. For the projects in this study, the integration of marketing, R&D, and manufacturing contributed not only to the sharing and use of information, but also to overall project success. However, the results of the study suggest that the way in which a project is organized plays only an indirect role in determining new product success—most likely by improving the processing of market information. From a managerial perspective, the most important variables identified in the study are market information shared, market information used, and financial success.

Patterns and performance outcomes of innovation orientation

“…In terms of representativeness, we mainly focus on the industries and company sizes of the overall sample. The participating companies employed at least 50 persons, which enabled us to eliminate very small firms that lacked distinct functional departments (Ottum and Moore 1997); otherwise, our sample captures a wide range of company sizes. Furthermore, though companies with 500 or more 3.5% 1,001-5,000 11.6% 5,001-10,000…”

Key service innovation drivers in the tourism sector: empirical evidence and managerial implications

“…Understanding the environment and its relevant elements constitutes a priority for an innovative organization, because anticipating and responding to changes in the market require extensive knowledge about every agent in that environment (Ottum and Moore 1997). Dahlsten (2003), Jaworski and Kolhi (1993), and Slater (2001) note that organizations typically have access to various mechanisms to obtain information about their customers or competitors, such as focus groups or client surveys.…”

Information communication, organizational capability and new product development: an empirical study of Chinese firms

“…At the same time, external information acquisition and internal information communication are different things, and their impacts on NPD are different (Ottum and Moore 1997). In the past, however, they have generally, with the notable exception of Frishammar and Horte (2005), been studied separately rather than within an integrated framework.…”