How does concept development contribute to successful launch? Exploring the role and the sources of Hard-to-Imitate Signals

This paper explains why CD activities are valuable from a signaling perspective. By signaling, the firm attempts to influence the behavior of a customer. However, as most signals can be imitated or faked by competitors, a signal will only be effective from the firm‘s perspective if it is perceived as reliable by customers, which requires the signal to be costly or hard to imitate. This paper explains why repeated customer interaction during the CD phase can create new or significantly improved capabilities on the one hand, and create lead users on the other hand. The creation of new capabilities and lead users are two sources of Hard to Imitate Signals (HIS) which are perceived as reliable by customers and thus contribute to innovation and market diffusion. The paper discusses some general implications of the signaling perspective for CD.

[1]  C. Shapiro,et al.  Network Externalities, Competition, and Compatibility , 1985 .

[2]  Eitan Gerstner.  Do Higher Prices Signal Higher Quality? , 1985 .

[3]  Joseph E. Stiglitz,et al.  The Theory of "Screening," Education, and the Distribution of Income , 1975 .

[4]  Charles H. Fine,et al.  Time Versus Market Orientation in Product Concept Development: Empirically-Based Theory Generation , 1997 .

[5]  John R. Hauser,et al.  Defensive Marketing Strategies , 2008, Mark. Sci..

[6]  S. Ghoshal,et al.  Social Capital, Intellectual Capital, and the Organizational Advantage , 1998 .

[7]  V. Rao,et al.  New Product Preannouncement as a Signaling Strategy: An Audience-Specific Review and Analysis , 2008 .

[8]  Amna Kirmani,et al.  Money Talks: Perceived Advertising Expense and Expected Product Quality , 1989 .

[9]  B. Kogut,et al.  What Firms Do? Coordination, Identity, and Learning , 1996 .

[10]  R. Kihlstrom,et al.  Advertising as a Signal , 1984, Journal of Political Economy.

[11]  I. Alam.  Removing the fuzziness from the fuzzy front-end of service innovations through customer interactions , 2006 .

[12]  Franklin Acito,et al.  Industrial product concept testing , 1981 .

[13]  Jeong-Yoo Kim,et al.  Product compatibility as a signal of quality in a market with network externalities , 2002 .

[14]  Gerard J. Tellis,et al.  Competitive Price and Quality Under Asymmetric Information , 1987 .

[15]  Walter G. Vincenti,et al.  What Engineers Know and How They Know It: Analytical Studies from Aeronautical History. , 1992 .

[16]  Christoph Fuchs,et al.  Customer Empowerment in New Product Development , 2011 .

[17]  R. Walters,et al.  Explaining Competitive Reactions to New Products: An Empirical Signaling Study , 1993 .

[18]  Paul R. Milgrom,et al.  Price and Advertising Signals of Product Quality , 1986, Journal of Political Economy.

[19]  Paul Herbig,et al.  Market signalling: a review , 1996 .

[20]  C. Fombrun,et al.  What's in a Name? Reputation Building and Corporate Strategy , 1990 .

[21]  Peter R. Magnusson,et al.  Managing User Involvement in Service Innovation , 2003 .

[22]  William Boulding,et al.  A consumer-side experimental examination of signaling theory: Do , 1993 .

[23]  Preannouncements: their role in reputation management , 1998 .

[24]  Maynard J. Smith,et al.  Animal Signals: Models and Terminology , 1995 .

[25]  Gad Saad,et al.  The evolutionary bases of consumption , 2007 .

[26]  Christian Homburg,et al.  Does Customer Interaction Enhance New Product Success , 2000 .

[27]  Richard L. Priem.  A Consumer Perspective on Value Creation , 2007 .

[28]  A. Zahavi.  Mate selection-a selection for a handicap. , 1975, Journal of theoretical biology.

[29]  Horace L. Melton,et al.  Customer and Frontline Employee Influence on New Service Development Performance , 2010 .

[30]  Eugene M. Johnson,et al.  A Proposed Model for New Service Development , 1989 .

[31]  John G. Riley,et al.  Silver Signals: Twenty-Five Years of Screening and Signaling , 2001 .

[32]  Stephen L. Vargo,et al.  Evolving to a New Dominant Logic for Marketing , 2004 .

[33]  Qingyu Zhang,et al.  The fuzzy front end and success of new product development: a causal model , 2001 .

[34]  M. Spence.  Job Market Signaling , 1973 .

[35]  R. Caves,et al.  Brands' quality levels, prices, and advertising outlays: empirical evidence on signals and information costs , 1996 .

[36]  A. Page,et al.  Developing an effective concept testing program for consumer durables , 1992 .

[37]  E. Hippel,et al.  Lead users: a source of novel product concepts , 1986 .

[38]  Shahid A. Zia,et al.  Competitive Strategy: Techniques for Analyzing Industries & Competitors , 2013 .

[39]  K. Bagwell,et al.  High and Declining Prices Signal Product Quality , 1991 .

[40]  John Roberts,et al.  The nature of lead users and measurement of leading edge status , 2004 .

[41]  B. Kogut,et al.  Knowledge of the Firm, Combinative Capabilities, and the Replication of Technology , 1992 .

[42]  Ke Te Le Mei Ru He Deng Yi.  Marketing management: analysis. planning. implementation and control , 2000 .

[43]  Peter R. Magnusson,et al.  Benefits of involving users in service innovation , 2003 .

[44]  T. S. Robertson,et al.  Toward a theory of competitive market signaling: A research agenda , 1991 .

[45]  Craig A. Kelley,et al.  An investigation of consumer product warranties as market signals of product reliability , 1988 .

[46]  Brian J. Loasby,et al.  The organisation of capabilities , 1998 .

[47]  Sanford J. Grossman.  The Informational Role of Warranties and Private Disclosure about Product Quality , 1981, The Journal of Law and Economics.

[48]  Eric von Hippel,et al.  Successful Industrial Products from Customer Ideas: Presentation of a new customer-active paradigm with evidence and implications. , 1978 .

[49]  Josh L Wiener,et al.  Are Warranties Accurate Signals of Product Reliability , 1985 .

[50]  R. Wadhwani,et al.  Changing Landscapes: The Construction of Meaning and Value in a New Market Category—Modern Indian Art , 2010 .

[51]  David Wilemon,et al.  Strategic issues in managing innovation’s fuzzy front‐end , 2002 .

[52]  Laasya Samhita.  The Handicap Principle , 2010 .

[53]  Walter Guido Vincenti,et al.  What Engineers Know and How They Know It: Analytical Studies from Aeronautical History by Walter G. Vincenti , 1992, Technology and Culture.

[54]  K. Boal,et al.  Strategic resources: Traits, configurations and paths to sustainable competitive advantage , 2007 .

[55]  J. Swait,et al.  Brand Equity as a Signaling Phenomenon , 1998 .

[56]  G. Ferro-Luzzi.  On Evolutionary Epistemology , 1982, Current Anthropology.

[57]  Allan Afuah,et al.  Users as Innovators: A Review, Critique, and Future Research Directions , 2009 .

[58]  P. Nelson.  Advertising as Information , 1974, Journal of Political Economy.

[59]  Amaresh Chakrabarti,et al.  Towards an ‘ideal’ approach for concept generation , 2003 .

[60]  Antoaneta P. Petkova,et al.  Being good or being known: An empirical examination of the dimensions, antecedents, and consequences of organizational reputation , 2005 .

[61]  P. Herbig,et al.  Marketing Signals in Service Industries: Implications for Strategic Decision Making and Profitability , 1994 .

[62]  D. Littler.  Design and Marketing of New Products , 1981 .

[63]  A. Rao,et al.  No Pain, No Gain: A Critical Review of the Literature on Signaling Unobservable Product Quality , 2000 .

[64]  Constance E. Helfat,et al.  Product Sequencing: Co-Evolution of Knowledge, Capabilities and Products. , 2000 .

[65]  Richard N. Langlois,et al.  Firms, Markets and Economic Change: A dynamic Theory of Business Institutions , 1995 .

[66]  C. Perry,et al.  A customer‐oriented new service development process , 2002 .

[67]  Robert W. Ruekert,et al.  Signaling Unobservable Product Quality through a Brand Ally , 1999 .

[68]  E. von Hippel,et al.  Sources of Innovation , 2016 .

[69]  Spent: Sex, evolution, and consumer behavior , 2009, Politics and the Life Sciences.

[70]  Susan E. Reid,et al.  The Fuzzy Front End of New Product Development for Discontinuous Innovations: A Theoretical Model , 2004 .

[71]  Edward Constant.  Recursive practice and the evolution of technological knowledge , 2000 .