The International Takeoff of New Products: The Role of Economics, Culture, and Country Innovativeness

Abstract

Sales takeoff is vitally important for the management of new products. Limited prior research on this phenomenon covers only the United States. This study addresses the following questions about takeoff in Europe: 1) Does takeoff occur as distinctly in other countries, as it does in the United States? 2) Do different categories and countries have consistently different times-to-takeoff? 3) What economic and cultural factors explain the intercountry differences? 4) Should managers use a sprinkler or waterfall strategy for the introduction of new products across countries? We gathered data on 137 new products across 10 categories and 16 European countries. We adapted the threshold rule for identifying takeoff (Golder and Tellis 1997) to this multinational context. We specify a parametric hazard model to answer the questions above. The major results are as follows: 1) Sales of most new products display a distinct takeoff in various European countries, at an average of six years after introduction. 2) The time-to-takeoff varies substantially across countries and categories. It is four times shorter for entertainment products than for kitchen and laundry appliances. It is almost half as long in Scandinavian countries as in Mediterranean countries. 3) While culture partially explains intercountry differences in time-to-takeoff, economic factors are neither strong nor robust explanatory factors. 4) These results suggest distinct advantages to a waterfall strategy for introducing products in international markets.International New Product Growth, New Product Takeoff, New Product Growth, International Diffusion, Diffusion of Innovations

Global Takeoff of New Products: Culture, Wealth, or Vanishing Differences?

“…Recently, studies have introduced and validated a new metric to measure how quickly a market adopts a new product,i.e., the takeoff of new products (see Agarwal and Bayus 2002, Chandrasekaran and Tellis 2007, Golder and Tellis 1997, Tellis et al 2003. Takeoff marks the turning point between introduction and growth stages of the product life cycle.…”

Measuring the duration of formative phases for energy technologies

“…To measure the (E5) 'user adoption' indicator, actual market growth (e.g., units sold or capacity installed) is divided by the potential market size for the corresponding year (see Appendix A). Other methods for inferring thresholds of market take-off compare sales growth rates either with market penetration rates (Tellis et al, 2003), with annual sales (Golder and Tellis, 1997), or with annual net entry rates (Agarwal and Bayus, 2002). Using a 2.5% share of market potential is comparatively simple, less data demanding, and applies to a broad set of technologies.…”

“…This can be a lengthy process. As an example, 30 product innovations in the US were found to take on average 30 years to move from invention to commercialization, with 14 years more before sales take-off (Agarwal and Bayus, 2002, see also Tellis and Chandrasekaran, 2012;Tellis et al, 2003;Golder and Tellis, 1997). However this literature tends to overlook the systemic conditions (e.g., investment in the production chain, supportive institutions) that often accompany the emergence of new technologies.…”

Licensing radical product innovations to speed up the diffusion

“…The time to takeoff in the sales diffusion of radical product innovations can vary considerably (e.g., Mahajan et al 1990, Golder andTellis 1997). There are also demand cultural factors suggesting that sales takeoff can vary on different countries (Tellis, Stremersch and Yin 2003).…”