In a dynamic and competitive environment, the decision how to and when to introduce new products into the market affects new product performance in the marketplace. Inspite of many studies on the determinants of new product performance, there have been limited research findings explaining the impacts of entry strategy on new product performance with consideration of interaction effects between entry strategy and other determinants of performance.
This study deals with effects of product entry strategy (timing of entry, marketing investment, production investment, efforts for product diversification and relative price advantage), product characteristics (technology newness to the firm, management newness to the firm, relative product advantage and technology appropriateness), and market characteristics (dynamics and competitiveness) on the new product performance, and their contingent relationships with performance.
Specifically, the main objectives of this study are as follows: i) to analyze the relationship between product characteristics and new product performance, ii) to investigate the relationship between market characteristics and new product performance, and iii) to examine the relationship between entry strategy and new product performance, and the moderating effects of product characteristics and market characteristics on the relationship.
A field study is undertaken to test the hypothesized relationships among market characteristics, product characteristics, entry strategy, and new product performance. Data are collected from 55 Products in the information and communication industry. Correlation analyses, Fisher's Z-tests are employed to test the main hypotheses, and multiple regression analyses are conducted for further analyses.
The major findings are summarized as follows: First, technology newness to the firm is positively related to the market share, while management newness to the firm is not significantly related to new product performance. Relative product advantage and technology appropriateness are positively related to the new product performance.
Second, market competitiveness is negatively related to the new product performance, while market dynamics are not significantly related to the performance.
Third, entry strategy has strong effects on the new product performance. Specifically, entry timing is positively related to the market share and subjective performance. Marketing investment is positively related to the market share, while production investment is positively related to the market share and subjective performance. Efforts for product diversification are positively related to the market share, sales, gross profit from sales, return on sales(ROS), subjective performance, while relative price advantage is not significantly related to the new product performance.
Fourth, moderating effects of product characteristics on the relationship between entry strategy and performance are as follows:
1) The relationship between entry timing and return on sales(ROS) is stronger when management newness to the firm is high than low, when technology newness to the firm is high than low, and when relative product advantage is low than high.
2) The relationship between entry timing and subjective performance is stronger when technology newness to the firm is high than low and when relative product advantage is low than high.
3) The relationship between efforts for product diversification and market share is stronger when relative product advantage is high than low.
4) The relationship between relative price advantage and return on sales(ROS) is stronger when relative product advantage is low than high.
5) The relationship between relative price advantage and subjective performance is stronger when relative product advantage is low than high.
Fifth, moderating effects of market characteristics on the relationship between entry strategy and performance are as follows:
1) The relationship between marketing investment and market share is stronger when competitiveness is high than low and when market dynamics are low than high.
2) The relationship between marketing investment and return on sale is stronger when competitiveness is high than low and when market dynamics are high than low.
3) The relationship between efforts for product diversification and return on sales is stronger when competitiveness is high than low and when market dynamics are high than low.
Additional analyses suggest the relative importance of market characteristics, product characteristics, and entry strategy to the new product performance.
Finally, some academic and managerial implications of findings and several directions for future research are discussed.
