How today's consumers perceive tomorrow's smart products

This paper investigates consumer responses to new smart products. Due to the application of information technology, smart products are able to collect, process, and produce information and can be described as "thinking" for themselves. In this study, 184 consumers respond to smart products that are characterized by two different combinations of smartness dimensions. One group of products shows the smartness dimensions of autonomy, adaptability, and reactivity. Another group of smart products are multifunctional and able to cooperate with other products. Consumer responses to these smart products are measured in terms of the innovation attributes of relative advantage, compatibility, observability, complexity, and perceived risk. The study shows that products with higher levels of smartness are perceived to have both advantages and disadvantages. Higher levels of product smartness are mainly associated with higher levels of observability and perceived risk. The effects of product smartness on relative advantage, compatibility, and complexity vary across product smartness dimensions and across product categories. For example, higher levels of product autonomy are perceived as increasingly advantageous whereas a high level of multifunctionality is perceived disadvantageous. The paper discusses the advantages and pitfalls for each of the five product smartness dimensions and their implications for new product development and concludes with a discussion of the limitations of the study and suggestions for further research

The Effects of Sensitization and Habituation in Durable Goods Markets

We develop a model to study the impact of changes in price sensitivity on the firm as it introduces multiple generations of a durable product where unit costs are a convex function of quality. We incorporate the psychological processes of sensitization and habituation into a model of discretionary purchasing of replacement products motivated by past experience. When price sensitivity decreases with each purchase (sensitization), the myopic firm offers a higher quality product at a much higher price with each generation. When price sensitivity increases with each purchase (habituation), the myopic firm engages in price skimming. When sensitization is followed by habituation, the myopic firm eventually provides higher quality than the market is willing to pay for, leading to a steep drop-off in sales and profits. The actions of the forward-looking firm depend on the discount rate. A firm with a low discount rate builds its customer base before offering a higher quality and higher priced product. In contrast, a firm with a high discount rate quickly increases price and quality following the same path to falling profits of the myopic firm. These results provide insight into the firm and consumer behaviors underlying the phenomenon of 'performance oversupply' identified in the innovation literature

The legend about sailing ship effects – Is it true or false? The example of cleaner propulsion technologies diffusion in the automotive industry

The global automotive industry is faced with major technological change in the field of propulsion systems. Due to low carbon emission regulations and a rising societal demand for sustainability, original equipment manufacturers (OEMs) are forced to innovate either in the conventional technology or in the technological alternatives such as electric drives or fuel cells. However, OEMs are only marginally switching to electromobility so far, but rather incrementally innovating traditional technologies. This behaviour can be described as sailing ship effect which contains the reaction of an old technology to a new technology by fostering innovation in the old technology. Firstly, the present study contributes to the discussion in literature on the sailing ship effect by combining its underlying ideas and consequences with the rationales of path dependence to demonstrate that such a behaviour may be individually economical rational. Based on these considerations, we respond to the call for further empirical investigation of the sailing ship effect. We show patent-based evidence that there has been a temporary sailing ship effect in the automotive industry concerning traditional and emerging propulsion systems and discuss implications for corporate technology strategy and policy

Drucker\u27s Insights on Market Orientation and Innovation: Implications for Emerging Areas in High-Technology Marketing

In 1954, Drucker boldly declared that organizations have only two basic functions, marketing and innovation. While true for any organization, this insight is particularly pertinent for technology-based businesses. The complicated environment surrounding high-tech companies creates a great need for sophisticated marketing, yet these companies continue to have under-developed competencies in marketing and in understanding customer needs. In its first two sections, this essay explores Drucker’s insights with respect to two particularly salient issues for high-tech companies: developing and implementing a market orientation, and sustained break-through innovations. We review Drucker’s insights and synthesize them with the scholarly research on these issues. In the third section, we discuss three emerging areas in high-tech marketing where academics and managers could build on Drucker’s insight to guide future research and practice: market-driving, customer co-creation, and corporate social responsibility. The illustrative examples provided by these emerging areas highlight that even today, Drucker’s writings continue to offer remarkable guidance to scholars and managers who are willing to take the time to reflect, understand, and incorporate these insights in the unique context of high-tech industries