The Impact of Product Category Lifecycle and Marketing Capabilities on New Product Performance: the Mediating Role of Marketing Program Planning and Launch Proficiency

Authors:
Dorian-Laurentiu Florea1, Claudiu-Catalin Munteanu2, Dora-Carmen Galvez Cruz1, Gabriela Capatina3
1. Anahuac University Mexico (Mexico)
2. The Romanian Academy (Romania)
3. The Bucharest University of Economic Studies (Romania)
Pages:
63 - 86
Language:
English
Cite as:
Florea, D. L., Munteanu, C. C., & Capatina, G. (2020). The Impact of Product Category Lifecycle and Marketing Capabilities on New Product Performance: the Mediating Role of Marketing Program Planning and Launch Proficiency. Marketing and Management of Innovations, 1, 63-85. http://doi.org/10.21272/mmi.2020.1-05


Annotation

Theory underlines the role of new product development for company survival and success. However, the success rates of new products launches are always at underwhelming levels. Practical wisdom shows that new product performance is the outcome of both controllable, internal factors and external, uncontrollable factors. The authors contrast the role of product category lifecycle as an external factor and of marketing capabilities as an internal factor, to find the balance between these two determinants. To the best of our knowledge, this is the first study to compare the impact of both types of factors on launch proficiency and further product growth. We apply PLS-SEM on a sample of 213 Mexican firms to test a theoretical model grounded on resource-advantage theory and strategic choice theory. Results show that both determinants are significant, but marketing capabilities exert a much stronger influence on new product performance. The relationship between marketing capabilities and unique product performance is mediated by marketing program planning. In contrast, the relationship between product category lifecycle and new product performance is mediated by launch proficiency. In this context, marketing program planning efficiency represents the mid-term and long-term quality of strategic marketing. At the same time, the overall launch proficiency reflects the short-term ability of the company to launch new products. From the perspective of strategic choice theory, the results of our study reinforce the importance of a successful launch for the short-term and mid-term new product performance. Besides, our empirical research finds that product category lifecycle strengthens the positive relationship between marketing program planning and unique product performance. This makes marketing program planning more critical for new product performance as the product category matures. From a managerial standpoint, our findings dismiss the uncontrollable market forces as the main reason for new product failures. We show that new product failures are most often caused by the marketing manager’s inability to devise an appropriate marketing plan. The paper also contributes to the literature of resource-advantage theory by providing compelling evidence regarding the foremost importance of marketing capabilities for new product success. Our findings also emphasize the essential role of launch proficiency in further product success, as it is difficult to recover from an early product failure. In practical terms, managers are advised not to postpone new product launches under the «bad timing» argument.


Keywords
launch proficiency, marketing capabilities, marketing program planning, new product performance, product lifecycle.


Links
  1. Agarwal, R., & Audretsch, D.B. (2001). Does entry size matter? The impact of the life cycle and technology on firm survival. The Journal of Industrial Economics, 49(1), 21-43. [Google Scholar][CrossRef]
  2. Agarwal, R., Sarkar, M.B., & Echambadi, R. (2002). The conditioning effect of time on firm survival: An industry life cycle approach. Academy of Management Journal, 45(5), 971-994. [Google Scholar] [CrossRef]
  3. Altshuler, D., & Magni, C.A. (2015). Introducing Aggregate Return on Investment as a Solution to the contradiction between some PME metrics and IRR. Journal of Performance Measurement,20(1), 48-56. [Google Scholar] [CrossRef]
  4. Armstrong, J.S., & Overton, T.S. (1977). Estimating nonresponse bias in mail surveys. Journal of Marketing Research, 14(3), 396-402. [Google Scholar] [CrossRef]
  5. Atuahene-Gima, K. (2005). Resolving the capability-rigidity paradox in new product innovation. Journal of marketing, 69(4), 61-83. [Google Scholar] [CrossRef]
  6. Baker, W.E., Sinkula, J.M., Grinstein, A., & Rosenzweig, S. (2014). The effect of radical innovation in/congruence on new product performance. Industrial Marketing Management, 43(8), 1314-1323. [Google Scholar] [CrossRef]
  7. Baron, R.M., & Kenny, D.A. (1986). The moderator-mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of personality and social psychology, 51(6), 1173. [Google Scholar] [CrossRef]
  8. Bello, D.C., Radulovich, L.P., Javalgi, R.R.G., Scherer, R.F., & Taylor, J. (2016). Performance of professional service firms from emerging markets: Role of innovative services and firm capabilities. Journal of World Business, 51(3), 413-424. [Google Scholar] [CrossRef]
  9. Bingham, C.B., Eisenhardt, K.M., & Furr, N.R. (2007). What makes a process a capability? Heuristics, strategy and effective capture of opportunities. Strategic Entrepreneurship Journal, 1(1-2), 27-47. [Google Scholar] [CrossRef]
  10. Bollen, K., & Lennox, R. (1991). Conventional wisdom on measurement: A structural equation perspective. Psychological bulletin, 110(2), 305. [Google Scholar] [CrossRef]
  11. Bowman, D., & Gatignon, H. (1996). Order of entry as a moderator of the effect of the marketing mix on market share. Marketing Science, 15(3), 222-242. [Google Scholar] [CrossRef]
  12. Brinckmann, J., Grichnik, D., & Kapsa, D. (2010). Should entrepreneurs plan or just storm the castle? A meta-analysis of contextual factors impacting the business planning-performance relationship in small firms. Journal of Business Venturing, 25(1), 24-40. [Google Scholar] [CrossRef]
  13. Cacciolatti, L., & Lee S.H. (2016). Revisiting the relationship between marketing capabilities and firm performance: The moderating role of market orientation, marketing strategy and organizational power. Journal of Business Research, 69(12), 5597-5610. [Google Scholar] [CrossRef]
  14. Calantone, R.J., & Di Benedetto, C. A. (2012). The role of lean launch execution and launch timing on new product performance. Journal of the academy of marketing science, 40(4), 526-538. [Google Scholar] [CrossRef]
  15. Calantone, R.J., Yeniyurt, S., Townsend, J.D., & Schmidt, J.B. (2010). The effects of competition in short product life-cycle markets: The case of Motion Picture. Journal of Product Innovation Management, 27(3), 349-361. [Google Scholar] [CrossRef]
  16. Carmines, E.G., & Zeller, R.A. (1979). Reliability and validity assessment (Vol. 17). Sage Publications. [Google Scholar]
  17. Cassar, G. (2014). Industry and startup experience on entrepreneur forecast performance in new firms. Journal of Business Venturing, 29(1), 137-151. [Google Scholar] [CrossRef]
  18. Castellion, G., & Markham, S.K. (2013). Perspective: New Product Failure Rates: Influence of Argumentum ad P opulum and Self-Interest. Journal of Product Innovation Management, 30(5), 976-979. [Google Scholar] [CrossRef]
  19. Cavusgil, E., Deligonul, Z.S., & Calantone, R. (2011). Late entrant over-the-counter and Rx market entry strategies. International Journal of Pharmaceutical and Healthcare Marketing. [Google Scholar] [CrossRef]
  20. Child, J. (1997). Strategic choice in the analysis of action, structure, organization and environment: Retrospect and prospect. Organization Studies, 18(1), 43-76. [Google Scholar] [CrossRef]
  21. Chin, W.W., & Gopal, A. (1995). Adoption intention in GSS: relative importance of beliefs. DATABASE for Advances in information Systems, 26(2-3), 42-64. [Google Scholar] [CrossRef]
  22. Conant, J.S., & White, J.C. (1999). Marketing program planning, process benefits, and store performance: an initial study among small retail firms. Journal of Retailing, 75(4), 525-541. [Goole Scholar] [CrossRef]
  23. Cooper, R.G. (2011). Perspective: The innovation dilemma: How to innovate when the market is mature. Journal of Product Innovation Management, 28(s1), 2–27. [Google Scholar] [CrossRef]
  24. Cooper, R.G. (1984). New product strategies: what distinguishes the top performers? Journal of Product Innovation Management, 1(3), 151-64. [Google Scholar] [CrossRef]
  25. Day, G.S. (2011). Closing the marketing capabilities gap. Journal of Marketing, 75(4), 183-195. [Google Scholar] [CrossRef]
  26. Dess, G.G., & Robinson Jr, R.B. (1984). Measuring organizational performance in the absence of objective measures: the case of the privately-held firm and conglomerate business unit. Strategic management Journal, 5(3), 265-273. [Google Scholar] [CrossRef]
  27. Diamantopoulos, A., Riefler, P., & Roth, K.P. (2008). Advancing formative measurement models. Journal of business research, 61(12), 1203-1218. [Google Scholar] [CrossRef]
  28. Diamantopoulos, A., & Winckhofer, H.M. (2001). Index construction with formative indicators: An alternative to scale development. Journal of marketing research, 38(2), 269-277. [Google Scholar] [CrossRef]
  29. Dibrell, C., Craig, J.B., & Neubaum D.O. (2014). Linking the formal strategic planning process, planning flexibility, and innovativeness to firm performance. Journal of Business Research, 67(9), 2000-2007. [Google Scholar] [CrossRef]
  30. Ernst, H., & Fischer, M. (2014). Integrating the R&D and Patent Function: Implication for New Product Performance. Journal of Product Innovation Management, 31, 118-132. [Google Scholar][CrossRef]
  31. Fornell, C., & Larcker, D.F. (1981). Evaluating structural equation models with unobservable variables and measurement errors. Journal of marketing research, 18(1), 39-50. [Google Scholar][CrossRef]
  32. Gatignon, H., Gotteland, D., & Haon, C. (2016). Making innovation last: Volume 2: Sustainable strategies for long term growth. Springer. [Google Scholar]
  33. Gatignon, H., & Robertson, T.S. (1985). A propositional inventory for new diffusion research. Journal of consumer reesearch, 11(4), 849-867. [Google Scholar] CrossRef[]
  34. Gatignon, H., & Xuereb, J.M. (1997). Strategic orientation of the firm and new product performance. Journal of marketing research, 34(1), 77-90. [Google Scholar] [CrossRef]
  35. Gourville, J.T. (2006). Eager sellers and stony buyers: Understanding the psychology of new-product adoption. Harvard business review, 84(6), 98-106. [Google Scholar]
  36. Green, D.H., Barclay, D.W., & Ryans, A.B. (1995). Entry strategy and long-term performance: Conceptualization and empirical examination. Journal of marketing, 59(4) 1-16. [Google Scholar][CrossRef]
  37. Hair, J.F., Hult, G.T.M., Ringle, C.M, & Sarstedt, M. (2017). A primer on partial least squares structural equation modeling (PLS-SEM). (2nd ed). Thousand Oaks: Sage.
  38. Hair, J.F., Ringle, C.M., & Sarstedt, M. (2011). PLS-SEM: Indeed a silver bullet. Journal of Marketing theory and Practice, 19(2), 139-152. [Google Scholar] [CrossRef]
  39. Heirati, N., & O’Cass, A. (2016). Supporting new product commercialization through managerial social ties and market knowledge development in an emerging economy. Asia Pacific Journal of Management, 33(2), 411-433. [Google Scholar] [CrossRef]
  40. Henard, D.H., & Szymanski, D.M. (2001). Why some new products are more successful than others. Journal of marketing Research, 38(3), 362-375. [Google Scholar] [CrossRef]
  41. Huang, C.T., & Tsai, K.H. (2014). Synergy, environmental context, and new product performance: A review based on manufacturing firms. Industrial Marketing Management, 43(8), 1407-1419. [Google Scholar] [CrossRef]
  42. Hulland, J., Baumgartner, H., & Smith, K.M. (2018). Marketing survey research best practices: evidence and recommendations from a review of JAMS articles. Journal of the Academy of Marketing Science, 46(1), 92-108. [Google Scholar] [CrossRef]
  43. Hunt, S. D., & Morgan, R.M. (1996). The resource-advantage theory of competition: dynamics, path dependencies, and evolutionary dimensions. Journal of marketing, 60(4), 107-114. [Google Scholar] [CrossRef]
  44. Hunt, S. D., & Morgan, R.M. (1997). Resource-advantage theory: a snake swallowing its tail or a general theory of competition?. Journal of Marketing, 61(4), 74-82. [Google Scholar] [CrossRef]
  45. Jain, D. (2001). Managing new-product development for strategic competitive advantage. In Iacobucci, D. (ed.), Kellogg on Marketing, New York: Wiley.
  46. Jarvis, C.B., MacKenzie, S.B., & Podsakoff, P.M. (2003). A critical review of construct indicators and measurement model misspecification in marketing and consumer research. Journal of consumer research, 30(2), 199-218. [Google Scholar] [CrossRef]
  47. Ketchen, D., & Hult, G.T.M. (2011). Marketing and organization theory: opportunities for synergy. Journal of the Academy of Marketing Science, 39(5), 1-3. [Google Scholar] [CrossRef]
  48. Kim, N., Shin, S., & Min, S. (2016). Strategic marketing capability: Mobilizing technological resources for new product advantage. Journal of Business Research, 6(12), 5644-5652. [Google Scholar] [CrossRef]
  49. Kraiczy, N.D., Hack, A., & Kellermanns, F.W. (2014). New product portfolio performance in family firms. Journal of Business Research, 67(6), 1065-1073. [Google Scholar] [CrossRef]
  50. Kuester, S., Hess, S.C., & Herrmann, A. (2015). The role of defaults in preventing innovation rejection. International Journal of Innovation Management, 19(2), 1550023. [Google Scholar][CrossRef]
  51. Kuester, S., Homburg, C., & Hess, S.C. (2012). Externally directed and internally directed market launch management: the role of organizational factors in influencing new product success. Journal of Product Innovation Management, 29, 38-52. [Google Scholar] [CrossRef]
  52. Langerak, F., Hultink, E.J., & Robben, H. S. (2004). The impact of market orientation, product advantage, and launch proficiency on new product performance and organizational performance. Journal of product innovation management, 21(2), 79-94. [Google Scholar] [CrossRef]
  53. Lawry, P.B., & Gaskin, J. (2014). Partial least squares (PLS) structural equation modeling (SEM) for building and testing behavioral causal theory: When to choose it and how to use it. IEEE transactions on professional communication, 57(2), 123-146. [Google Scholar] [CrossRef]
  54. Lieberman, M.B., & Montgomery, D.B. (2013). Conundra and progress: Research on entry order and performance. Long Range Planning, 46(4-5), 312-324. [Google Scholar] [CrossRef]
  55. MacKinnon, D.P., Warsi, G., & Dwyer, J.H. (1995). A simulation study of mediated effect measures. Multivariate behavioral research, 30(1), 41-62. [Google Scholar] [CrossRef]
  56. Markides, C., & Sosa, L. (2013). Pioneering and first mover advantages: the importance of business models. Long Range Planning, 46(4-5), 325-334. [Google Scholar] [CrossRef]
  57. Montoya-Weiss, M.M., & Calantone, R. (1994). Determinants of new product performance: a review and meta-analysis. Journal of Product Innovation Management: An International Publication Of The Product Development & Management Assotiation, 11(5), 397-417. [Google Scholar] [CrossRef]
  58. Moorman, C., & Slotegraaf, R.J. (1999). The contingency value of complementary capabilities in product development. Journal of Marketing Research 36(2), 239-257. [Google Scholar][CrossRef]
  59. Morgan, N.A. (2012). Marketing and business performance. Journal of the Academy of Marketing Science, 40(1), 102-119. [Google Scholar] [CrossRef]
  60. Morgan, N.A., Vorhies, D.W., & Mason, C.H. (2009). Market orientation, marketing capabilities, and firm performance. Strategic management journal, 30(8), 909-920. [Google Scholar][CrossRef]
  61. Mu, J. (2015). Marketing capability, organizational adaptation and new product development performance. Industrial Marketing Management, 49, 151-166. [Google Scholar] [CrossRef]
  62. Mu, J. (2014). Networking capability, network structure, and new product development performance. IEEE Transactions on Engineering Management, 61(4), 599-609. [Google Scholar][CrossRef]
  63. Mu, J., & Di Benedetto, C.A. (2011). Strategic orientations and new product commercialization: mediator, moderator, and interplay. R&D Management, 41(4), 337-359. [Google Scholar][CrossRef]
  64. Muller-Stewens, B., & Moller, K. (2017). Performance in new product development: a comprehensive framework, current trends, and research directions. Journal of Management Control,28(2), 157-201. [Google Scholar] [CrossRef]
  65. Murray, J.Y., Gao, G.Y., & Kotabe, M. (2011). Market orientation and performance of export ventures: the process through marketing capabilities and competitive advantage. Journal of the Academy of Marketing Science, 39(2), 252-269. [Google Scholar] [CrossRef]
  66. Najafi-Tavani, S., Sharifi, H., & Najafi-Tavani, Z. (2016). Market orientation, marketing capability, and new product performance: The moderating role of absorptive capacity. Journal of Business Research, 69(11), 5059-5064. [Google Scholar] [CrossRef]
  67. Narver, J.C., & Slater S.F. (1990). The effect of a market orientation on business profitability. Journal of Marketing, 54(4), 20-35. [Google Scholar] [CrossRef]
  68. Ngo, L.V., & O’Cass, A. (2012). In search of innovation and customer-related performance superiority: The role of market orientation, marketing capability and innovation capability interactions. Journal of Product Innovation Management, 29(5), 861-877. [Google Scholar] [CrossRef]
  69. Nunnally, J.C. (1978). Psychometric theory 2nd Ed. New York: McGraw-Hill.
  70. O'Cass, A. & Heirati, N. (2015). Mastering the complementarity between marketing mix and customer-focused capabilities to enhance new product performance. Journal of Business & Industrial Marketing. [Google Scholar] [CrossRef]
  71. Phillips, J.J. (1997). Measuring return on investment. Alexandria: American Society for Training & Development.
  72. Ploscaru, C.C., Munteanu, C.C., & Florea, D.L. (2014). The Implementation of Corporate Governance into Brand Management. SEA: Practical Application of Science, 2(3). http://seaopenresearch.eu/Journals/articles/SPAS_5_73.pdf.
  73. Reid, S.E., Roberts, D., & Moore, K. (2015). Technology vision for radical innovation and its impact on early success. Journal of Product Innovation Management, 43(4), 593-609. [Google Scholar] [CrossRef]
  74. Rink, D.R., & Swan, J.E. (1979). Product life cycle research: A literature review. Journal of Business Research, 7(3), 219-242. [Google Scholar] [CrossRef]
  75. Rodriguez-Pinto, J., Carbonell, P., & Rodriguez-Escudero, A.I. (2011). Speed or quality? How the order of market entry influences the relationship between market orientation and new product performance. International Journal of Research in Marketing, 28(2), 145-154. [Google Scholar] [CrossRef]
  76. Rogers, E. M (1983). Diffusion of innovations. (3rd ed). New York: Free Press.
  77. Rue, L.W., & Ibrahim, N.A. (1998). The relationship between planning sophistication and performance in small businesses. Journal of small business management, 36(4), 24. [Google Scholar]
  78. Rust, R.T., Ambler, T., Carpenter, G.S., Kumar, V., & Srivastava, R.K. (2004). Measuring marketing productivity: Current knowledge and future directions. Journal of marketing, 68(4), 76-89. [Google Scholar] [CrossRef]
  79. Schoenherr, T., & Swink, M. (2015). The roles of supply chain intelligence and adaptability in new product launch success. Decision Sciences, 46(5), 901-936. [Google Scholar] [CrossRef]
  80. Schuhmacher, M.C., Kuester, S., & Hanker, A.L. (2018). Investigating antecedents and stage-specific effects of customer integration intensity on new product success. International Journal of Innovation Management, 22(4), 1850032. [Goole Scholar] [CrossRef]
  81. Schuhmacher, M.C., Kuester, S., & Hultink, E.J. (2018). Appetizer or Main Course: Early Market vs. Majority Market Go-to-Market Strategies for Radical Innovations. Journal of product innovation management, 35(1), 106-124. [Google Scholar] [CrossRef]
  82. Schwenk, C.R., & Shrader, C.B. (1993). Effect of formal strategic planning on financial performance in small firms: A meta-analysis. Entrepreneurship: theory and practice, 17(3), 53-64. [Google Scholar] [CrossRef]
  83. Slater, S.F., & Narver, J.C. (1994). Does competitive environment moderate the market orientation-performance relationship? Journal of Marketing, 58(1), 46-55. [Google Scholar] [CrossRef]
  84. Song, M., Im, S., Bij, H., & Song, L.Z. (2011). Does strategic planning enhance of impede innovation and firm performance? Journal of Product Innovation Management, 28(4), 503-520. [Google Scholar] [CrossRef]
  85. Song, X.M., & Parry, M.E. (1996). What separates Japanese new product winners from losers. Journal of Product Innovation Management: An international publication of the product development & management association, 13(5), 422–439. [Google Scholar] [CrossRef]
  86. Story, V.M., Boso, N., & Cadogan, J.W. (2015). The form of relationship between firm-level product innovativeness and new product performance in developed and emerging markets. Journal of Product Innovation Management, 32(1), 45-64. [Google Scholar] [CrossRef]
  87. Su, M., & Rao, V.R. (2011). Timing decisions of new product preannouncement and launch with competition. International Journal of Production Economics, 129(1), 51-64. [Google Scholar][CrossRef]
  88. Suarez, F.F., Grodal, S., & Gotsopoulos, A. (2015). Perfect timing? Dominant category, dominant design, and the window of opportunity for firm entry. Strategic Management Journal, 36(3), 437-448. [Google Scholar] [CrossRef]
  89. Talke, K., & Hultink, E.J. (2010a). The impact of the corporate mind-set on new product launch strategy and market performance. Journal of Product Innovation Management, 27(2), 220-237. [Google Scholar] [CrossRef]
  90. Talke, K., & Hultink, E.J. (2010b). Managing diffusion barriers when launching new products. Journal of Product Innovation Management, 27 (4), 537-553. [Google Scholar] [CrossRef]
  91. Theodosiou, M., Kehagias, J., & Katsikea, E. (2012). Strategic orientation, marketing capabilities and firm performance: An empirical investigation in the context of frontline managers of service organizations. Industrial Marketing Management, 41(7), 1058-1070. [Google Scholar] [CrossRef]
  92. Vanhaverbeke, W., Belderbos, R., Duysters, G., & Beerkens, B. (2015). Technological performance and alliances over the industry life cycle: evidence fron the ASIC industry. Journal of Product Innovation Management, 32(4), 556-573. [Google Scholar] [CrossRef]
  93. Varadarajan, R. (2010). Strategic marketing and marketing strategy: domain, definition, fundamental issues and foundational premises. Journal of the Academy of Marketing Science, 38(2), 119-140. [Google Scholar] [CrossRef]
  94. Verhoef, P.C., & Leeflang, P.S. (2009). Understanding the marketing department’s influence within the firm. Journal of marketing, 73(2), 14-37. [Google Scholar] [CrossRef]
  95. Vorhies, D.W., Orr, L.M., & Bush, V.D. (2011). Improving customer-focused marketing capabilities and firm financial performance via marketing exploration and exploitation. Journal of the Academy of Marketing Science, 39(5), 736-756. [Google Scholar] [CrossRef]
  96. Vickery, S.K., Koufteros, X., Droge, C., & Calantone, R. (2016). Product modularity, process modularity, and new product introduction performance: does complexity matters? Production and Operations management, 25(4), 751-770. [Google Scholar] [CrossRef]
  97. Vorhies, D.W., & Morgan, N.A. (2005). Benchmarking marketing capabilities for sustained competitive advantage. Journal of marketing, 69(1), 80–94. [Google Scholar] [CrossRef]
  98. Workman Jr, J.P. (1993). Marketing's limited role in new product development in one computer systems firm. Journal of Marketing Research, 30 (4), 405-421. [Google Scholar] [CrossRef]
  99. Zacharias, N.A., Stock, R.M., & Im, S. (2017). Strategic Givens in New Product Development: Understanding Curvilinear Effects on New Product Performance. International Journal of Innovation Management, 21(1), 1750010. [Google Scholar] [CrossRef]
  100. Zahra, S.A., Criaco, G., Naldi, L., & Larraneta, B. (2015). Industry knowledge characteristics, prior experience and new venture survival. In Academy of Management Proceedings, (Vol. 2015, No. 1, p. 17103). Briarcliff Manor, NY 10510: Academy of Management. [Google Scholar] [CrossRef]