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More effective assessment of market performance in later stages of the product development process: The case of the motion picture industry

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  • Gerda Gemser
  • Mark Leenders
  • Charles Weinberg

Abstract

A key challenge for companies engaging in new product development (NPD) is to reduce uncertainty by accurately forecasting demand. In this study, we focus on whether later-stage NPD market performance assessments are more accurate than early-stage assessments. Although the literature supports this, we suggest four factors (escalating commitment, information-processing limitations, emergence of new uncertainties, and interdependencies) why this may not be so. Using data from the movie industry, we find that the price film distributors pay to producers for a nearly or fully completed but not yet launched film (the so-called minimum guarantee) mediates the effect of production budget, the main predictor of revenues at the early stage of NPD, consistent with the hypothesis that later-stage assessments are more accurate than earlier ones. However, despite the external validity of this market-based measure, the amount of uncertainty reduction is limited. The implications for NPD uncertainty management are discussed. Copyright Springer Science+Business Media, LLC 2012

Suggested Citation

  • Gerda Gemser & Mark Leenders & Charles Weinberg, 2012. "More effective assessment of market performance in later stages of the product development process: The case of the motion picture industry," Marketing Letters, Springer, vol. 23(4), pages 1019-1031, December.
    • Handle: RePEc:kap:mktlet:v:23:y:2012:i:4:p:1019-1031
    DOI: 10.1007/s11002-012-9208-z
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    References listed on IDEAS

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    Cited by:

    1. Divakaran, Pradeep Kumar Ponnamma & Palmer, Adrian & Søndergaard, Helle Alsted & Matkovskyy, Roman, 2017. "Pre-launch Prediction of Market Performance for Short Lifecycle Products Using Online Community Data," Journal of Interactive Marketing, Elsevier, vol. 38(C), pages 12-28.
    2. Jordi McKenzie, 2023. "The economics of movies (revisited): A survey of recent literature," Journal of Economic Surveys, Wiley Blackwell, vol. 37(2), pages 480-525, April.
    3. Björn Bohnenkamp & Ann-Kristin Knapp & Thorsten Hennig-Thurau & Ricarda Schauerte, 2015. "When does it make sense to do it again? An empirical investigation of contingency factors of movie remakes," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 39(1), pages 15-41, February.
    4. Pejman Ebrahimi & Seyed Mozaffar Mirbargkar, 2017. "Green entrepreneurship and green innovation for SME development in market turbulence," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 7(2), pages 203-228, August.

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