Premarket Forecasting of Really-New Products

Abstract

The authors illustrate how a firm can face the challenge of forecasting consumer reaction for a really-new product. For the case of an electric vehicle, the authors describe how one firm combines managerial judgment and state-of-the-art market measurement to determine whether (1) the really-new product would be a viable business venture at its target launch date, (2) the firm should plan for improvements in technology that would reduce price and/or increase benefits enough so that the business venture would be profitable, or (3) the firm should stop development. The new market measurement system combines existing methods with a multimedia virtual-buying environment that conditions respondents for future situations, simulates user experience, and encourages consumers to actively search for information on the product. The authors comment on the advantages and disadvantages of the methodology and summarize the lessons they have learned from this application.