EXPLORING THE ROLE OF SUPPLY-SIDE FACTORS IN THE SURVIVAL OF INNOVATIONS: A LONGITUDINAL ANALYSIS OF THE ITALIAN MOBILE VAS INDUSTRY

There is a surprisingly high percentage of new products and services that fail after they reach the market: because of the unsatisfactory levels of diffusion and customer acceptance that they experience, their sales are discontinued very early. Although innovation and marketing management research has acknowledged the importance of a properly planned and executed commercialization strategy on new product performance, no systematic analyses have been carried out so far to understand how specific market launch decisions affect early diffusion and hence survival. This paper investigates how early market survival is affected by the maturity of the technology on which the innovation is based and by the use of some approaches (such as investments in advertising and involvement of external organizations) during the commercialization process. The paper indicates that the more mature the technology on which an innovation is based, the higher the likelihood of incurring in early failure. Moreover, it emerges that investments in advertising and substantial involvement of the players of the innovation’s adoption network in commercialization activities amplify the chance of early survival. Whereas involvement of external organizations in the commercialization process appears to be more effective in ensuring early market survival for new, embryonic innovations, advertising is equally important for both mature and embryonic new products and services. These findings suggest that product and marketing managers who are willing to reap the potential advantages from commercializing an innovation based on very new and revolutionary technologies (i.e. higher margins, expanded market, increased reputation, opportunity to establish a new standard in the industry) should be well aware of the challenges that this strategic choice implies in terms of early customer acceptance and diffusion, and should pay particular attention to adopt appropriate commercialization policies to overcome the risk of early failure. The implications for existing research on diffusion of innovation are discussed as well in the paper