A reverse take on the potential success of new product development posits that if a certain type of customer buys your product then it’s probably doomed to failure, according to an article in the Journal of Marketing Research.
In their paper, The Surprising Breadth of Harbingers of Failure, Duncan Simester, Catherine Tucker and Clair Yang build on 2015 research that showed there exist “harbinger customers” who systematically buy new products that fail and are subsequently discontinued by retailers.
Such customers are more likely to purchase products that other customers don’t. But the new research goes further and finds that “harbinger zip codes” exist as well.
“If households in these zip codes adopt a new product, this is a signal that the new product will fail,” the authors state.
“More precisely, holding the number of purchases by non-harbingers fixed, the number of purchases by harbinger zip codes is higher on products that fail than on products that succeed.”
The question then arises as to whether households exhibiting harbinger tendencies tend to cluster together or whether people learn these behaviours after moving into a neighborhood.
The authors report that the evidence “strongly supports” the idea that people move from one harbinger zip code to another (and similarly, households starting in non-harbinger zip codes tend to move to other non-harbinger zip codes) and there is little to suggest that households become more like their neighbors after they move.
“Harbinger tendencies are a sticky trait,” they conclude.
Nor are these tendencies restricted to purchases of consumer items; “they are correlated across a wide range of decisions,” the authors say, including political and housing ones.
When comparing donations to congressional election candidates, for example, they found that households in harbinger zip codes donate to different candidates than those in neighboring zip codes – and they donate to candidates who are less likely to win.
Since findings in one category apply to others, the authors suggest that market research firms could, having identified harbinger zip codes in one product category, use this knowledge in the same way for different firms in different categories.
“Firms do not need to match specific customers across different firms or markets,” they say: “it is sufficient to match zip codes.”
Sourced from Journal of Marketing Research