KOREASCHOLAR

Product launch is perhaps the most important but risky phase in new product development process (Calantone & Montoya-Weiss, 1993). Product management at the launch phase aims to gain market acceptance, which, in turn, may maximize the chances of profitability (Guiltinan, 1999). One of the hidden, but real, threats for the vast majority of new product launches into a market is cannibalization, which refers to the process by which a new product gains a portion of its sales by diverting sales from an existing product (Harvey & Kerin, 1979;Lomax, Hammond, East, and Clemente, 1997; Traylor, 1986). High-technology markets are characterized by uncertainties that derive from market, technology, and competitive factors (Moriarty & Kosnik, 1989). Different information processing patterns among buyers are likely to emerge in high-technology markets (Capon and Glazer, 1987; Glazer, 1991). Accordingly, marketing strategies and tools are required to adapt to market environments. In response to environmental complexity and turbulence, marketers of high-tech products usually resort to marketing communications to assuage customers’ fear and doubt involved in product adoption (Lee and O’Connor, 2003). Such high-tech marketing practices, in a sense, illuminate signaling theory logic to mitigate uncertainty (Gulati and Higgins, 2003). Drawing on signaling theory, this research is to explore the circumstances under which launch tactics may result in salient product cannibalization. It is proposed that the cannibalization of product launch varies with the interactions between launch tactics and organizational/market factors. The findings of this research indicate that the cannibalization effect of price similarity will be greater for a launching firm possessing great product category strength. The cannibalization effects of preannouncing timing and price similarity tend to be greater in a highly competitive market context, as opposed to a low competitive context. Nevertheless, relative communication effort in support of product launch results in smaller cannibalization under a highly competitive condition. Product cannibalization derived by earlier preannouncements will become greater in a highly technologically turbulent market. This research contributes to the marketing and product management literature in two main respects. First, it represents an initial effort to empirically test the link between tactics in support of product launch and product cannibalization under different firm and market conditions. Second, we advance understanding of the cannibalization effects incurred by launch tactics by adopting a signaling approach. The fit between marketing strategy and its context has significant implications for new product performance, which should be captured in terms of the potential cannibalization between a new product and other products within the same firm, in addition to its sales and profitability. The findings may also offer guidelines for managing launch tactics. To make right decisions on developing appropriate tactics, the firms must accurately evaluate the firm and market characteristics and, simultaneously, take into account the amount of cannibalization caused by different tactics.

• Chien-Wei Chen(National Chengchi University)
• Nai-Hwa Lien(National Taiwan University)