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Generating 'buzz' about new products can influence their success

Christian Fernsby |
The way companies announce new products or build up hype can often influence their success once those new products hit the market, according to new research from Binghamton University, State University of New York.

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Preannouncement marketing can often influence a product's success, whether it's an upcoming blockbuster movie or a new product rollout from major companies like Coca-Cola or Apple.

A study from Binghamton University's School of Management Associate Professor Debi Mishra shows how companies might use this type of marketing to their advantage.

What these communications provide is another way to think about shareholder return because shareholders want the money that they're putting in to appreciate in value, said Mishra, a marketing expert who conducted the study.

While that often depends on the actual product performance, he said, how companies manage and communicate the "buzz" plays a big role.

A study from Binghamton University's School of Management Associate Professor Debi Mishra shows how companies might use this type of marketing to their advantage.

"If companies create all this buzz about a product but never release it, they might benefit from the stock market having gone up initially, but shareholders will suffer down the road," Mishra said.

"It also makes a difference whether the company makes any kind of guarantee, such as purchasing land worth $20 million for a factory to make the new product. That's a credible commitment because that money could be lost if they never introduce that product. The market is smart enough to figure these types of things out."

Mishra said the research also showed a "surprise effect" can impact the market's reaction to new products.

If a company makes a new product announcement and has already put in a lot of visible commitment behind it, that is no longer a surprise to the market because of an implied expectation the company would follow through with the introduction.

Mishra said a company's new product announcement that doesn't provide upfront information about how much is being invested into it could potentially make a larger splash on the market once it comes out.


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