Datar, S., Jordan, C.C., Kekre, S., Rajiv, S. & Srinivasan, K. (1997). Advantages of Time-Based New Product Development in a Fast-Cycle Industry. Journal of Marketing Research, 34(1), 36-49.

Format: Peer-reviewed article

Type: Research — Non-experimental

Experience level of reader: Advanced

Annotation: This article investigates the advantage of lead time on market share. Three firms were surveyed, all of which were suppliers of computer components — a fast paced industry rapidly producing new products. The authors found that lead time positively impacts market share, more so during volume production and concept generation stages than at the prototype development stage. However, the authors also discovered that there are lead time thresholds and lag time thresholds. During these times a competitor may enter the market and capture significant market share, eliminating the gains that would have been realized by the company reaching the marketplace first. However, lead time threshold varies depending on the structure of the company. Organizations with a concentrated structure have approximately 33 days to introduce a new product, while those with a distributed structure have only 10 days. Further work in this area is needed, as the small sample and specific industry area included in this survey prevent the results from being readily generalizable to other industries.

Setting(s) to which the reported activities/findings are relevant: Large business, Small business (less than 500 employees)

Knowledge user(s) to whom the piece of literature may be relevant: Manufacturers, Researchers

Knowledge user level addressed by the literature: Sector

This article uses the Commercial Devices and Services version of the NtK Model

• Maintaining sufficient lead time over competitors has a positive impact on market share. Similarly, lagging has a negative impact on market share. Lead and lag time is particularly significant during volume production and concept generation stages, and less significant during the prototype development stage.
  Survey. High statistical significance.
  Occurrence of finding within the model: Stage 1, Stage 2, Stage 8

• Utilize novel estimation procedure for testing order entry models. Procedure is based on the generalized method of moments.
  Survey. This model was developed and applied by the study's authors to overcome the limitations of regression-based methods.
  Occurrence of finding within the model: Step 9.3

• Market share gains can only be sustained with substantial lead time in volume production when product diffusion is occurring slowly.
  Survey. High statistical significance.
  Occurrence of finding within the model: Stage 8

• Firms with a concentrated structure (new product activities at one location and manufacturing at another) are at risk of losing market share to competitors for a longer period of time than firms with a distributed structure (new product development and manufacturing housed together at multiple locations). Ie) A distributed firm will retain market share advantages related to being first-to-market so long as competition does not enter the market for 10 days. A concentrated structure firm must not have competition for 30 days or it will lose market share.
  Survey. High statistical significance.
  Occurrence of finding within the model: Stage 8, Step 1.5

• The largest market share is achieved by the firm that first introduces its product to the market. (Carpenter & Nakamoto, 1989; Kalyanaram & Urban, 1992; Smith & Reinertsen, 1991; & Urban et al. 1986)

• Pros and cons of distributed verses concentrated organizational structure. (Bartlett & Ghoshal, 1989; Ghoshal & Nohria, 1993; Porter, 1986)

• The faster a company completes the product development process, the greater is its likelihood of surpassing its competitors in the marketplace. (Stalk, 1988; Stalk & Hout, 1990; Wheelwright & Clark, 1992; Williams, 1992)

Method: Listening to the customer's needs early in the product development process has been identified as being critical for eventual market success. (Griffin & Hauser, 1993; Hauer & Clausing, 1988; Nayak & Chen, 1993)
Occurrence of finding within the model: Step 4.11, Step 2.2, Step 1.1, Step 6.3, Step 6.1, Step 5.3

Tip: When conducing evaluations, keep in mind that customers are likely to retain or switch suppliers on the basis of service (55%), quality (7%), or price (7%). (Forum Corporation, 1988)
Occurrence of finding within the model: Step 9.1, Step 8.2