Preannouncement Strategy Research Articles

Keep it vague? New product preannouncement, regulatory focus, and word-of-mouth

This paper aims to examine the interaction between firm's new product preannouncement (NPP) strategies and consumers' regulatory foci on their WOM intention and the underlying mechanisms. In three experiments, we find that (1) the promotion-focused (prevention-focused) consumers have higher WOM intentions for vague (specific) NPP; (2) curiosity (outcome expectancy) mediates the effects of the NPP strategies on WOM intention for promotion-focused (prevention-focused) consumers; and (3) brand familiarity plays a moderating role, such that the interaction effect between NPP strategy and regulatory focus on consumers' WOM intention holds for a low-familiarity brand only. Our research contributes to a better understanding of NPP strategies and provides actionable strategic support for firms to conduct NPP.

Preannouncement strategy of platform-type new product for competing platforms: Technical or marketing information

<p style='text-indent:20px;'>What message should be released to consumers and developers is an important part of the preannouncement strategy of platforms' new product. From the perspectives of consumers and developers' information perceptions, we develop a game model of two-sided market, which can better describe the impacts of information preannouncement on consumers, developers, and platforms behavior in a competitive environment. There are two preannouncement strategies: Technical or marketing information. Our studies reveal that (i) when the development capabilities are heterogeneous enough, both platforms release technical information; (ii) both platforms preannounce marketing information when the heterogeneity of development capability is sufficiently small, even if it decreases total social welfare; (iii) the platform lacking competitive advantage is more inclined to adopt a strategy different from the competitive advantage platform, and competitive advantage platform is likely to change the preannouncement strategy constantly; (iv) the heterogeneity of platforms is the prerequisite for the asymmetric equilibrium, even if it may decrease the overall social welfare.</p>

Platform Preannouncement Strategies: The Strategic Role of Information in Two-Sided Markets Competition

The release of a new platform version is often preceded by prelaunch activities including a preannouncement of new features, improvements, and other innovations. The information contained within these preannouncements not only shape expectations of distinct but connected sides, for example, users and developers in a video game platform, but also informs a rival platform in a competitive market. Through a game-theoretic analysis of three different preannouncement strategies (formal, informal, and no-preannouncement) in a duopoly, our research furthers the understanding of externality-related information on expectation formation and the associated competitive dynamics. The literature on the role of information in platform competition is limited, and as the first to model the use of this information (through preannouncements) as a strategic lever, we characterize the firms’ equilibrium preannouncement strategies under different market conditions including when agents have an option to switch and/or the ability to multihome. Our findings show a clear relationship between the equilibrium preannouncement strategies and agents’ strength of taste preferences. In markets with weak preferences, firms pursue a no-preannouncement strategy in equilibrium to a formal preannouncement strategy where users and developers have strong taste preferences. Overall, our welfare analyses reveal that in a competitive market, firms will prefer not to preannounce their platform features even if preannouncement may increase expected network effects. Consumer and social welfare are both higher in multihoming markets than in single-homing ones. This paper was accepted by Chris Forman, information systems.

New Product Preannouncement: Phantom Products and the Osborne Effect

The mere preannouncement of a new product can affect consumer choice, thus complicating preannouncement strategy. This is because a preannounced product that is unavailable immediately can still be one of the alternatives in a consumer’s mind at the time of choice. Such unavailable products, also known as phantom products, influence the reference point that consumers compare alternatives to when making a choice, as has been widely demonstrated in experimental studies. Thus, in addition to encouraging consumers to postpone purchase in favor of a future product, preannouncement also changes their preference for the currently available products when consumers do not prefer to postpone. In this paper we explore preannouncement strategy by analyzing a model that incorporates the effect of new product preannouncement (NPP) on consumer preferences and compare the results with a benchmark case in which consumer preferences across the existing products are not influenced by preannouncement. We find that when we take into account the effect of NPP on consumer preferences across the existing products, although postponement of purchase by some consumers remains beneficial, the preference for the current product offering with a lower quality can suffer so much that the significant lowering of current profits is not offset by future gains. Thus, preannouncement may no longer be the optimal strategy for the firm with a lower-quality product, which in turn explains the “Osborne effect.” Our results also challenge the conventional wisdom in new product preannouncement literature. This paper was accepted by Juanjuan Zhang, marketing.

Platform Preannouncement Strategies: A Duopoly of Two-Sided Markets

Platform-firms’ strategic choices differ from that of product-firms. While products serve a market, platforms need to account for the impact of their actions on two (or more) distinct but connected sides. Further, in a competitive market, the preannouncement of a new plat-form by firms such as videogame console makers, needs to not only take into account game-developers’ reactions and gamers’ expectations but also competitive response. In the age of Web-forums and social media, in addition to formal preannouncement, platform firms also engage in informal preannouncement where no explicit commitment of new feature-sets, prices and other information are put-forth. Our work finds that firms’ optimal strategies and equilibrium outcomes are a function of users’ (developers’) strength of taste-preferences. We find that the informal preannouncement strategy is generally preferred as it is able to mitigate some aspects of the price competition. However, in duopolies where users (developers) have strong taste-preferences, the equilibrium outcome is one where both firms pursue formal preannouncement strategies. Both prices and licensing fees are higher when pursuing informal preannouncement strategy and social welfare is always higher in the formal preannouncement game as long the overall preannouncement costs are small.

Retraction Statement: Analysts' Reactions to Earnings Preannouncement Strategies

The above article, published online on December 17, 2002 in Wiley Online Library (wileyonlinelibrary.com), has been retracted by agreement between the authors Hun‐Tong Tan and Robert Libby, the journal Editors, Ray Ball, Philip Berger, Christian Leuz, Haresh Sapra, and Douglas Skinner, The Accounting Research Center at the University of Chicago Booth School of Business and Wiley Periodicals Inc.After receiving notice of Bentley University's report on Dr. James E. Hunton (available at https://www.bentley.edu/files/Hunton%20report%20July21.pdf), the Editors contacted the authors for additional information to help establish the validity of data that form the basis for this article. The following retraction request was submitted by two of the three authors, Hun‐Tong Tan and Robert Libby:“Bentley University conducted an investigation finding that Dr. J.E. Hunton had, while a member of the Bentley University faculty and without the knowledge of his co‐authors, engaged in scientific misconduct [in relation to two published articles]. Dr. Hunton gathered the data used in this study. Therefore, we conclude that the validity of the data underlying the experimental results cannot be confirmed, and request that this article be retracted.”Through his counsel, Dr. Hunton contends that the data are valid and disagrees with the coauthors’ request to voluntarily retract the article. However, Dr. Hunton has not responded to our requests for information that would help confirm the validity of the data.Accordingly, two of the three authors have concluded that the validity of the data underlying the experimental results cannot be confirmed.The Editors consider the authors’ statements, taken together, to be sufficiently clear evidence that the findings in this paper are in doubt because the validity of the underlying data cannot be confirmed. We therefore accept Dr. Libby's and Dr. Tan's request that this paper be retracted and acknowledge Dr. Hunton's objection, through his counsel, to the retraction.REFERENCETan, H‐T.; J. E. Hunton; and R. Libby. 40 (2002): 223–24. doi: 10.1111/1475-679X.00045

Vaporware, Suddenware, and Trueware: New Product Preannouncements Under Market Uncertainty

A firm may want to preannounce its plans to develop a new product in order to stimulate future demand. But given that such communications can affect rivals' incentives to develop the same new product, a firm may decide to preannounce untruthfully in order to deter competitors. We examine an incumbent's preannouncement strategy when there is uncertainty regarding the commercial viability of a new product opportunity and a threat of rival entry. Each firm has a private assessment of the market potential for the new product. Two competitive incentives arise for the incumbent in terms of discouraging rival entry: it can use preemptive communication or it can remain silent and instill a pessimistic market potential outlook. We find that an incumbent prefers to follow a vaporware strategy—i.e., declares plans to pursue a new product opportunity even when it may have no development intentions—when its market forecasting capabilities are weak and the demand-side benefits from preannouncing are small. By contrast, when the incumbent has strong market forecasting capabilities and the demand-side benefits are small, the incumbent adopts a suddenware strategy—i.e., remains silent about its new product plans even when it actually plans to develop the new product. Finally, when its market forecasting capabilities are strong and the demand-side benefits are large, the incumbent prefers to engage in a trueware strategy—i.e., truthfully preannounces development plans. We show that an interplay between competition-related and demand-related considerations is what allows trueware to emerge as an equilibrium in the absence of any ex post cost to engaging in vaporware. In an extension, we let the incumbent's actual development plans leak out and allow the entrant to wait and learn those plans prior to setting a research and development level. We identify conditions for the entrant to postpone development despite the risk of being late to market, as well as conditions for the entrant to commence development immediately despite not knowing the incumbent's plans based on the observed preannouncement strategy.

Understanding and Managing International Product Launch: A Comparison between Developed and Emerging Markets

With the developed market becoming increasingly saturated, companies have turned to the rapidly growing emerging market. To compete effectively in the global marketplace, firms need to develop global market competences, such as effective product launch. Although considerable efforts have been devoted to identifying principles of effective new product launch, most of the literature focuses on a single country (i.e., the domestic market) and provides little direct cross-national comparison. The objective of this study is to provide a better understanding of the patterns of effective product launch in the developed and emerging markets. Drawing from the contingency perceptive, the authors propose a conceptual model that emphasizes the central role of tactical launch decisions and the need to cope with the internal and external constraints for maximum new product performance. The research model is tested on 284 new products launched in the United States and 97 in Taiwan. Although prior literature suggested certain elements of global product launch may be standardized for purposes of efficiencies, the empirical data from this study suggests that global launch requires some degree of customization. The insights of the findings reveal that while some tactical launch decisions are effective for both emerging and mature markets, some are detrimental to each other. For example, customer education preannouncement and promotion discount pricing strategy enhance new product performance and preemption preannouncement strategy upset consumers for both the Taiwan and U.S. market. However, there are some cross-national differences. Emotional advertising strategy is generally appreciated in the U.S. market but not in the Taiwan market. For management practice, the findings suggest the distinct patterns of effective product launch for the emerging and mature market using the United States and Taiwan as examples.

Resisting a stigmatized identity

The socio-cultural complexities that subsume the HIV/AIDS stigma are examined in relationship to the notions of illness and deviancy as explained in the ‘sick role model’ theory. It is argued that in conversations with their physicians, patients use self-effacing arguments and conversational strategies with the communicative intention of redressing their human images, and as a way of resisting the stigma. The data comprise 46 interviews collected in Uruguay at a public hospital. Some of the self-effacing strategies include: violation of the quantitative maxim, reformulation, and pre-announcement strategy. While self-effacing strategies are the patients’ ways of resisting the stigma, the use of these strategies is seen as culturally linked to moral frames entrenched in the Uruguayan culture. It is observed that the patients’ arguments and strategies used to resist stigmatization might, paradoxically, perpetuate the HIV/AIDS-related stigma.

Vaporware: a tug of war between market freezing and cannibalisation

Vaporware is a misleading preannouncement strategy. The established view about such a marketing strategy is that it is commonly used by dominant firms. The literature also suggests that firms engage in vaporware in order to deter the entry of potential competitors. This study challenges these conventional wisdoms and shows that the optimality of the vaporware strategy depends on the tradeoff between the market freezing effect and the cannibalisation effect. Specifically, the study finds that vaporware is only optimal for a firm with a sufficiently low market share and for a new product with a sufficiently high quality improvement over the existing product. To eliminate the vaporware incentive, this study proposes a signalling price mechanism. The analysis shows counterintuitively that a lower price signals better product delivery capability.

The Effects of Management’s Preannouncement Strategies on Investors’ Judgments of the Trustworthiness of Management

This paper examines the role of management’s earnings preannouncements on judgments about its trustworthiness by nonprofessional investors. We predict that management’s preannouncement decision and the resulting direction (e.g., favorable vs. unfavorable) of the earnings surprise influence investors’ ethical judgments about management’s trustworthiness; these judgments, in turn, are associated with investors’ other investment related judgments. We test our predictions in an experiment in which MBA students make investment-related judgments under four different preannouncement strategies. Consistent with our predictions, the results of our study show that managers’ preannouncement decisions are significantly associated with investors’ evaluations of management’s trustworthiness. Specifically, holding the size of the earnings surprise constant, we find that judgments of management’s trustworthiness are damaged more following (a) a negative as opposed to a positive earnings surprise, and (b) the release of a preannouncement compared to when management does not issue a preannouncement. Also consistent with our predictions, we find that evaluations of management’s trustworthiness are significantly and positively associated with judgments of the attractiveness of the firm’s equity as an investment. Based on our findings, we encourage further research to explore whether managers understand the trust implications associated with their preannouncement decisions and the extent to which this understanding influences their disclosure decisions.

Is the value relevance of earnings conditional on the timing of earnings information?

We examine the association between quarterly stock returns and total earnings news conditional on the timing in which earnings information is revealed to the market. Evidence in prior research suggests that managers try to avoid reporting a negative earnings surprise and that market participants place greater weight on the information contained in earnings announcements than on earnings forecast revisions during a quarter (Soffer, L., Thiagarajan, R., Walther, B., 2000. Earnings preannouncement strategies. Review of Accounting Studies 5 (1), 5–26; Bartov, E., Givoly, D., Hayn, C., 2002. The rewards to meeting or beating earnings expectations. Journal of Accounting and Economics 33 (2), 173–204). This notion is consistent with recency theory in the context of individual judgment and decision-making behavior (Hogarth, R., Einhorn, H. 1992. Order effects in belief updating: The belief-adjustment model. Cognitive Psychology 24 (1), 1–55). We extend prior research by investigating the descriptive validity of recency theory to a comprehensive set of potential earnings paths. Our evidence suggests, contrary to conclusions in the prior literature, that investors do not always assign more weight to earnings surprises than to analyst forecast revisions. Rather, our results suggest that the market response to earnings news is more consistent with prospect theory, an alternative cognitive psychology theory developed by Kahneman and Tversky (1979. Prospect theory: An analysis of decisions under risk. Econometrica 47 (2), 263–292).

The Impact of Communication Strategy on Launching New Products: The Moderating Role of Product Innovativeness

Academic literature is filled with debate on whether product innovativeness positively impacts new product performance (NPP) because of increasing competitive advantage or negatively impacts performance due to consumers' fears of novel technology and resultant resistance to adopt. This study investigates this issue by modeling product innovativeness as a moderator that influences the relationship between communication strategy and new product performance. The authors emphasize that the impact of innovativeness to producers is different from that to consumers and that the differences have strategic impact when commercializing highly innovative products. Product innovativeness is conceptualized as multidimensional, and each dimension is tested separately. Four dimensions of innovativeness are explored—product newness to the firm, market newness to the firm, product superiority to the customer, and adoption difficulty for the customer.In this study, communication strategy is comprised of preannouncement strategy and advertising strategy. First, the relationship between whether or not a preannouncement is offered and NPP is explored. Then three types of preannouncement messages (customer education, anticipation creation, and market preemption) are investigated. Advertising strategy is characterized by whether the advertisement campaign at the time of launch was based primarily on emotional or functional appeals.Using empirical results from 284 surveys of product managers, the authors find that the relationship between communication strategy and NPP is moderated by innovativeness, and that the relationships differ not only by degree but also by type of innovativeness. Implications for research and practice are discussed.

Retracted: Analysts’ Reactions to Earnings Preannouncement Strategies

Preannouncements of earnings tend to overstate negative or understate positive news, which decreases the chance of a negative surprise when actual earnings is announced. We conduct an experiment to investigate how experienced sell‐side analysts’ earnings forecasts are affected by preannouncements that either understate, accurately state, or overstate the magnitude of positive or negative total earnings news, holding total earnings news constant. We find that firms with negative (positive) total news receive the highest post‐earnings announcement forecasts of future earnings when the earlier preannouncement overstates (understates) the magnitude of the news. These forecasts are consistent with the analysts’ perceptions about the firms’ future prospects, but not their perceptions of management. While analysts expect preannouncements to be lower than actual earnings, they do not adjust their forecasts for these beliefs. These insights into analysts’ responses have implications both for managers and analysts.

Analysts' Reactions to Earnings Preannouncement Strategies

Analysts' Reactions to Earnings Preannouncement Strategies