Encroachment Patterns of the “Best Products” from the Last Decade

Authors


  • *We gratefully acknowledge the extensive feedback of Abbie Griffin, Anthony Di Benedetto, Eric Bradlow, anonymous reviewers, and the dedicated participation of our panel of judges.

Address correspondence to: Joseph van Orden, West Point Military Academy, West Point, NY 10996. E-mail: jvanorden@rinchem.com.

Abstract

Based on the examination of 239 “best products” (all those on Business Week's annual lists from the past decade), this article tests and validates a conceptual framework identifying six ways in which new products open new markets and/or encroach on original products. Three of these six scenarios involve high-end encroachment (the new product first opens a new high-end market, or enters at the high end of an existing market, and then diffuses down-market), and three scenarios involve low-end encroachment (encroachment starts at the low end, followed by diffusion up-market). As illustrated in a 2 × 3 matrix, high-end encroachment ensues when the new product enhances performance with regard to the market's core attribute (low-end encroachment ensues when this performance is diminished). The three high-end sub-types and three low-end sub-types are determined by the strength of performance along an ancillary attribute dimension. If the ancillary attribute performance is week, then the encroachment of the new product on the old market is immediate (corresponding to immediate high-end encroachment and immediate low-end encroachment, respectively). If the ancillary performance is moderate, then the new product expands the market at the high or low end (corresponding to new-attribute high-end encroachment and fringe-market low-end encroachment, respectively). If the ancillary performance is strong, then the new product first opens an entirely new market at the high or low end (corresponding to new-market high-end encroachment and detached-market low-end encroachment, respectively). The reliability and comprehensiveness of the encroachment framework is tested by asking a panel of eight judges to categorize each of the 239 products. Results show inter-judge reliability of 98%, with all products falling within one of the six encroachment categories. Each of the encroachment types has unique implications on product positioning and pricing, as further discussed in the paper. Thus the model helps firms identify and analyze the various possible strategies that they might choose from when introducing new products.

Ancillary