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Virtual Reality in New Product Development: Insights from Pre-Launch Sales Forecasting for Durables

Virtual Reality in New Product Development: Insights from Pre-Launch Sales Forecasting for Durables

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Teaching Insight:

Most new products fail. However, this study shows that durable producers could reduce this economic risk by leveraging virtual reality. With this investigation, our research team provides one of the first articles on virtual reality in business research. In particular, we develop a new virtual reality forecasting approach that makes highly accurate monthly sales forecasts prior to the launch of a new durable. This approach includes a simulated purchase journey in virtual reality encompassing various touchpoints and information sources. Therefore, it also allows assessing realistic consumer behavior even before the product or prototype physically exists. We tested the new forecasting approach in two field studies with two real-world innovations that our collaborating companies actually introduced.

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Related Marketing Courses: ​
Marketing Strategy

Full Citation: ​
Harz, Nathalie, Sebastian Hohenberg and Christian Homburg (2021), “Virtual Reality in New Product Development: Insights from Pre-Launch Sales Forecasting for Durables,” Journal of Marketing.

Article Abstract

This investigation examines how consumer durable goods producers can leverage virtual reality for new product development (NPD). First, the authors develop a pre-launch sales forecasting approach with two key features: virtual reality and an extended macro-flow model. To assess its effectiveness, the authors collect data from 631 potential buyers of two real-world innovations. The results reveal that the new approach yields highly accurate prelaunch
forecasts across the two field studies: Compared to the actual sales data tracked after the product launches, the prediction errors for the aggregated first-year sales are only 1.9% (Study 1a, original pre-launch sales forecast), 0.0% (Study 1b, forecast with actual advertisement spending), and 20.0% (Study 1b, original pre-launch forecast). Moreover, the average the mean absolute percentage error (MAPE) for the monthly sales is only 23% across both studies. Second, to understand the mechanisms of virtual reality, the authors conducted a controlled laboratory experiment. The findings reveal that virtual reality fosters behavioral consistency between participants’ information search, preferences, and buying behavior. Moreover, virtual reality enhances participants’ perceptions related to presence and vividness,
but not their perceptions related to alternative theoretical perspectives. Finally, the authors provide recommendations for when and how managers can use virtual reality in NPD.

Special thanks to Holly Howe (Ph.D. candidate at Duke University) and Demi Oba (Ph.D. candidate at Duke University), for their support in working with authors on submissions to this program. 

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