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According to new research from Binghamton University, State University of New York, the way companies announce new products or build hype can often affect their success when those new products hit the market. Whether it’s an upcoming blockbuster movie or a new rollout from big companies like Coca-Cola or Apple, new research shows how companies can use this type of pre-announcement marketing to their advantage.

How many times have you seen trailers for an upcoming movie and thought, “I can’t wait to see that,” when it hits theaters next year?

It’s no surprise when critically acclaimed films score well at the box office, but when films like “Barbie” or “Oppenheimer” go above and beyond, that extra push is often the buzz. One can look at what they produced up until their debut. big screen.

Pre-announcement marketing can often influence the success of a product, whether it’s an upcoming blockbuster movie or a new product rollout from a major company like Coca-Cola or Apple. A research study by Debi Mishra, associate professor at Binghamton University’s School of Management, shows how companies can use this type of marketing to their advantage.

What these communications provide is another way to think about shareholder returns because shareholders want the money they’re putting in to appreciate in value, said Mishra, a marketing expert who studied said While that often depends on the actual performance of the product, he said, how companies manage and communicate the “buzz” plays a big role.

Mishra said, “New products are the heartbeat of a company, especially products that are more consumer-facing, so how a company communicates with customers or stakeholders about new products is the future. is the key to growth and survival.” “Do you provide all the information at or beyond the pre-announcement stage? And depending on how that information is delivered, they create surprises in the market that can be beneficial. “

Mishra and a fellow researcher assessed the impact by collecting data from 149 product launch events and their preceding announcements, as reported in The Wall Street Journal From 2005-2018.

By examining what kind of information was revealed in the year before the product announcement, whether it was a costly announcement (the company loses money if it doesn’t introduce the product) or a valuable one, the researchers Can compare the impact on stocks. these scenarios.

They found that the no-price approach generally resulted in a positive stock market reaction, and that, contrary to expectations, losses from not investing more upfront in building product hype were offset after the release. can go. Alternatively, expensive methods often resulted in no significant stock market response at all.

Examples include:

  • Coca-Cola’s announcement of a new drink did not promise when it would be introduced or how much the company had invested in the new product, making it easy for the company to change the announcement if needed. could
  • IBM’s announcement of using artificial intelligence to draw insights from digital data and create data graphics is part of the company’s $1 billion investment, albeit a positive one.

Mishra said, “If companies create all this hype about a product but never release it, they may benefit from an early rise in the stock market, but shareholders will suffer. Ga,” said Mishra. “It also makes a difference if the company makes any kind of guarantee, like buying $20 million of land for a factory to build a new product. That’s a credible commitment because if they never introduce that product. It could be a waste of money if you do. Smart enough to figure that kind of thing out.”

Mishra said the research also showed that the “surprise effect” can affect market response to new products.

If a company announces a new product and has already made a very clear commitment behind it, it is no longer a surprise to the market as the company will follow it up with an introduction.

Mishra said that a company’s new product announcement, which does not provide advance information about how much is being invested in it, could potentially create a huge market boom once it is revealed. .

“If you’ve got something really cool to offer — Brad Pitt is starring in a big upcoming movie — you can’t keep it under wraps all the time, but if you’re introducing that product or movie “You’re really honest about what you want, so it might still be a good idea to keep things somewhat private,” Mishra said. “Suddenly, you’re in a position where your audience or the market will react by saying, ‘Oh, we didn’t expect that!’

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