Predicting Sales Takeoff for Whirlpool's New Personal Valet

Abstract

The introduction of really new products creates many dilemmas for managers. Initially, they must develop a launch strategy in the face of great uncertainty about the product's potential. After launch, they need guidance about whether to pull the plug on a new product with lackluster sales (prior to takeoff) or persist with a product that could ultimately be a failure. Our results and model of the takeoff in sales of new products provide some guidance on these complex managerial decisions. Prior to our study on sales takeoff, a manager's only recourse to analyzing new product growth would have been diffusion models. However, these models have typically used new product sales beginning at or around the takeoff, have assumed takeoff, and have not explicitly modeled it. In contrast, our model addresses the time from commercialization until takeoff, thus providing insights during the period of greatest uncertainty. Whirlpool Corporation used our model to guide their decision making in the testing and launch of a completely new consumer durable, the Personal Valet.

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