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Financial Incentives and Salesperson Time Orientation in New Product Launch: A Longitudinal Study

Authors/Editors: Beuk, F.
Malter, A.J.
Spanjol, J.
Cocco, J.
Published: 2014
Type: Articles in Refereed Journals (International)
ISBN/ISSN: 1540-5885
Published by: Journal of Product Innovation Management, 31 (4), 647-663
Additional information: Lead article in special issue on sales and innovation

Abstract

The success of a new product launch critically depends on an engaged and dedicated sales force. Salespeople who are involved in a new product launch must overcome significant uncertainty associated with the new product's performance, which can affect success expectations and, in turn, sales effort for the new product. Moreover, success expectations may drop in the first few months of the launch period, due to initial negative market feedback or general decline in sales force enthusiasm. Diminished expectations may start a vicious circle effect where lower success expectations for the new product lead to lower sales effort that, in turn, leads to lower performance, which further lowers expectations, and so on.

Based on insights from attribution-expectancy theory, this study investigates two distinct mechanisms to counteract the potential downward spiral in success expectations and sales effort devoted to a new product. Specifically, this research examines the role of financial incentives and salespersons' long-term orientation in creating and maintaining high new product success expectations and sales effort during a new product launch. To investigate how the effect of these factors changes over time, success expectations and sales effort are examined across two critical points in time: the start of a new product launch and at completion of the first sales cycle. To test the model empirically, the North American sales force (n = 129) of a business unit of a global firm is surveyed longitudinally during the launch of a new line of industrial products. The data are analyzed using a partial least squares model.

The results show that initial success expectations have a significant effect on sales effort later in the launch, and that this relationship is mediated by success expectations later in the launch. Success expectations and sales effort early in the launch are also shown to impact the perceived attractiveness of the financial incentives offered, but this does not translate into higher success expectations or sales effort at the end of the launch. In contrast, the long-term orientation of salespersons is key to maintaining higher success expectations and sales effort at the end of the launch.

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