Researchers from College of Texas at San Antonio and College of Southern California revealed a brand new paper within the Journal of Advertising that examines the tough selections {industry} incumbents and new entrants face throughout instances of probably disruptive technological change.

The examine, forthcoming within the Journal of Advertising, is titled “Leapfrogging, Cannibalization, and Survival throughout Disruptive Technological Change: The Essential Position of Price of Disengagement” and is authored by Deepa Chandrasekaran, Gerard Tellis, and Gareth James.

In July 2020, Tesla grew to become the world’s most beneficial automaker, surpassing Toyota in market worth for the primary time. Paradoxically, it was Toyota that in 1997 launched the Prius, the world’s first mass-produced hybrid electrical car. In 2006, Tesla Motors, an upstart entrant, guess its future on absolutely electrical automobiles. Incumbents dismissed the hassle as futile due to the excessive entry boundaries for auto manufacturing, the excessive price of manufacturing in California, and the challenges of creating charging stations. In distinction, Toyota guess the longer term on hybrids. Toyota confronted onerous selections: spend money on hybrids, all-electrics, or each?

This instance illustrates that in instances of probably disruptive technological change, each {industry} incumbents and new entrants face tough selections. For incumbents, the important dilemma is whether or not to cannibalize their very own profitable choices and introduce the brand new (successive) know-how, survive with their outdated choices, or spend money on each. To handle this dilemma, they should know whether or not disruption is inevitable and in that case, how a lot of their current gross sales can be cannibalized over time, or whether or not each outdated and new applied sciences might, the truth is, exist in tandem (coexist). The entrant’s dilemma is whether or not to focus on a distinct segment to keep away from incumbent response or goal the mass market and incur the wrath of the incumbent.

The examine’s analysis staff posits that to successfully handle disruption, corporations should reply the next questions: First, when does an outdated know-how coexist with a brand new, successive know-how, versus going into a direct decline? If that’s the case, how can one account for the coexistence of two applied sciences in an empirical mannequin? Second, how can one estimate the extent of cannibalization and leapfrogging of an outdated know-how by a brand new know-how over time? Third, can shopper segments clarify coexistence, cannibalization, and leapfrogging in successive applied sciences and, in that case, through which segments?

To reply these questions, the researchers developed a generalized mannequin of the diffusion of successive applied sciences. A key function of the generalized mannequin is the speed of disengagement from the outdated know-how, which isn’t compelled to equal the speed of adoption of the successive know-how, thus permitting each applied sciences to coexist. The important thing discovering is that technological disruption is frequent, with dominant incumbents failing within the face of takeoff of a brand new know-how. Nevertheless, disruption is neither at all times fast nor common as a result of new applied sciences generally coexist as partial substitutes of the outdated applied sciences. As Chandrasekaran explains, “Our generalized mannequin of diffusion of successive applied sciences can assist entrepreneurs seize disruption or coexistence as a result of fee of disengagement from the outdated know-how, which might range from the speed of adoption of the brand new know-how. This mannequin permits a superior match to information on technological succession over prior multi-generational fashions that don’t embody such flexibility.”

The examine additionally identifies 4 adopter segments that account for competitors between successive applied sciences: leapfroggers correlate with the expansion of the brand new know-how, switchers and opportunists account for the cannibalization of the outdated know-how, and twin customers account for the coexistence of each applied sciences. The generalized mannequin can seize variations in section sizes throughout applied sciences and markets. For instance, leapfroggers kind a dominant element of adopters within the youth cycle of a brand new know-how in growing markets whereas twin customers accomplish that in developed markets.

The mannequin can present essential indicators about disruption and survival by estimating cannibalization versus co-existence and forecasting the evolution of 4 important customers segments from combination information. “Incumbents usually wait till the marketplace for the brand new know-how is giant sufficient to be worthwhile earlier than committing assets to its improvement. Our evaluation means that managers must be cautious to not underestimate cannibalization by switchers, particularly once they dominate twin customers, or the expansion of latest applied sciences through leapfroggers (particularly in growing nations),” says Tellis. As well as, regardless of its frequent incidence, disruption just isn’t a given when a brand new successive know-how enters the market. Thus, managers shouldn’t have to make a stark alternative between the 2 applied sciences. Disruption could also be averted by successfully focusing on twin customers and by fastidiously analyzing elements driving the extended (co)existence of the outdated know-how.


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Concerning the Journal of Advertising

The Journal of Advertising develops and disseminates information about real-world advertising and marketing questions helpful to students, educators, managers, coverage makers, customers, and different societal stakeholders world wide. Printed by the American Advertising Affiliation since its founding in 1936, JM has performed a big function in shaping the content material and limits of the advertising and marketing self-discipline. Christine Moorman (T. Austin Finch, Sr. Professor of Enterprise Administration on the Fuqua Faculty of Enterprise, Duke College) serves as the present Editor in Chief.

Concerning the American Advertising Affiliation (AMA)

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