Estimating the Market Potential with Pre-Release Buzz

Abstract

With increased competition and shorter product life-cycles, forecasting the life-cycle sales of new products prior to launch is becoming increasingly important to marketers and demand planners. Our study contributes to the literature on new product adoption using analogies by augmenting information from previous generations with pre-release search traffic. In contrast to existing research, which relies on pre-release buzz information only for the launch phase, we consider life-cycle sales. First, we propose a model of pre-release buzz and market potential, establishing the connection between the two. Then, we validate this relationship with an empirical experiment on sequential video game sales. Our finding support that pre-release buzz contains predictive information up to 17 weeks prior to release and can increase life-cycle sales forecast accuracy up to 20%. The explanatory power of pre-release buzz varies across product generations. This evolution opens up marketing opportunities and highlights why it is important to manage pre-release buzz.

Keywords: Google Trends, Diffusion, Analogy, Pre-Launch, New Product