RESEARCH INSIGHT | Where Your Customers Live Can Predict Product Success
The Research
Previous research has determined that there are “harbinger customers”—people who systematically purchase new products that ultimately fail (and are discontinued by retailers). This article extends this finding in two ways. First, not only are there customers who are harbingers, but there are also harbinger zip codes: Purchases of new products by households in these zip codes is a signal that the new product will fail. More precisely, holding the number of purchases by nonharbingers fixed, the number of purchases by harbinger zip codes is higher on products that fail than on products that succeed.
Second, harbingers make decisions that are different from neighboring zip codes across a wide range of contexts. Zip codes identified as harbingers at a mass merchandise store are also harbinger zip codes at an apparel retailer. Even more interesting: Zip codes identified as harbingers at a mass merchandise store are systematically less likely to donate to the most popular political candidates. They are also more likely to donate to political candidates who lose their elections.
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What You Need to Know
- The age-old adage “know your customer” has never been more relevant: “Harbingers of failure” are customers and areas that tend to purchase products that ultimately fail.
- Zip code–level data can be used to evaluate who the early adopters of a new product are (rather than just the total number of new adopters).
- These results extend to various types of merchandise, political candidates, and even home values.
Abstract
Previous research has shown that there exist “harbinger customers” who systematically purchase new products that fail (and are discontinued by retailers). This article extends this result in two ways. First, the findings document the existence of “harbinger zip codes.” If households in these zip codes adopt a new product, this is a signal that the new product will fail. Second, a series of comparisons reveal that households in harbinger zip codes make other decisions that differ from other households. The first comparison identifies harbinger zip codes using purchases from one retailer and then evaluates purchases at a different retailer. Households in harbinger zip codes purchase products from the second retailer that other households are less likely to purchase. The analysis next compares donations to congressional election candidates; households in harbinger zip codes donate to different candidates than households in neighboring zip codes, and they donate to candidates who are less likely to win. House prices in harbinger zip codes also increase at slower rates than in neighboring zip codes. Investigation of households that change zip codes indicates that the harbinger zip code effect is more due to where customers choose to live, rather than households influencing their neighbors’ tendencies.
Duncan I. Simester, Catherine E. Tucker, and Clair Yang, “The Surprising Breadth of Harbingers of Failure,” Journal of Marketing Research, 56 (6), 1034–49.